XPeng successively creates explosive hits

Author | Wang Xiaojuan

Editor | Chai Xuchen

A few days ago, the industry's question about XPeng P7+ was whether it could replicate the success of MONA and create another explosive hit. Just three days later, XPeng provided an answer to the outside world with order data.

On October 14th, He Xiaopeng, Chairman and CEO of XPeng Motors, announced the pre-sale price of XPeng P7+ at the Paris Motor Show starting from 209,800 yuan. Soon, the value of this price was reflected in the pre-order data.

Coming down from the stage to the interview room, He Xiaopeng, slightly excited, showed off the achievements to everyone with his phone: in less than two hours of pre-sale, P7+ had already received 30,000 orders. "This is the highest pre-order data for XPeng so far," He Xiaopeng said, indicating that based on the conversion of previous MONA orders, the final delivery situation of P7+ would also be very good.

The popularity of P7+ is not accidental. XPeng not only brought out its latest technology but also emphasized comprehensive product strength. "This car is a combination of technology +, space +, and comfort +," He Xiaopeng said at the press conference.

In terms of technology, P7+ debuts XPeng's AI Eagle Eye Vision solution, which has stronger information collection capabilities compared to traditional cameras, further raising the ceiling of XNPG.

It is understood that XPeng's XNGP intelligent driving system can now handle all road conditions and routes nationwide. P7+ will be equipped with the AI Tianji system 5.4.0 version, which can activate XNGP from 0 speed, starting from a standstill. This upcoming system has improved certain capabilities by 3-4 times compared to the current version.

In terms of space, the SUV coupe P7+ surpasses most luxury executive sedans in space experience, with the rear seats even able to accommodate 33 20-inch carry-on suitcases; in addition, P7+ has also been upgraded in the cabin.

Finally, P7+, where all selling points become standard features, embodies explosive attributes. He Xiaopeng also announced that in the future, all XPeng products will include high-end intelligent driving core functions as standard. And will introduce as few versions as possible, which is also a declaration of sincerity to the global market after reflecting on the initial G9 storm and being determined to boost sales.

According to the plan, by 2025, XPeng Motors aims to enter over 60 countries and regions globally, with overseas sales accounting for half of the total sales, becoming the number one Chinese high-end new energy brand in overseas sales.

For XPeng, which has just stabilized and rebounded after coming out of the "10,000 units line," going global will be the "second curve" it has opened up for survival and growth. He Xiaopeng has repeatedly promised publicly, "By the fourth quarter of 2024, XPeng will enter a positive cycle." The series of performances by XPeng now, compared to the first half of this year, or even last year, are all significantly improved, indicating that He Xiaopeng's promise has been fulfilled.

Accelerating international expansion is the new story He Xiaopeng tells. However, the process of globalization is not achieved overnight, and He Xiaopeng also hopes to take it slowly, first being liked by current market users in the early stages.

At the same time, the surge in orders for MONA M03 and P7+ also presents XPeng with new challenges for delivery. Next, only by overcoming challenges in production, marketing, sales, and service, can XPeng's positive cycle truly begin The following is an edited transcript of the dialogue between Wall Street News and He Xiaopeng, Chairman and CEO of XPeng Motors:

Question: The rear space of the P7+ is very good, but is there not as much strong demand for it in Europe? Additionally, compared to the P7+, MONA M03 may have a greater demand in overseas markets. Does MONA M03 have any plans to go global in the future?

He Xiaopeng: Regarding the global expansion plans for MONA M03, we will announce it when the time comes. Today, our outlook for future product planning aims for 1 million vehicles, which is the first step. As for the P7+, we are considering its global value proposition.

Different regions have different demands for cars globally. In the European market, there is a high focus on the second row and the trunk space for compact and mid-sized cars. However, at this level, regardless of the country, there is a high focus on the second row. Therefore, what P7+ considers is benchmarking executive cars, being very comfortable, and having a large trunk space.

Question: Is this XPeng's first time participating in an international A-level auto show? How was the experience? How do overseas customers evaluate XPeng Motors?

He Xiaopeng: Yesterday, we opened our first store in France and delivered the first car, which was purchased by the CEO of a local French company. The user demographic here is different from China, where the main car buyers are likely under 45 years old, while here they are likely over 45 years old and are full cash buyers.

Today, I met with our distributor from Israel, who is the largest distributor in Israel, and we started our cooperation this year. In Israel, we have already reached the top three in the market, with Tesla in first place, Mercedes-Benz in second, and XPeng in third, following this trend in recent months. So they see XPeng as a mid-to-high-end company and a technology innovator.

