In a move that brings it closer to its goal of producing its own vehicles, Chinese electric vehicle firm Xpeng Motors has acquired Foshan-based automotive manufacturer Guangdong Foday Auto Company. As part of the acquisition, Xpeng will obtain Guangdong Foday's vehicle manufacturing license, allowing it to manufacture its own cars.
The purchase of the already established local vehicle manufacturer was confirmed on Monday. An Xpeng spokesperson mentioned in a statement that the acquisition will result in the further strengthening of the company's supply chain management and grant it manufacturing capabilities for its future products.
The acquisition was partly funded by Alibaba Group Holdings, Xiaomi, and IDG Capital. Other investors, who were not named, also participated in the transaction. Xpeng Motors has long been hailed by the industry as China's answer to the current global market leader Tesla.
Since it was established in 2014, Xpeng has found it difficult to obtain permits to manufacture its own vehicles. Last year, China rolled out tighter restrictions on the production of electric vehicles, making it much harder for smaller players to obtain permits. The regulations were put in place to ensure the safety and quality of electric vehicles sold in the domestic and international markets, essentially only allowing established manufacturers with decades of experience to produce their own vehicles.
Guangdong Foday is regarding as one of the most established automobile manufacturers in Guangdong. The company, which was founded in 2001, mainly manufactures vehicle bodies and other automotive components for other companies.
Xpeng currently doesn't produce its own vehicles. Instead, the company relies on third-party manufacturers such as Haima Automobile Group to assemble its finished products. So far, the company has managed to produce more than 10,000 electric vehicles through its partnership with third-party contractors.
According to a statement released by the electric startup, its partnerships with third-party contractors will remain unchanged. Xpeng will still need to go through a lot of processes, including obtaining government approvals and completing procedures, before it can start making its own vehicles.
Xpeng is currently in the process of building a new factory in Zhaoqing, Guangdong province. The facility is expected to produce the company's upcoming battery-powered coupe called the Xpeng P7. The Chinese startup recently obtained permits in the US to test-drive its P7 model in the United States. The P7 is expected to go head-to-head with the Tesla Model S in China, despite it costing nearly a third of the price of its US counterpart.
