Xpeng the latest to join China electric-car gold rush
Firm starts deliveries of its first commercial model, the G3 SUV
BEIJING: The gold rush that is China’s electric-car market is getting its latest entrant as a slew of local manufacturers fight for a foothold ahead of Tesla Inc’s planned offensive.
Xpeng Motors started deliveries of its first commercial model yesterday, four years after its founding by entrepreneur He Xiaopeng and partners in Guangzhou, southern China.
The G3 sport-utility vehicle gives Xpeng instant credibility and revenue, while hundreds of other startups are still working on their prototypes and competing for investors’ funds.
At stake is a market that is set to balloon to hundreds of billions of dollars in the coming decades as China’s government promotes greener vehicles at the expense of gas guzzlers.
Local brands are trying to gain relevance and secure their survival before Elon Musk’s Tesla starts building cars in Shanghai next year and global giants from Volkswagen AG to Ford Motor Co flood the market with their locally produced electrified models.
“Very few can succeed,” He said in an interview in Guangzhou. “Xpeng is very likely to be one of the few.”
Xpeng is handing over the first batch of its five-seater SUVs, priced at about US$29,000 to US$41,000, after having its employees test the model for the past 14 months.
Tesla is set to start delivering US-made, higher-end versions of its Model 3 sedan priced at about US$78,000 next year before starting local production of the vehicle.
While the Chinese contenders’ lower prices are likely to appeal to buyers, they need to convince customers of their vehicles’ quality and brand appeal.
At the same time, the startups will face challenges in ramping up manufacturing capacity, which can easily cost hundreds of millions of dollars and is something that rivals from Tesla to NIO Inc have struggled with.
He said Xpeng has a healthy cashflow, which would help sustain the company for at least the next 25 months.
The company needed to sell more than 100,000 vehicles to break even, and its profit margin is set to pick up rapidly after it achieved more scale and started making money on services, he said.
Xpeng has no timetable for an initial public offering, finance chief Brian Gu said. — Bloomberg