Question: Did you watch Tesla's event on the 11th? What are your thoughts?

He Xiaopeng: I think we should acknowledge its strengths. It showcased the modern development of the future Western world, and Tesla is gradually excelling in the field of technological innovation exploration. It may have developed a bit slowly, but we should recognize its strengths.

Question: What unique advantages does XPeng have in Europe?

He Xiaopeng: Unlike many other car manufacturers, we are neither very large nor purely electric vehicles, with our cars ranging from about 4.7 meters to 5 meters. You should know that our delivery volume improved slightly last month.

Furthermore, I discovered a situation during my previous entrepreneurship, when I was working on UC, which is to never localize positioning. Because there are too many countries and cultures globally, once you localize positioning, you are bound by it, making it easier to focus on technological innovation.

XPeng is a company that places great emphasis on technological innovation, whether in automobiles or flying cars. I believe that as XPeng enters more countries in Europe and globally this year, our innovation will shine. Additionally, we focus on mid-to-high-end products and long-term development Question: What are the sales expectations?

He Xiaopeng: After the release starting at 7:30 pm today, the backend team initially thought there was an error because the pre-order effect was very, very good. They were surprised at how fast it grew, and then they started looking at the numbers together.

We are also working hard to bring the P7+ to the global market earlier. Because we are more conservative, we generally expect a Chinese car to start its globalization after selling in China for some time, taking it slow. We hope that at some point next year, the P7+ can be sold overseas.

China's autonomous driving will also develop next year under a new architecture system for light maps and light radars. Because many autonomous driving companies in China aim to excel in autonomous driving within the Chinese region.

We found that the previous logic for global operations was not feasible, with high service fees and testing costs. It was not sustainable to adjust so much every month. Because there are too many countries globally, we have always said not to rely on networks because China's network is good, but overseas networks are not.

Secondly, a solution that is very easy to implement globally, and thirdly, the global quality standards need to be aligned. So, next year, you will see us following a global logic in many places, such as the UK and France, which will improve operational efficiency.

It's not that we are working overtime more, it's that our architecture started early.

Question: How do you view the EU's imposition of tariffs? What are our sales expectations in Europe or for future global sales?

He Xiaopeng: Yes, I believe no company is willing to accept high tariffs because it will definitely affect their profits and sales. But I hope it will be relatively stable, not worrying about policies changing constantly.

Globalization is a threshold that all large Chinese companies must cross. If you want to be a global company, you must have a long-term perspective and win-win cooperation with the locals. When we come to Europe, we hope to spend the first ten years in win-win cooperation and learning from the locals.

Question: What are the profit expectations for XPeng in Europe or globally in the future?

He Xiaopeng: In the past year, our gross profit has increased significantly compared to before, by about 20% or more. I believe that for a long-term view of an intelligent car and AI company, a gross profit margin of 20% to 39% is acceptable. Today, it meets our expectations, and our scale is still very small. We are still in the early stages of establishment, nurturing, and incubation.

Profit is not a problem; you need to invest heavily in research and development, innovation, and brand expenses to achieve it. I don't want to make a lot of money quickly because after making a lot of money quickly, you might lose friends in the long term and reduce investment in the medium to long term. You need to control the continuous addition of profits. Few people can control profits to invest less and focus more on research and development when they have good profits.

Question: What goals will XPeng's autonomous driving achieve next year?

He Xiaopeng: Our latest Tianji 5.4.0 will be released next month, which will roughly improve certain capabilities by 3 to 4 times compared to the current version. From my perspective, we started moving towards end-to-end last year and adjusted various syntaxes this year Our autonomous driving architecture is different, and it's different from what you see. If we can achieve taking over every hundred kilometers in most cities in China next year, I think it's very good.

The core of autonomous driving testing is the results of hundreds of kilometers, thousands of kilometers, and it's a combination of various experiences, safety efficiency, and comfort, not just about taking over.

In the future, Xiaopeng's AI high-level autonomous driving will be a standard feature, without concepts like Pro or Max, and there is no subscription fee model. Only after the standard feature, there will be a lot of upgrades based on its basic information in the future. You need to reach a 70-point capability first before you can possibly move towards 80 points, 90 points, which is a big change.

In the coming years, more and more cars, including ours next year, will also launch autonomous driving in the 150,000 price range, attracting users who have not used good autonomous driving before.

Question: What will be the relationship between the three models P7, P7i, and P7+ in the future? Will they be jointly produced and sold, or will the first two be discontinued?

He Xiaopeng: In fact, there are two types. P7, one is for individual sports, and the other is for spacious comfort, but both of these models focus on appearance and are AI cars. You can think of this as us going in two directions on P and G, one is individual type, mainly for two people. The other is a spacious type, for multiple people, so they will continue to exist in the future.

