Xpeng Motors Acquires Guangdong-based EV-maker Foday

XPeng G3 (Source: XPeng)

Chinese EV-maker Xpeng Motors fully acquired another Guangdong-based EV maufacturer Foday through its subsidiary Zhaoqing New Energy Investment Company Ltd. The move could be instrumental in allowing the company to expand their production line and manufacture cars independently.

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The company commented, “The transaction is a critical step for our long term strategic plan.” The acquisition is expected to streamline Xpeng’s supply chain management processes, as well as optimize the company’s product development and manufacturing capabilities.

Prior to the acquisition, Xpeng did not have production facilities under its ownership, making use of the Zhengzhou-located facilities belonging to Haima, a major Chinese automaker and subsidiary of the FAW group. However, Xpeng emphasized that the company willl continue to cooperate with Haima despite the acquisition.

In a similar manner as Xpeng, WM Motor has acquired Dalian-based automaker Huanghai. In October 2018, Byton acquired FAW subsidiary Huali while CHJ Automotive, owner of the EV-brand Leading Ideal,acquired Chongqing Lifan Automobile to strengthen its production capabilities.

There are certain advantages to not owning a factory, as it allows companies to go to market faster and invest more in R&D. Yet, having few heavy assets, automakers like Xpeng or NIO miss out on hefty government subsidies. NIO announced in February 2019 that it would build new headquarters in Hefei, Anhui Province, where it already produces its cars under a manufacturing arrangement with state-owned JAC Motors. The company received 10 billion yuan in government support as a result of the decision.

The value of the acquisition was not disclosed, yet the EV-maker noted that “Xpeng Motors is in a healthy operating status and the transaction will not impose any major pressure on its financing capability.” The company raised $400 million in its latest Series C funding round in November 2019. Additionally, last year Xpeng secured several billion in RMB-denominated credit lines from leading Chinese and international banks, including China Merchants Bank, China CITIC Bank and HSBC, in order to diversify its funding sources.