Is Xiaopeng Motors really going to achieve what Elon Musk boasted about?

Musk's ambitious plan to build a $150,000 Tesla may now be intercepted by He Xiaopeng.

After partnering with Volkswagen for over a month, Xiaopeng Motors is making another big move: acquiring assets from Didi Chuxing.

On August 28th, Xiaopeng announced that it will issue an initial 3.25% increase in Class A common stock to "bundle" the acquisition of assets, research and development capabilities, and personnel teams related to Didi's smart electric vehicle project. They will launch a pure electric sedan priced at around 150,000 yuan, with the project codenamed "MONA". It is expected to be mass-produced in 2024, with a minimum initial annual sales target of 100,000 units and more in the future.

This means that Xiaopeng will have more initiative in the second half of the intelligent era. If successful, its significance will be no less than BYD's pricing power in the first half of the electric vehicle era, directly posing a "lethal threat" to Tesla in the 100,000-200,000 yuan market.

This story naturally excites investors. On August 28th, Xiaopeng's Hong Kong stock rose by a maximum of 21.8% during trading hours and ultimately closed with a 10.9% increase.

For Xiaopeng Motors, taking over Didi's car-making project is a "cost-effective business."

During a media briefing on the same day, Xiaopeng's Vice Chairman Gu Hongdi revealed that the reason for choosing to cooperate with Didi is that they have already invested "billions" in developing a highly completed pre-production A-class model, which is "very attractive" to Xiaopeng.

Another cost-effective aspect is Didi's sincerity. Because the cooperation between the two parties includes a betting agreement, Didi needs to help Xiaopeng achieve the sales KPI for this car within its own system.

Gu Hongdi revealed that in addition to the immediate delivery of 3.25% equity in exchange for the other party's assets, Xiaopeng will also have an additional 1.75% equity as an incentive. If Didi achieves annual sales of over 100,000 units for "MONA," Xiaopeng's shareholding ratio can be increased to a maximum of 4.26%. If they achieve sales of 180,000 units or more for two consecutive years, the shareholding ratio can be increased to nearly 5%, with a total consideration of HK$5.835 billion.

In terms of specific division of labor, Xiaopeng will continue to develop and promote the mass production of "MONA" in the early stage, and will be responsible for part of the car's sales to consumers. Didi will operate "MONA" within its ecosystem and deliver it to the B2B travel market.

The A-class market has always been the most important segment of the automotive market. According to data from the China Association of Automobile Manufacturers, in 2018, A-class car sales accounted for 60.7% of the total car sales, and this proportion still remains at nearly half in the first half of this year. However, the penetration rate of new energy vehicles in the A-class market is less than 20%, the lowest among all sub-markets.

This is also the most fiercely competitive segment in the Chinese automotive market, and it used to be firmly controlled by joint venture fuel vehicle companies such as Toyota, Honda, and Volkswagen.

In this market, consumers not only pursue the improvement of functional configurations but also value cost-effectiveness. This puts pressure on manufacturers to balance configuration and cost. Nowadays, BYD, Great Wall, and other automakers have gradually conquered the most important territory of fuel vehicles by offering cost-effective options with the same price for both fuel and electric vehicles. In fact, Musk has been talking about producing a $150,000 Model Q for several years. The plan is to sell 10 million Model Qs by 2030.

However, investors have been waiting for years for Musk's boastful claims to materialize, but they have yet to see any results.

After partnering with Didi, Xiaopeng Motors may be the first to achieve a sub-150,000 yuan pure electric vehicle with intelligent driving capabilities, challenging Musk.

Xiaopeng hopes to enter the market with its own flying architecture combined with XNGP intelligent driving, offering a high cost-performance ratio and becoming a disruptor in the new A-level market.

He Xiaopeng is quite confident about this and mentioned that this is just the beginning. In the future, they will even launch a second or third brand in this market.

Whether it's Tesla, BYD, or Xiaopeng, having absolute dominance in the A-level automotive market is the path to becoming a leader in the electric intelligent era for any car manufacturer.

As intelligent driving gradually captures the minds of users in the second half, the penetration rate of intelligence will become a key indicator for players to compete, just like the penetration rate of electrification in the first half.

Can Xiaopeng, who has taken the lead, continue its advantage and break free from the constraints of scale in the second half of the intelligent era? With partnerships with Volkswagen and Didi, Xiaopeng's new story is just beginning.