Question: What sets Xiaopeng's cars apart? Is there a unified core spirit?

He Xiaopeng: There are several logics that I personally think are very important:

First, I want good design, which is a very important point for our team, design is important, whether it's exterior or interior styling and materials. Second, in the entire technology tree, whether it's AI technology, hardware technology, or power technology, we are doing a lot of things on the technology tree.

We also need to do subtraction. For example, the configuration of P7+ and the configuration of the subsequent cars, I hope that one car will only have one configuration, and if necessary, two at most, the fewer configurations, the simpler. We used to suffer a loss because we had too many configurations. I see many competitors still have a bit too many configurations, each additional configuration is an addition, so we will have our own choices.

Question: How much is the current capacity of MONA?

He Xiaopeng: We have reached 10,000 units last month, we have expanded our capacity more than once, you will see the capacity in November, December, and January next year, climbing very quickly every month. The speed at which we increase production may not completely match the speed at which our orders increase, but we are still working hard.

Question: What is the overall strategy for the European market?

He Xiaopeng: Regarding the global market strategy, we have several basic logics: first, long-termism, second, win-win with the locals, third, take the technological route, and fourth, focus on the mid-to-high end. Since the year before last, we have been considering many global models, Xiaopeng's autonomous driving, from light maps, light radar, high computing power, all are seen from a global perspective, not just from a local perspective in China Question: Do you think the tremendous success of Chinese brands in China in recent years can be quickly replicated in markets like Europe?

He Xiaopeng: The tremendous success of Chinese brands in the automotive field in recent years comes from the Chinese market, not necessarily from a global market position. For example, the proportion of sedans in China is still very high, but in Europe, the proportion of sedans is already very low.

One of the reasons why Xiaopeng's P7+ is coming to Europe is because it has space for SUVs. Because Europe values space very much, it is not about the second-row space, but about the trunk space.

From another perspective, the success of China in the past five years has only been achieved in the specific Chinese market, not globally, and not comprehensively. Chinese automotive companies need to humbly continue learning from global peers.

Question: In terms of development in Europe, will you prioritize contract manufacturing or building your own factories?

He Xiaopeng: Our internal ideas are different. When we first entered China, Haima Automobile helped us with contract manufacturing. I have great respect for Jingzhu and Haima Automobile, as they have truly provided us with great help. If there is a good choice, I would prefer contract manufacturing. But this is not my decision, it is Fengying's decision.

Question: You mentioned earlier that you will bring some models to Europe, which models might be brought over?

He Xiaopeng: We have already made it clear that we have done G9, G6, P7. There are a few more models to come, which we may make global. The number of cars we have globally is relatively small. We hope to serve the global market because Chinese standards are not completely consistent with global standards.

Question: At the recent auto show, which model are European customers most interested in?

He Xiaopeng: From a data perspective, they are more interested in G6 because it is cheaper and smaller. I expect each of our models to do well in this niche market. After G9 and G6 have achieved first place in several countries, it is in this niche market, such as mid-to-large pure electric SUVs. During this period, we are not pursuing the broader market too much. We still want to focus on doing technology well.

Question: Will Xiaopeng choose to produce extended-range products in the future?

He Xiaopeng: Both electric and hybrid vehicles will have good development in the next decade, so we are also looking into this. I have already shared with everyone that we use hybrids for flying cars.

However, we also see that plug-in hybrids or extended-range vehicles each have their own advantages and disadvantages. We have been thinking about whether AI combined with pure electric technology can bring about changes and make something different.

Question: Different brands have different ways of developing in the European market. What is your view?

He Xiaopeng: In Europe, there are currently two situations. The first is self-operation, just like in China, doing everything on our own. The other is to work with local partners, where they help us with dealerships. We may feel that working together with partners for mutual benefit is better overseas Question: Is globalization the goal of XPeng, or the process of XPeng?

He Xiaopeng: We believe that globalization is the inevitable path for future Chinese automotive companies, or large companies. On this inevitable path, the focus should not be on how many users or how much revenue and profit we have. Instead, we should think about how we can become a company loved by users in multiple countries around the world in the long term.

So I may be a bit unconventional. I don't have specific requirements for annual sales and profits in globalization. The requirement is to provide excellent service.

In the field of globalization, we have laid a solid foundation for a long time before actually embarking on globalization. I particularly dislike the approach of going straight in and saying, "We have appointed a general agent in this country, and then we will push inventory regardless of whether they can sell it or not, since they have already purchased it." That is something I do not approve of