Saying goodbye to selling one car at a loss, XPeng-W finally sees a turning point | Jianzhi Research

On the evening of March 19th, XPeng-W released its fourth-quarter performance for 2023. After experiencing three quarters of sluggish sales and negative gross profit margins, XPeng-W finally reached a turning point in sales and profitability.

In key performance indicators, XPeng-W's fourth-quarter revenue reached 13.05 billion yuan, a year-on-year increase of 153.9% and a quarter-on-quarter increase of 53%; net loss was 1.35 billion yuan, a significant year-on-year narrowing of 42.9% and a quarter-on-quarter narrowing of 65.3%; the gross profit margin turned positive, increasing by 8.9 percentage points quarter-on-quarter to 6.2%.

XPeng-W ended the fourth quarter with a year-on-year and quarter-on-quarter decline in revenue, a return to positive gross profit margin, and a significant increase in car deliveries. Huasheng Jianwen·Jianzhi Research believes that XPeng-W may have reached a turning point.

1. Q4 XPeng-W Sales Reversal

At the beginning of 2023, XPeng-W's sales remained sluggish, taking over half a year to recover to the level of tens of thousands of vehicles. Despite the launch of the redesigned P7i in March, sales did not rebound, posing a challenge for XPeng-W.

In the second half of the year, especially in the fourth quarter, the strong sales of G6 and G9 helped stabilize XPeng-W's sales, bringing it back to its peak and regaining market share. Sales in the fourth quarter reached 60,000 vehicles, averaging 20,000 vehicles per month, accounting for 43% of the whole year, a year-on-year increase of 171% and a quarter-on-quarter increase of 50%, in line with the company's expectations. This is a sharp contrast to the monthly sales of less than ten thousand vehicles in the first half of the year.

However, in the first quarter of this year, XPeng-W's sales outlook remains conservative, with an expected 21,000 to 22,500 vehicles, a year-on-year increase of 15.2%-23.4%. Excluding sales from the first two months, the estimated sales for March are only 8,000 to 9,500 vehicles, possibly falling below ten thousand again, similar to last year's trend.

In 2024, XPeng-W's target sales volume is 280,000 vehicles, averaging 23,000 vehicles per month. However, the completion rate for the first quarter of this year is only 7.5%, falling significantly short of the target. XPeng-W plans to launch a new brand, the A-level product, in collaboration with Didi, known as the mona brand, and is expected to be launched as early as next month. This brand will be equipped with advanced intelligent driving systems, even autonomous driving.

XPeng-W's mona brand is primarily targeted at B-to-B, with C-to-C as a secondary focus. Didi's annual subscription is for 100,000 vehicles, ensuring relatively stable sales. At the same time, this model is positioned at 100,000-150,000 yuan, equipped with XPeng-W's advanced intelligent driving system, posing a challenge to brands in the same price range such as GAC Aion, BYD, Chery, NIO, Deep Blue, and LeapmotorThe new models and brand of XPeng-W are expected to drive sales growth, with a target of 280,000 units for the whole year.

2. XPeng-W's Revenue Hits Historic High, Gross Margin Finally Turns Positive

XPeng-W's operating income reached a historic high in the fourth quarter, reaching 13.05 billion RMB, a year-on-year increase of 153.9% and a quarter-on-quarter increase of 53%, ending the previous downturn in operating income.

In addition, XPeng-W's net loss has also narrowed, reaching 1.35 billion RMB, a significant decrease of 42.9% year-on-year and 65.3% quarter-on-quarter; the gross margin finally turned positive in the fourth quarter, reaching 6.2%, an increase of 8.9 percentage points quarter-on-quarter to 6.2%, no longer losing money on each vehicle sold.

华尔街见闻·见智研究 believes that XPeng-W's fourth-quarter revenue and profit have returned to a growth track, mainly benefiting from a significant increase in sales volume and an increase in unit prices. In the fourth quarter, XPeng-W's sales volume increased by 50% quarter-on-quarter, slightly lower than the revenue growth rate of 55.9%. The unit revenue rose to 204,000 RMB, an increase of 8,000 RMB quarter-on-quarter, exceeding the 200,000 RMB mark.

The main reasons for the increase in unit revenue include: firstly, the strong performance of the new high-priced G9 (260,000-360,000 RMB) model, with 15,000 orders in half a month, increasing the proportion of high-priced models in sales and thus raising unit revenue. Secondly, in the fourth quarter, the price war among new energy vehicle companies temporarily ceased, and XPeng-W's main models P7i and G6 did not continue to reduce prices on a large scale, maintaining levels above 200,000 RMB, only offering limited-time discounts in December, with limited impact on overall revenue.

With the growth in sales of XPeng-W's high-end product X9 (350,000-420,000 RMB), which sold over 2,478 units in its first month on the market, accounting for over 30%, it is expected that XPeng-W's unit revenue will continue to grow.

3. Expenses Return to High Expenditure Mode

In the third quarter of 2023, XPeng-W's R&D expenses briefly declined, but with the intensification of competition in intelligent driving, a reduction in R&D investment is clearly unsustainable. In the fourth quarter, XPeng-W's R&D expenses were 1.31 billion RMB, an increase of 6.3% year-on-year and 0.1% quarter-on-quarterXPENG-W's research and development focus is on intelligent driving and new models X9 and mona. Currently, the intelligent driving team at XPENG-W has about 3,000 people, accounting for over 40% of the team. Last year, the team made significant progress, with XNGP's autonomous driving service covering 243 cities nationwide, with plans to expand to more cities by 2024.

The initial orders for XPENG-W's new model X9 exceeded 30,000 units, with sales in the first two months accounting for about 30% of the total. In the last week of March, sales reached 1,202 units, surpassing the TANK NIO D9, becoming the weekly sales champion of new energy MPVs. In addition, the new brand mona is also set to be released ahead of schedule.

In the first three quarters of 2023, XPENG-W rejected ineffective expansion, choosing to reduce costs by optimizing stores and improving efficiency, leading to a year-on-year decline in sales expenses. However, in the fourth quarter, XPENG-W's sales network expanded to 500 stores, covering 181 cities, with sales expenses expanding to 1.94 billion RMB, a year-on-year increase of 10.3% and a quarter-on-quarter increase of 14.4%.

In summary, XPENG-W experienced a fluctuating start in 2023, but ultimately achieved significant growth in sales and profits in the fourth quarter.

Through investment in intelligent driving technology, the launch of new models, and optimization of the sales network, XPENG-W has demonstrated its competitiveness and growth potential in the new energy vehicle market. It is hoped that XPENG-W can continue to maintain this momentum and achieve long-term stable development