In 2022,  XPeng Stepped on the “Sharp Brake”

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On March 17, Xpeng Motors released its fourth quarter and full year 2022 financial report, with revenue of 5.14 billion yuan in the fourth quarter, down 39.9% year-on-year; The net loss was 2.36 billion yuan, an increase of 83% year-on-year. Annual revenue was 26.86 billion yuan, a year-on-year increase of 28%; The net loss was 9.14 billion yuan, an increase of 88% year-on-year, a record high.

In 2022, Xpeng Motors’ total deliveries exceeded 120,000 units, a year-on-year increase of 23%, which is far from the previously set annual sales target of 250,000 units.

In this regard, Xpeng Motors had to adjust. Since the end of last year, the organizational structure has been adjusted, and Wang Fengying, former president of Great Wall Motor, has been invited to become the company’s new president at the beginning of this year. At the same time, He Xiaopeng, chairman of Xpeng Motors, also returned to the front line, and since February this year, all Xpeng Motors’ design, research and development, production, supply chain, organization management, process system and system teams have reported directly to He Xiaopeng.

In the earnings call, He Xiaopeng said that last year’s macro environment and competition in the new energy vehicle industry brought many challenges, and the company’s performance was also under pressure. But those pressures also helped companies see problems ahead of time and move quickly at the end of last year. Xpeng Motors is about to reach a turning point and is confident of resuming sales and market share growth.

But can Xiaopeng Motors, which is already in a downturn and cannot come up with good products, save its decline?

In 2022,  XPeng Stepped on the "Sharp Brake"
In 2022,  XPeng Stepped on the “Sharp Brake”

Small Plate, Big Loss

According to the financial report, Xpeng Motors’ annual revenue in 2022 will be 26.86 billion yuan, a year-on-year increase of 28.0%; The loss reached 9.14 billion yuan, an increase of 88.1% year-on-year, and the net loss reached a record high. Revenue in the fourth quarter was 5.14 billion yuan, down 39.9% year-on-year; The net loss was 2.36 billion yuan, an increase of 83% year-on-year.

R&D investment was CNY 5.21 billion, up 27% y/y, mainly due to the increase in R&D personnel and the development of new models.

Selling, administrative and general expenses increased by 26.1% year-on-year to $6,688 million, mainly due to the continued expansion of the sales network and the increase in related personnel costs.

Up to now, Xpeng Motors has expanded to 420 stores nationwide, covering 143 cities; In addition, Xpeng’s self-operated charging station network was further expanded to 1,014 charging stations, including 808 self-operated Supercharger stations and 206 destination charging stations.

Gross margin was 11.5%, down 1 percentage point year-on-year. Automotive gross margin was 9.4%, down 2.1 percentage points year-on-year. Xpeng Motors said that this was mainly due to increased sales discounts and higher material costs.

The increase in investment and gross profit margin did not go up, and the expansion of Xpeng Motors’ losses is inevitable.

From the comparison of the three “Wei Xiaoli”, in 2022, the revenue of “Wei Xiaoli” will be 49.27 billion yuan, 26.86 billion yuan and 45.29 billion yuan, respectively, an increase of 36.3%, 28.0% and 67.7% year-on-year. The gross profit margin of automobiles was 13.7%, 9.4% and 19.1%, respectively. Xpeng Motors not only loses a lot of money selling cars, but the overall plate is not large.

Fortunately, the net loss is not the most serious, NIO’s annual net loss of 14.437 billion yuan may still allow Xpeng Motors to “avoid the limelight”, but compared with the annual net loss of 2.03 billion yuan of Li Auto, Xpeng Motors’ loss is about 4.5 times that of Li Auto.

As of January 31, 2023, Li Auto operated a total of 296 retail stores covering 123 cities; Operates 320 after-sales repair centers and authorized sheet spray centers in 222 cities.

As of March 2023, NIO has 386 stores nationwide, covering 108 cities. At the same time, NIO has built a total of 1,315 exchange stations (including 348 highway exchange stations), 2,340 charging stations (13,734 charging piles) in the Chinese market, and more than 630,000 third-party charging piles.

Overall, the number and coverage of the three stores are not much different.

