XPeng and Li Auto, each going their own way

The financial reports of Li Auto, XPeng, and NIO all demonstrated their respective characteristics.

Li Bin enjoys making friends with everyone. During the Q&A session at the investment bank, he directly calls the other party by name, adding a sense of closeness to this serious environment. He Xiaopeng is principled, with clear boundaries between what he can and cannot answer. His responses rarely contain ambiguity. Li Xiang's pursuit of efficiency is reflected in the financial report meeting, which was the shortest among the three companies, with the Q&A session never exceeding half an hour.

For a long time, Li Auto was the first to release its financial report among the three, followed by XPeng, and then NIO.

However, the order of the release of the 2024 first-half financial reports changed this time.

XPeng was the first to announce its half-year financial report on August 20th, followed by the unveiling of the MONA M03 in Beijing seven days later. Li Auto chose to release its half-year report the day after the M03 announcement. NIO, on the other hand, announced its data on September 5th, the fifth day of the LeDao offline store opening, with the LeDao L60 set to announce its listing price two weeks later.

With three months left in 2024, based on the half-year reports, all three companies have introduced new products or brands, and their financial figures have improved year-on-year.

NIO: Direct Sales Dominance

In the first half of 2024, NIO achieved sales of 87,000 vehicles, with an average monthly sales of nearly 15,000 vehicles, a year-on-year increase of 60.2%. As a result, the total revenue for the first half of 2024 was 27.354 billion RMB, a 40% increase compared to the same period in 2023, which was 19.448 billion RMB.

It is worth mentioning that NIO achieved record highs in revenue and deliveries in the second quarter: revenue in the second quarter was 17.45 billion RMB, a year-on-year increase of 98.9% and a quarter-on-quarter increase of 76.1%; deliveries were 57,400 units, a year-on-year increase of 143.9% and a quarter-on-quarter increase of 90.9%; the gross profit margin for the entire vehicle was 12.2%, an increase of 6 percentage points year-on-year and 3 percentage points quarter-on-quarter.

In terms of research and development, NIO invested the most among the three companies, totaling 6.083 billion RMB. However, Li Auto's R&D total investment for the first half of 2024 was very close at 6.076 billion RMB.

In the first half of the year, NIO's gross profit margin was 8%. For the second half of the year, NIO's guidance for the third quarter is 61,000 to 63,000 vehicles, a year-on-year growth of 10% to 13.7%.

The most recent focus for NIO is the LeDao L60, with the final price set to be announced on September 19th.

Li Bin mentioned during the financial report meeting that the price would be lower than the pre-sale price of 219,900 RMB, but considering the cost, it will not be significantly lower. The L60 inherits NIO's consistent quality. From the launch event in June to the official listing, it has kept everyone eagerly anticipating.

LeDao operates through independent channels, maintaining a direct sales model but an authorized after-sales model. By September 1st, 105 offline stores had been opened nationwide, with four in Beijing, one in each direction. Automotive Business Review recently visited an offline store outside the Fourth Ring Road in Beijing.

This store is not far from a Tesla direct store, with only a Red Flag store in between. The L60 directly competes with the Tesla Model Y. Whether this statement has become part of the location strategy is unknown. In any case, after visiting LeDao or Tesla, customers can compare the two At present, the store has not provided test drives yet, only static experiences are available. The staff in the store told the automotive business reporter that his personal order volume has exceeded one hundred.

Regarding deliveries, due to NIO's past difficulties in ramping up production, deliveries have always been closely watched by the public. It was also mentioned again at the financial report meeting.

Li Bin said that a small number of L60s will be delivered in September, with mass deliveries scheduled for the end of this year.

"The current pre-order situation for the L60 is very good, exceeding expectations. There will be a ramp-up process in the supply chain. We hope to achieve 10,000 deliveries in December this year, and at some point next year, reach 20,000 deliveries in a single month. The market targeted by the L60 is one with over 8 million vehicles, combined with BaaS, charging and swapping networks, it is very competitive. From a sales volume perspective, its upper limit is much higher. The medium to long-term operating goal of the L60 is a 15% gross profit margin for the vehicle." Li Bin said.

