Xpeng Motors, one of the best-known EV brands in China, has just bought a Guangzhou-based competitor.
Car manufacturing. Image credit: Unsplash
The reason behind the acquisition may have been to enable Xpeng Auto to produce its electric vehicles (EV) independently (source in Chinese) – without cooperation with other carmakers.
Although founded in 2014, and despite considerable success, Xpeng Motors didn’t have its own car manufacturing facilities before the takeover. This was mainly because of the Chinese government’s encouragement to EV startups to outsource their production with well-established domestic manufacturers. With this encouragement, the government wanted to give startups some time to adjust their plans to the complicated and costly process of obtaining a manufacturing license. As a result, previously Xpeng Motors was cooperating with Haima Automobile Co., Ltd. (海马汽车) and relying on Haima’s car manufacturing capacities for original equipment manufacturer (OEM) production.
Haima Automobile is based in Haikou, Hainan and a subsidiary of FAW Group. The company’s main activity is the production of passenger cars for other companies. It was founded in 1992 as a joint venture between the Hainan provincial government and Mazda to produce Mazda models for sale in China.
Since 2014 the company has been helping to produce various Xpeng Motors cars, such as the Xpeng G3, released in 2018, and delivered 16,608 vehicles in 2019.
However, this time Xpeng wants full authority in the production of the company’s upcoming Xpeng P7 EV model. Therefore, a few days ago, the company acquired Guangdong Fudi Automobile (广东福迪汽车). The shareholder of Fudi was changed to Zhaoqing Xiaopeng New Energy Investment Co., Ltd., and the company’s legal representative has also been switched to Xpeng Automobile’s Co-founder and President, Xia Yi.
What makes Fudi the perfect company to acquire for Xpeng? It may be that the company’s roots go back all the way to 1988 and it is experienced in the production of vehicles – primarily pick-up trucks and sport utility vehicles (SUV), automotive parts and stampings. Previously Fudi products have been sold in various countries under the Fudi and Foday brands.
In fact, the acquisition of a domestic car manufacturer with mass production qualifications approved by the government is a widely used practice in the industry. To illustrate, Ideal Motors purchased 100 percent of Chongqing Lifan Automobile Company for approximately USD 91 million ( CNY 650 million) in 2018. The purpose of the acquisition was precisely to obtain Lifan Automobile’s car manufacturing capacity.
Now, thanks to Fudi’s manufacturing license, which will be available for Xpeng with the acquisition, the company will be able to produce the Xpeng P7 independently.