In terms of cash, Xpeng Motors is also the least of the three. As of December 31, 2022, Xpeng Motors held cash, cash equivalents, restricted cash, short-term investments and time deposits totaled RMB38.25 billion. NIO is 45.5 billion yuan. The ideal car is 58.45 billion yuan.

Regarding the pressure on performance, He Xiaopeng admitted that it was challenged by the macro environment and competition in the new energy vehicle industry last year, but he believes that Xpeng Motors is about to usher in a turning point and is confident of resuming sales and market share growth.

But can Xpeng Motors’ market performance make He Xiaopeng get his wish?

In 2022,  XPeng Stepped on the "Sharp Brake"
In 2022,  XPeng Stepped on the “Sharp Brake”

Delivery Volume Rankings Plummeted

The overall plate is small, mainly in the “Waterloo” of Xpeng Motors’ delivery volume.

In 2022, Xpeng Motors’ deliveries will be 120,800 units, and although it exceeded the 100,000 mark for the first time, the year-on-year increase was greatly reduced, only 23%. In 2020 and 2021, Xpeng’s deliveries increased by about 112% and 263% respectively.

NIO and Li Auto’s deliveries in 2022 have also slowed down, but they have outpaced Xpeng Motors in both volume and growth. Among them, NIO delivered 122,500 units, a year-on-year increase of 34%; Li Auto delivered 133,200 units, up 47.2% y/y.

In addition, Nezha and Leap Auto also caught up, and in 2022, Nezha Automobile delivered 152,000 units, a year-on-year increase of 118%; Leap Motor delivered 111,200 units, a year-on-year increase of 154.1%.

In 2021, Xpeng Motors was still the top in the list of deliveries of new automakers, and now it is one step away from the bottom of the list. What happened to Xpeng Motors?

Xpeng Motors did not mention the accurate sales figures of each model in its 2022 financial report, but only mentioned once because its G3i and P7 car deliveries were reduced, partially offset by the newly launched G9. This resulted in a decrease in revenue from car sales.

From the data of the third quarter of 2022, Xpeng Motors’ main model is still P7, with a total of 16,800 deliveries, a year-on-year decrease of 15%, as a model that has been on the market for more than two years, its appeal to consumers is weakening. The P5 delivered 0.87 million units.

The new model G9, which had high hopes, was criticized for high prices and low configuration as soon as it was launched, and then Xpeng Motors urgently adjusted the SKU and reduced the price by 20,000-30,000 yuan in disguise, but the market effect was not good. As of the release of the 2022 financial report, the sales of the G9 are only more than 6,000 units.

In fact, Xpeng Motors’ original intention is to drive the average selling price through this 309,900-469,900 G9. Before the listing, Xpeng Motors expected that the average monthly sales of this car would be more than 10,000 units, and at least 30,000 units in 2022, so as to increase profits on the basis of driving corporate revenue, but the reality obviously did not meet expectations.

According to Xpeng’s plan, the sales target for 2022 is to secure 250,000 units and impact 300,000 units, of which G9 sales account for about 14%, and it is expected to be 35,000 units. But reality is much worse than planned.

Perhaps the G9 defeat has made Xpeng Motors cautious, and it expects deliveries of 1.8-19,000 units in the first quarter of this year, a year-on-year decrease of 45%-47.9%. NIO’s delivery guidance for the same period is 31,000-33,000 units, and the Li Auto delivery guidance is 52,000-55,000 units.

In fact, Xpeng Motors’ deliveries from the fourth quarter of 2021 to the fourth quarter of 2022 continued to decline, with 41,751 units, 34,561 units, 34,422 units, 29,570 units, and 22,204 units, respectively.

The slump in deliveries continued into this year, with Xpeng’s total deliveries of 11,200 units in the first two months of this year, down more than 40% year-on-year. According to data released by the Passenger Association of China, from January to February 2023, among the top 15 new energy vehicle manufacturers in terms of sales, Xpeng Motors’ sales decline ranked second, second only to Chery Automobile.

Zhang Yi, CEO of iMedia Consulting, told Kunyu Business Watch that at present, Xpeng’s shortcomings are reflected in the lack of continuous launch of explosive products. In terms of market expansion and product support, Xpeng Motors seems to pay more attention to market investment and lack support for products.

