Does XPeng Motors still have a chance based on the launch of XPeng P7i?


Author | Kaijun Qiu
Editor | Kaijun Qiu

Without any launch event, XPeng Motors has released the P7i. Such a low-key approach is surprising, considering that the P7, which the P7i replaces, is the best-selling car of XPeng Motors.

On March 10th, XPeng Motors announced on official WeChat account and other channels that “XPeng’s brand-new P7i Super Intelligent Coupe has been launched!” It has been nearly three years since the first launch of the P7 on April 27th, 2020.

During this period, the P7 sales soared shortly after its launch, becoming a sales powerhouse for XPeng Motors. However, with the poor sales of the P5 and G9, the P7 has not been redesigned, and the sales have gradually declined as the same-level models become increasingly abundant. Later, XPeng Motors encountered core personnel changes and multiple rumors, which can be said to be a bad momentum.

The launch of the P7i this time can be said to be a cautious move by XPeng Motors after deep reflection, seemingly implying “not seeking merit, but seeking no faults.” It seems that XPeng Motors is waiting for the market situation and public opinion before making plans again.

Does XPeng Motors still have a chance? The listing of the XPeng P7i is undoubtedly a good node to observe XPeng Motors.

Strike while the iron is hot

The XPeng P7i’s launch has achieved nearly the effect of “winning without a fight.” Except for some folk comments that the P7i is a bit pricey, most of them are positive reviews. To sum up, there are several highlights of the P7i’s launch this time.

First, the appearance is still attractive.

The previous coupe appearance of the P7 was one of its selling points. The P7i has not undergone major changes in appearance, except that the overall length of the car has increased by 8mm. In addition, the headlights have integrated laser radar, which completely blends the new hardware into the original design. The main changes are in the colors—the P7i adds the Starry Green color and upgrades the New Moon Silver color. The interior has added the Atmosphere Grey color and upgraded the Gravity Red interior. Therefore, in terms of appearance, the XPeng P7i does not lose points, and can even be considered to have scored slightly higher.

P7i interior adds Atmosphere Grey

Secondly, intelligence is still leading.

The most important part that distinguishes the P7i from the P7 is the further upgraded intelligence.

In terms of intelligent driving, XPeng P7i has offered the highest combination of dual Orin-X chips and dual laser radars. Although the materials are not as lavish as NIO’s, with XNGP self-developed and NGP landing in multiple cities across the country soon, XPeng P7i is still the highest-level player in China’s intelligent driving. At least it is one of them.Regarding the intelligent cabin, the all-new P7i is equipped with the most powerful Qualcomm SA8155P chip currently in mass production, along with the self-developed intelligent in-car system Xmart OS 4.0. Upgraded to full-scenario voice 2.0 from the already best voice assistant in the industry, it can provide industry-leading voice interaction experiences, including vehicle-wide and real-time voice dialogue, four-tone zone recognition, ultra-fast dialogue, and no-network dialogue.

Simplification of the third car model configuration. Having learned a lesson from the overly complex configurations of P7 and G9, the four configurations of P7i are relatively clear. Moreover, regardless of the configuration, the intelligent cabin is fully equipped, and intelligent driving has at least one Orin-X chip to ensure the intelligence of XPeng.

The four configurations of XPeng P7i

Fourth, cooperation between promotion and sales is well-coordinated. The launch of P7i was likely delayed due to its synchronization with sales, but this time P7i achieved “delivery upon launch”. I consulted two XPeng stores in Beijing, both of which had test drive cars available.

According to market observer Sun Shaojun’s research, the presentation and the first batch of test drive cars for XPeng P7i arrived at the store earlier, directly causing a surge in the volume of visitors to the stores, and most stores had the highest number of visitors ever recorded. The average store received 3-4 orders. It can be said that at least in terms of popularity, P7i’s “delivery upon launch” earned successful results.

Image source: Sun Shaojun's Weibo

In addition, P7i has been upgraded in terms of range, charging speed, heat management, seats, chassis tuning, etc., some of which address complaints from P7 users, and some of which keep up with industry advancements, all of which contribute to its positive reception.

Overall, the launch of P7i was not overly promoted, and it was launched in a period of negative public opinion towards XPeng, but it has performed quite well.

Bankruptcy? With over 40 billion yuan in cash…

As new car-making forces like WM, Horizon, Aiways, etc. are on the verge of collapse, some have raised concerns about whether XPeng will be next.

Compared to these companies, XPeng’s situation is completely different, even healthier than start-ups like NIO and Leapmotor that are still in operation.

Xpeng Motors has not released its 2022 financial report yet. As of the third quarter of 2022, Xpeng has a broad cash balance of CNY40.12 billion, although this is CNY1.2 billion less than the second quarter. However, assuming Xpeng’s revenue does not improve, a one-year loss of CNY23.8 billion per quarter multiplied by four would result in a CNY100 billion loss, which is sufficient for four years. Additionally, Xpeng is listed on both the US and Hong Kong stock markets and has government support from Guangzhou and Wuhan.

In terms of Xpeng’s self-generating ability, the core factor is its gross margin. In the third quarter of 2022, Xpeng’s gross margin was 13.5%, which is 2.6 percentage points higher than the second quarter. Xpeng’s gross margin is better than both Li Auto and NIO. During the Q3 earnings call, Xpeng stated that the gross margin would continue to rise in the fourth quarter with the delivery of the high-priced G9 model. However, G9’s delivery might fall short of expectations and negatively impact Xpeng’s gross margin situation.

Although Xpeng’s P5 and G9 models did not perform well, in the 2022 car market, Xpeng Motors ranked third on the newforce terminal sales list, following Hezhong (Nazha) and Li Auto. Xpeng also ranked tenth on the overall new energy vehicle enterprise terminal sales list.

