Author: Feng Jingang

Today, the 100,000th XPeng P7 rolled off the assembly line at the XPeng factory in Zhaoqing, taking 695 days. It seems like only yesterday when we were working on the “706 P7”. Obviously, whether for XPeng or for the new forces, this is undoubtedly a milestone event.

The success of the P7 has been talked about too much, and it is no longer meaningful to repeat it. After all, it is difficult to escape the three elements of timing, location, and human factors. More importantly, P7’s success has propelled XPeng from an obscure position to a leading position, making it the new leader of the new forces.

So there are too many points for XPeng to summarize about the P7. Such a summary can not only allow the team to relive the passion of past battles and increase cohesion, but also help plan a brand new future along this strategic thread…

For example, when the P7 surpasses 100,000 units, does that mean the G3i should be discontinued? In the industry, such cases are not uncommon.

Traditional independent brands, such as the famous Chery QQ or newer players like the NIO N01, have contributed greatly to the rise of the brand, but they have all been abandoned under the new brand development strategy.

Of course, there are exceptions. Geely’s Haohao, which has become China’s leading independent brand with its A-level car lineup derived from the Haohao, has not been abandoned even to this day, after having opened up Geely’s vital energy.

Therefore, for XPeng, whether to discontinue the G3i will depend on XPeng’s brand strategy and development vision. Especially, with the official launch of the 100,000th P7, this decision has become even more urgent.

In January, XPeng Motors said in response to institutional surveys that the P7 is currently its best-selling model, while the G3i has the lowest sales due to its low price and profitability and will gradually be marginalized. This news immediately sparked speculation.

For XPeng, from the release of the G9 to the transmission of such words, every move is suggestive of an offensive on the company’s brand. So, is XPeng ready?

In terms of data, the Q3 financial report last year showed that from Q1 to Q3, P7 sales accounted for 59.78%, 66.23%, and 76.88%, showing a gradual increase. The sales ratio of more than half indicates that the mid-to-high-end P7 has become XPeng’s mainstay model.

At the same time, as of Q3 last year, XPeng’s average single-car revenue had reached 2.213 million yuan, equivalent to Hongqi, basically entering the entry-level luxury market.In XPeng’s view, the sales structure and single-car income are the core data supports for XPeng’s brand to move upwards. However, it should be pointed out that there is still some uncertainty in these data.

Firstly, has P7 really fixed its position? It remains to be seen. With the arrival of NETA S, WM Motor M7, and Leapmotor C01, which cost between 150,000 to 250,000 yuan, P7 and P5 from XPeng will inevitably face challenges. The important reason why these two sedans from XPeng have achieved success is that they have occupied the vacuum period of the new power intelligent electric vehicle market in advance.

Secondly, currently, there is still a lot of price markup on smart electric vehicles, which cannot objectively reflect the true value of products and brands. Once the market matures, and products with better cost performance enter the market, the market structure may change instantly.

Therefore, the data supporting XPeng’s upward movement should not only rely on these two factors.

In the press release of the production of P7 under 100,000 units, there is such a sentence: “Define luxury with intelligence and continuously lead the smart travel experience.” At least in the view of this “editor,” “intelligence” is the weapon for XPeng to move upwards. Indeed, through intelligence, XPeng has established a differentiated label and stimulated the purchasing desire of young people in recent years.

However, can intelligence really support luxury? On the surface, most brands regard intelligence as the key layout, indicating intelligence is indeed important. However, its implicit meaning is that over time, everyone’s intelligence level will be raised, and there will be no particularly significant difference.

It can be seen that purely attacking the high-end market with intelligence is risky. Products will ultimately return to multi-dimensional competition, and this time will not be too far away.

In fact, from the experience of EV journalists, XPeng’s intelligent functions and configurations are indeed leading, but quality, or convenience of use, still needs to be improved. For other brands, their intelligent functions may not be the most advanced, but they are already sufficient to meet the practical needs of most people.

XPeng should be alert to this difference. After all, intelligence is the foundation of XPeng. If intelligence is shaken, XPeng’s development will inevitably suffer an impact.

Moreover, the upward advancement of the brand is not only determined by product power but also by more tangible brand power.

In an interview in 2020, I asked He XPeng what XPeng’s mission was, and he said it was to provide more convenient and intelligent products for everyone. Before the Guangzhou Auto Show last year, XPeng announced its new brand proposition: Future Travel Explorers. The introduction of the new proposition has made some adjustments compared to the previous one, and its direct factor is naturally the joining of He XPeng.

For the new brand proposition, He XPeng said, “The driving force behind the continuous development of the XPeng brand is the spirit of daring exploration: fearlessly doing cool and valuable things, and doing difficult but right things.” Despite the official rhetoric and He XPeng’s personal touch, the core idea remains unchanged – to explore with value.

Based on this brand proposition, looking at the situation of whether G3i should be discontinued, there is some contradiction.

Currently, due to the high costs of the three-electrification and intelligent new technologies, G3i provides little significant improvement in profits for XPeng, except for a slight increase. From a business perspective, G3i does not have much value for XPeng at present, and whether to discontinue it may just be a matter of time.

However, in the long run, with the decrease of new technology costs, the G3i, which now stands in the mainstream market, will not only have considerable sales but also contribute significantly to profits, and will continue to help XPeng firmly establish its position as the leader among the new forces, holding significant importance strategically. Therefore, G3i may be under tactical pressure, but it is undoubtedly an important support in strategy.

The so-called “valuable exploration” requires the precondition and core value to be valuable. Without value, exploration has no meaning.

Based on this development strategy, what does it matter whether the brand is upward or not? Instead of deliberately launching a brand upward campaign and discontinuing temporarily valueless products, it is better to focus on researching user needs, producing explosive products, exploring market potential, and showing the leadership’s style, which is the real value and meaningful exploration.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.