In 2022,  XPeng Stepped on the "Sharp Brake"
In 2022,  XPeng Stepped on the “Sharp Brake”

Will Adjustments Work

At the same time as the performance declined, the top management was also adjusting.

At the end of October last year, Xpeng Motors began to adjust the company’s internal organizational structure, and the jurisdiction business of the two core founding members, Xia Heng and He Tao, was constantly adjusted and contracted. As the co-founder and president of Xpeng Motors, Xia Heng resigned as an executive director of the company’s board of directors; Former Vice President and General Manager of Brand Public Relations of Xpeng MotorsLiCheng was revealed to have joined Avita; Yi Han, a former senior executive of Geely, confirmed his appointment to Xpeng Motors, responsible for marketing and public relations communications.

On January 30 this year, Wang Fengying, former vice chairman and general manager of Great Wall Motor, became president of Xpeng Motors, fully responsible for the company’s product planning, product matrix and sales system.

Recently, it was reported that Liu Minghui, vice president of Xpeng Motors’ powertrain, has left, and Gu Jie, a former technical executive of parts company Delphi, has become the senior director of the power department and reports directly to He Xiaopeng. In addition, Liao Qinghong, chief talent officer and vice president of sales, will also leave and is currently on leave, and his sales and marketing operations have been taken over by Xpeng Motors veteran Wang Tong and Yi Han, who has just joined from Geely, both of whom report to Wang Fengying.

However, for this news, Xpeng Motors responded that it was untrue news.

But in any case, the adjustment at the end of last year was the largest organizational restructuring since the establishment of Xpeng Motors. He Xiaopeng calls this reform “secondary entrepreneurship”: “We choose to subvert ourselves and carry out real secondary entrepreneurship in a higher dimension and platform. ”

For Wang Fengying’s arrival, just one and a half months ago, he pointed out many problems that Xpeng Motors had exposed in terms of products and marketing. He Xiaopeng bluntly said that Wang Fengying’s research on channels is far better than his own, and in the more than one month since he joined the company, the two sides have made three clear points on the channel strategy: first, firmly promote self-operation and authorization, of which the proportion of authorization will be relatively increased; The second is to flatten the management of the channel and improve the overall profitability and operational efficiency; The third is to switch from purely sales-oriented channels to channels with 4S functions.

It is reported that Wang Fengying deployed three major adjustments: including postponing the online warm-up time of the new P7 from mid-February to early March this year, so as to make the marketing and distribution rhythm more compact; Name the new P7 P7i and suspend the sales plan of the new and old models at the same time; Integrate Xpeng’s self-operated and third-party sales systems, and formulate unified KPI targets for new vehicle launches according to regions and cities.

However, the pressure on Wang Fengying is not small, and the price range of P7i is 249,900-339,900 yuan, which is much more expensive than the price of 209,900-249,900 yuan of the old model P7.

After multiple rounds of price reductions, the price range of Tesla Model 3 is 229,900-329,900 yuan, and P7i will face Model 3.

In addition, Xpeng’s new coupe SUV, the G6, is expected to be officially launched in the middle of this year. After the G9’s “debut rollover” event, the pricing and launch strategy for the G6 will become important.

He Xiaopeng expects that from the third quarter of this year, Xpeng Motors’ sales will see a significant increase in month-on-month and year-on-year. In his opinion, Xpeng Motors is not as good as imagined when it is good, and it is not as bad as imagined when it is bad.

Zhang Yi believes that the arrival of the new team, the adjustment of strategy, coupled with the accumulation of previous technology, Xpeng Motors is still expected to win the next wave of competition. However, Xpeng’s traditional sales channels, mainly first-tier and new first-tier cities, are generally affected by the epidemic. From strategy adjustment to product innovation to channel marketing, what new changes will be the focus of this year.

However, the greater difficulty is that in the face of the efforts of traditional car companies and Tesla’s “price butcher-style” attack, the entire new forces of car manufacturing are under great pressure. And the Xpeng car, which stepped on the “sharp brake”, can it still give the foot “throttle” to continue chasing?

In 2022,  XPeng Stepped on the "Sharp Brake"
In 2022,  XPeng Stepped on the “Sharp Brake”

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