China's Xpeng readies Tesla Model 3 rival

Chinese EV startup Xpeng will launch a second full electric sedan this year intended to rival the Tesla Model 3.

Xpeng used Twitter to preview the car, which will go on sale in China later this year.

The model will slot underneath the company's P7 sedan and offer a lower-riding alternative to the G3 compact SUV, which has just gone on sale in Norway, Xpeng President Brian Gu told Automotive News Europe in an interview.

"It's a smaller sedan than the P7 but it's actually roomier inside," Gu said. He compared the model's size to a Toyota Camry or Honda Accord sedan and said the car would impress with its in-cabin experience as well as semi-autonomous capability.

The new sedan will use a lidar sensor from Chinese company Livox that will increase the capability of Xpeng's Xpilot suite of active safety technology.

Xpeng is currently evaluating the P7 sedan for sale in Norway, Gu said, but no decision has been made.

Xpeng delivered the first 100 G3 SUVs to customers in Norway in December. The model starts from 358,000 krone ($41,000) and will rival the Tesla Model Y and Ford Mustang Mach-E.

Xpeng chose Norway to begin its push into Europe because of its high takeup of EVs, Gu said.

"Norway is perfect to be the first market. It has one of the best EV penetration rates, the best infrastructure and also has very welcoming policies," he said.

Xpeng, which is backed by China's Alibaba Group Holding, will disclose its strategy for pushing further into Europe in the next four months.

"We don't want to be late but at the same time as a new entrant it's much important to establish your brand and reputation properly by having the right infrastructure, the right sales and service and the right brand recognition," Gu said.

Xpeng will follow the new sedan with a larger SUV in 2022 that uses the P7 platform and will sit above the G3, Gu said.

Xpeng delivered 27,041 vehicles in 2020. The majority of those were sold in China, with 12,964 delivered in the fourth quarter, the company said in a release.

P7 deliveries were 15,062 while the G3 accounted for 11,979.

Xpeng listed on the US stock exchange in August and in December sold more shares in the company, raising $2.45 billion.

Volkswagen Group CEO Herbert Diess warned in a recent interview that well-capitalized start-ups could be a threat to incumbent automakers such as VW.