From the L60's launch event in June to the large-scale deliveries that followed, a delivery cycle of nearly half a year may lead to a certain proportion of cancellations, which is one of the challenges NIO faces. Another challenge is how to reach more users with a limited number of offline stores. The staff told the automotive business review that Beijing will increase to 7 direct stores, but this number is still insufficient for a first-tier city with a population of over 20 million.

Many car companies are currently focusing on online traffic diversion, and NIO has also adopted this model. The head of user services at NIO, Qinghua, has started a 36-day live broadcast, driving the first offline L60 to 70 cities, visiting local offline stores and users, which is also a way to promote the product.

"We have set strict standards for the decoration costs of NIO stores, with each store not exceeding 1 million RMB. Our goal is to improve the investment efficiency of the stores, and the staffing is based on the number of locked orders and deliveries to allocate NIO's sales personnel." Chief Financial Officer Qu Yu said at the financial report meeting.

Next to this NIO store is a Tesla store, and the staff there does not seem to be worried about the threat NIO may pose. She told the automotive business review, "It's a good thing that NIO is opening next to us. Usually, there are not many customers here, so with more people coming in the future, the customer flow will increase. There are many cars that compete with Tesla, but we only compare with ourselves. Our car interior is very environmentally friendly, with our own three-electric system. In addition, our chassis is very excellent, the car must be driven to be fully evaluated." This young Tesla salesperson confidently told the automotive business review.

XPeng: Are Direct Sales + Authorizations Effective?

XPeng's financial report shows that it achieved revenue of 14.66 billion RMB in the first half of the year, with automotive sales revenue accounting for 12.36 billion RMB, or 84.3% of total revenue, and service and other sales revenue of 2.296 billion RMB.

The revenue growth is related to XPeng's delivery performance in the first half of the year. In the first half of this year, XPeng delivered a total of 52,000 vehicles, a year-on-year increase of 25.6%. During this period, the delivery volume of the higher-priced X9 model rapidly increased, with a cumulative delivery of 13,000 vehicles in the first half of the year, which was one of the factors contributing to the increase in automotive revenue. Another source of income for XPeng comes from its cooperation with Volkswagen, which has provided XPeng with another way to thrive In terms of research and development, XPeng paid a total of 2.817 billion RMB in the first half of the year. This expense is lower than NIO and Li Auto, but considering XPeng's overall number of employees, sales volume, and the proportion to revenue, it is not low.

He Xiaopeng provided an outlook for the third quarter, expecting to deliver between 41,000 to 45,000 vehicles, a year-on-year increase of 2.5% to 12.5%. With the start of deliveries for the MONA M03, September will be its first complete delivery month, and the most direct reflection of its initial sales volume.

On August 27th, XPeng held a grand 10th-anniversary celebration in Beijing, which also served as the launch event for the MONA M03. During the group interview that evening, the number of orders had already exceeded tens of thousands, and within the next 48 hours, XPeng officially announced that the number of confirmed orders had exceeded 30,000 vehicles. The next challenge will be testing XPeng's internal production and delivery capabilities.

Before and after the launch of the M03, automotive business reviews visited XPeng's offline direct stores and authorized stores. Feedback from the staff at the Beijing store indicated that a certain number of customers had placed orders, but they told the automotive business review: "The places where the most M03 orders were placed are not in first-tier cities. It is said that Beijing, Shanghai, and Guangzhou are not selling well in second and third-tier cities."

According to the big data provider for dealership customer flow, Tu Qiangyuan's "Qiliu" observation data, after the release of the M03 on August 27th, the first weekend saw a peak in foot traffic at stores nationwide. At XPeng's authorized store outside Beijing's Fourth Ring Road, the average foot traffic on weekends is around 50 groups, but on August 31st, it surged to 99 groups. In other cities, the surge was generally even higher.

