(Yicai Global) Sept. 28 -- Chinese smart electric vehicle startup Xpeng Motors will begin construction of its Guangzhou based plant today which is the recipient of CNY4 billion (USD586 million) in government funding, the company said in a statement today.

The plant in Guangzhou near Hong Kong is set to finish and go into production by the end of 2022. It will research and develop new models, produce and sell vehicles, and house main workshops for stamping, welding, painting, final assembly and packing, Xpeng said on its official account on WeChat today.

The company will develop a complete smart car industry chain covering investment, R&D and production and sales in the Guangzhou Development Zone where the new plant lies. The chain will include smart travel and vehicle R&D and testing. The carmaker is also preparing to set up a national funding and investment headquarters company there, it said.

Kaide Investment Holdings, a wholly-owned investment firm under the Guangzhou Development Zone Management Committee, will provide Xpeng with the CNY4 billion in funds, mainly for the construction of production bases and purchase of equipment. Xpeng's statement omitted mention of whether this government financing takes the form of equity investment or is a project loan.

Another Chinese EV startup, Nio, secured CNY10 billion (USD1.5 billion) in strategic investment from the municipal government of Hefei in eastern China's Anhui province in February. The carmaker then announced its investment in a second plant in the local area and the relocation of its headquarters there from Shanghai.

Xpeng's statement also skipped mention of the production scale of the Guangzhou plant. The company's other production facility in Zhaoqin, also in Guangdong province, has already started operation, with a planned annual output of 100,000-150,000 units in the first phase.

Chinese internet giant Alibaba Group Holding owns 13.3 percent of shares in Xpeng second only to Xpeng's management, whose 40.9 percent stake makes it the largest outside shareholder.

Xpeng staged its New York Stock Exchange debut on Aug. 27, raising USD1.5 billion, rising 41 percent on its first day of trading. Its shares [NYSE:XPEV] closed 2.75 percent lower at USD17.93 on Sept. 25.

Editor: Ben Armour