Source: Shangxianshu

Therefore, Xpeng is far from the brink of death. Not only is Xpeng relatively good compared to many new car makers, but it is also relatively good compared to many traditional fuel car companies.

As Li Bin, the founder of NIO, said at the end of 2022, “I think both NIO and Xpeng can survive and even survive well.”

Core capabilities are still one of the strongest

“Short-term delivery fluctuations will not affect Xpeng’s long-term strategy.”

During the Q3 earnings call in 2022, He XPeng said. He firmly believes that intelligence will be the future of automotive competition. The real era of intelligent vehicles will begin in the second half of 2023 and gradually expand, and Xpeng’s leading advantage in mass production of autonomous driving technology will further help the company improve market share.

There are others who share He XPeng’s views.

Regarding intelligent electric vehicles, Li Xiang divides them into two aspects: energy and information technology. The core contradiction on the energy level is resolving the difficulties of charging and high battery cost, which can be addressed through battery swapping, large batteries, and high-voltage fast charging. At the information technology level, Li Xiang summarized the core capabilities as artificial intelligence. “In addition to developing good products, platforms, and algorithm applications, the real competition will occur at the lowest level, including the AI operating system.”

There is a slight difference between Li Xiang and He XPeng regarding the timing. Li Xiang believes that from 2024, high-end and middle-end cars will completely enter the era of intelligent electric vehicles based on Software 2.0.

Li Bin also has a three-stage plan for NIO’s intelligent electric vehicle start-up. The first two stages are aimed at preparing for the third stage after 2025. “I believe that in 2024 and 2025, whether it is a traditional or a new company, whether they have completed their core competence accumulation in the trend of technological revolution towards intelligent electric vehicles, will basically determine their ranking in the final competition and their competitiveness when participating in the competition.”

What is core competency? Li Bin particularly emphasizes research and development. “Although NIO started with full-stack technology research and development, the research and development intensity has increased significantly in the past two years. The R&D expenditure for each quarter has reached a scale of 3 billion RMB. The competitiveness of this R&D output may be revealed in 2024 and 2025.”

Currently, as Li Xiang said, the research and development of intelligent electric vehicle companies is mainly divided into two aspects: one related to electricity, such as batteries, electric drives, charging and changing batteries; the other related to intelligence, such as chips, hardware, products, platforms, algorithms, and even operating systems. The research and development investment in these two aspects far exceeds the traditional research and development model centered on vehicle research and development, so NIO, XPeng, and Li Xiang have all invested a lot of money in research and development.

By 2023, both NIO and Li Xiang will pile up R&D costs over 10 billion yuan, while XPeng will exceed 10 billion yuan by 2025.

NIO and XPeng's Heavy Investment in Intelligent Development

Currently, in terms of research and development and reserve of intelligent technology, of the three, XPeng is the earliest to make heavy investment and achieve the earliest results, with the best team.

In 2019, NIO also had to lay off its autonomous driving team during its darkest moment. It was not until the end of 2022 that NIO’s full-stack self-developed technology was showcased on the NT2.0 platform with the release of NOP+.

Li Xiang focused limited resources on early model development, and adopted an observe and follow strategy for intelligence. After IPO, ideal car has enough funds to invest in intelligent driving research and development, starting with ADAS (Advanced Driving Assistance System), NOA (Navigation on Autopilot), AEB (Automatic Emergency Braking) and other functions, gradually establishing full-stack self-developed capabilities.Except for Xiaoli Wei, including Wang Chuanfu and others, everyone in the new energy vehicle industry believes that the competition in the second half of new energy vehicles is the intelligence, and they are all working hard to develop core capabilities.

Currently, only a few companies such as Xiaoli Wei, Huawei, Baidu, and Hozon are leading the competition in intelligence, and XPeng is at least one of the leaders.

Especially in the smart driving confrontation with Tesla, XPeng Motors has always been at the forefront.

Products and management need improvement

Of course, the setbacks encountered by XPeng Motors in the past year also reflect the problems in the XPeng Automotive system on the way to the smart era.

Comparing to Ideal Motors and NIO Automotive, XPeng Motors did not achieve clarity, coherence and efficiency in product strategy and organizational management, which resulted in some low-level errors.

However, for Xiaoli Wei, all three founders have rich Internet experience. Although they each have their own strengths, they do not have any significant weaknesses, otherwise they would not succeed. They are all at least good product managers.

Regarding corporate management, when Wang Xing and Li Xiang talk about “Who is the Hero in the World of Intelligent Electric Cars,” they put forward one of the logics for the new car-making forces: These three people have all managed teams with more than ten thousand people and have rich management experience, which can hold the big picture of intelligent electric vehicle research and development, production, and operation.

When the problems of XPeng Motors were clearly seen by the outside world, XPeng himself realized it earlier and made adjustments. In the third quarter of last year, XPeng Motors conducted in-depth strategic review and organizational structure adjustment. Regarding his own energy problems criticized by the outside world, XPeng said he would significantly reduce his direct involvement in the ecological enterprise, and focus more on XPeng Motors’ strategy, product planning and research and development, and promote organizational change and upgrading, implement the whole process of customer value-driven production, research, sales and service, so that the company can be more focused and efficient as a whole.

As for the subsequent organizational adjustments, personnel in and out, the results of the adjustments have already appeared.

The XPeng P7i is on the market during a price war, and consumers’ wait-and-see attitude is severe. It is difficult to judge the sales of the P7i. However, XPeng Motors’ core competitiveness still exists. After solving the recent challenges of product and organization, it still has a good chance of returning to the front line of intelligent electric vehicles.

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