With the strong sales of the M03, XPeng's team's confidence will also increase. In the second half of the year, they will also launch the P7+, with sales expected to further increase.

One of XPeng's challenges is how to maintain the strong sales of new models. Previously, the G6 experienced a brief surge in sales, followed by a decline. XPeng's channels currently consist of direct stores and agent stores. Last year, they eliminated over 130 stores at the bottom internally, while introducing more than 160 excellent dealer partners through the "Jupiter Plan," expanding coverage to 40 lower-tier cities.

Is the combined strength of agent stores and direct stores 1+1>2 or 1+1<2? Continuous observation of the sales situation of the M03 is still needed.

Li Auto: Making Money from Financial Management is Better than Selling Cars

Li Auto's financial report for the first half of 2024 shows revenue of 57.31 billion RMB, with vehicle sales revenue accounting for 54.57 billion RMB, or 95.2% of total revenue. The revenue change is related to the company's sales growth. In the first half of the year, Li Auto delivered a total of 189,000 vehicles, a year-on-year increase of 35.8%. The low-priced model Li Auto L6 has been contributing increasingly to the delivery volume since its launch on April 18th, achieving over 20,000 deliveries in a single month in June.

Intense price competition in the first half of the year led Li Auto to make a price reduction decision on April 22nd.

For all models under its lineup, Li Auto officially reduced prices by 18,000 to 30,000 RMB, and compensated owners who purchased new models after the price reduction, including the Li Auto Mega and the 2024 L series, by making varying degrees of compensation through price differentials In the second quarter delivery structure, the proportion of low-priced model Li Auto L6 gradually increased. According to calculations, the delivery volume of this model accounted for 36% of the total delivery volume in the second quarter, while the delivery volume of the high-priced models Li Auto L9 and L8 was affected by Aito M9 in the market competition, leading to a decrease in market share.

The combination of these factors resulted in an average unit price of 279,000 RMB in the second quarter, a decrease of 22,000 RMB compared to the previous quarter, resulting in a gross profit margin of 18.7% for the quarter, a decrease of 0.6 percentage points compared to the previous quarter and a decrease of 2.3 percentage points year-on-year. Li Auto's gross profit margin for the first half of the year was 19%, a decrease of 1.5% year-on-year; the company's overall gross profit margin also decreased by 1.2 percentage points year-on-year to 20%.

The decline in gross profit margin coupled with increased expenses led to a 46.8% year-on-year decrease in Li Auto's net profit to 1.7 billion RMB in the first half of the year.

During the first half of the year, the company's research and development expenses increased by 42% year-on-year to 6.1 billion RMB. Li Auto attributed this mainly to the increase in expenses to support the company's expansion of product portfolio and technology, as well as the increase in employee compensation due to the growth in the number of employees.

Currently, Li Auto has a total of 30,899 employees, including 5,373 R&D personnel, 11,095 production personnel, 12,083 sales personnel, and 2,348 general and management personnel. This number far exceeds XPeng, which currently has a total of 13,261 employees. However, in terms of R&D personnel, XPeng has a team of 5,619 members, slightly higher than Li Auto. The compensation of these employees has also contributed to the increase in Li Auto's related expenses.

Li Auto sold 189,000 vehicles in the first half of the year, generating operating losses due to high expenses. However, relying on investment income of 1.439 billion RMB, which directly covered the operating loss of 1.17 billion RMB, the net profit surged to 1.692 billion RMB. This portion of gains and losses directly accounted for 85% of Li Auto's net profit in the first half of 2024.

As early-stage new forces, Nio, Li Auto, and XPeng have actually each gone their separate ways, although people still like to group them together, they have already developed different models.

Author: Zhang Linyu, Source: Automotive Business Review, Original Title: "Nio, Li Auto, XPeng, Each Going Their Own Way"