Is Xiaopeng leaving its darkest days behind?

Article by Pan Tan

The US stock market once surged by 13.9%, reflecting XPeng Motors’ stock price performance on the evening of March 17th, following the release of its Q4 2022 and full-year financial report.

However, it is worth noting that XPeng’s Q4 performance last year was not impressive:

  • Total revenue: 5.14 billion RMB, a year-on-year decrease of 39.9% and a quarter-on-quarter decrease of 24.7%

  • Total vehicle deliveries: 22,204 units, including 9618 units of XPeng G9

  • Total gross profit: 445 million RMB, a year-on-year decrease of 56.5% and a quarter-on-quarter decrease of 51.8%

  • Overall gross profit margin: 8.7%, a year-on-year decrease of 3.3 percentage points and a quarter-on-quarter decrease of 4.8 percentage points

  • Gross profit margin per vehicle: 5.7%, a year-on-year decrease of 5.2 percentage points and a quarter-on-quarter decrease of 5.9 percentage points

  • Net loss: 2.36 billion RMB, a year-on-year increase of 83.4% and a quarter-on-quarter decrease of 0.6%.

However, after the financial report was released, many people originally thought that XPeng’s stock price would plummet. Instead, an unexpected reversal occurred. What is the reason behind this? I think the most likely reason is that the capital market believes that XPeng Motors’ negative factors have been exhausted, and the worst is already over, it is more likely that the situation will improve in the future.

Significant Changes Internally

In fact, in the conference call of the financial report, XPeng Motors’ Chairman and CEO, He XPeng, also disclosed many changes that XPeng is undergoing, which shows that the company is gradually removing some stubborn problems that have plagued them for many years. Here are the ten main points we summarized from this financial report conference call:

  1. Since the end of last year, XiaoPeng has decisively conducted strategic reflection and adjustment, and implemented a bold optimization of the overall organizational structure, and strengthened the short board of comprehensive ability. XiaoPeng chose to subvert itself and conduct a true second entrepreneurship on a higher dimension and platform.

  2. The strategic adjustment of XiaoPeng has shown significant effects in the first three months of the quarter, and is confident in continuing to consolidate and amplify its achievements in the coming quarters.

  3. The new CEO, Wang Fengying, will be responsible for the product planning, sales, brand marketing, and the entire product matrix system of XiaoPeng. With profound industry experience and market dynamics expectations, coupled with outstanding execution, Wang Fengying will help XiaoPeng to accurately capture customer needs, and greatly improve its brand marketing and sales service capabilities and efficiency.

  4. He XPeng believes that XiaoPeng Automobile is about to enter a turning point, because they have seen what their goals are, what their strengths and weaknesses are, and are not only confident in restoring sales and market share growth, but also attach greater importance to the foundation, including the overall improvement of organizational capability, production capacity, marketing capacity, and cost capacity. This will lay a solid foundation for XiaoPeng’s long-term victory and make it truly possible for XiaoPeng to become China’s and even the world’s No.1 enterprise for intelligent electric vehicles.

  5. In terms of product planning and design, XiaoPeng will focus more on innovation around user-perceivable value and differentiation, and adjust the configuration combination of subsequent models, including new and revised models, and unify the vehicle’s modular design and intelligent consistency.

  6. XiaoPeng has completed the flat management of sales network organization adjustment, and is strengthening network layout and enhancing the training and combat effectiveness of frontline sales personnel. This lays a very good foundation for building a data-empowered sales terminal that is capable of victory and achieving a breakthrough in sales scale.

  7. After the release of P7i, the number of visits and test drives has reached the highest level in recent months. In the current situation where the overall market’s new orders are very weak, XiaoPeng has recently shown an obvious upward trend against the trend. In February, the new order volume increased by 100% compared to January, and with the strong performance of P7i after listing, the new order volume in March increased significantly from the previous month. This is the first victory that XiaoPeng has achieved after the comprehensive transformation and has greatly boosted morale internally.

  8. XiaoPeng’s second heavyweight new model, G6, will debut at the Shanghai Auto Show this year and will be officially launched and delivered in the second quarter of this year. It is believed that G6 will become a hot-selling model ranking among the top in the market. After mass production, it will achieve 2-3 times the monthly sales target compared to P7. In the second half of this year, XiaoPeng will also launch a brand-new pure electric seven-seater MPV, which will meet the needs of family customers who pursue larger space and human-machine intelligent driving.# 9

  9. XPeng has already developed a clear execution roadmap, which will achieve over 50% reduction in the BOM cost of autonomous driving from this year to next year through various means such as technological innovation and configuration optimization, and bring about a 25% reduction in hardware costs including power systems of the whole vehicle.


  1. With the large and rapid adjustment of management, the upgrade and iteration of product portfolio forging and the rapid iteration of marketing system capabilities, XPeng has seen significant changes and effects. He XPeng has a strong confidence that from the third quarter of 2023, XPeng’s sales volume will see a substantial increase both on month-on-month basis and year-on-year basis, and a large proportion of which will exceed the industry growth rate.

Encouraging Signs are Emerging

XPeng’s earnings conference call was a huge source of information, in which He XPeng revealed a lot of information that the public was concerned about. The most impressive part was that XPeng’s overall efficiency, which was most criticized in the past, had improved, and cost control could be optimized to 25%. Such a significant change in cost control ability even made people doubt whether it was true or not.

After the release of the price of G9 at the conference last year, XPeng was soon hit hard. In addition to the complex configuration, the initially announced price was considered uncompetitive, which could not address XPeng’s cost control problem. The gross profit margin of G9 itself was very low, and the room for manoeuvre was limited. Under the overwhelming criticism, XPeng chose to modify the configuration and lower the price, eventually saving a lot of users who were ready to cancel or had cancelled their orders.

From XPeng’s Q4 earnings report last year, the company’s overall gross profit margin was 8.7%, a year-on-year decrease of 3.3 percentage points and a month-on-month decrease of 4.8 percentage points. The gross profit margin per car was only a poor 5.7%, a year-on-year decrease of 5.2 percentage points and a month-on-month decrease of 5.9 percentage points.

As a comparison, the overall gross profit margin of Ideal Auto in Q4 last year was as high as 20.2%, and the gross profit margin per car reached 20%. Meanwhile, Tesla’s gross profit margin and gross profit margin per car in the same period were more than 25%. Only NIO has an overall gross profit margin of 3.9% and gross profit margin per car of 6.8%, which is at about the same level as XPeng.

It is precisely because of the extremely low level of gross profit margin that XPeng will be very embarrassed in the current price war, because the original pricing was already very low, so it is difficult to lower the price further. Can they sell cars at negative gross margins?However, if XPeng Motors really manages to achieve “a cost reduction of about 25% in vehicle hardware, including the power system”, then XPeng Motors will be at the same gross profit level as ideal, and there will be enough means to combat any price wars even in the face of competitors lowering prices.

Do not underestimate the impact of this matter, as the benefits brought by lower costs can be said to be all encompassing. If we use Amazon’s internal flywheel theory to summarize this matter, we can roughly describe it as follows: once costs are significantly reduced, prices will obviously decrease, and sales will obviously increase; a significant increase in sales will strengthen the voice of the supply chain, which will help reduce Bom costs; a decrease in Bom costs will further drive down prices, which will further boost sales, thus forming a virtuous cycle.

It can be said that as long as XPeng’s efficiency and cost control capabilities can be greatly improved, this company will not be far from returning to high speed growth.

To achieve the above effects, XPeng will use various means such as technological innovation and configuration optimization from this year to next year as indicated by He XPeng. Specifically, XPeng will complete several stages of substantial cost reductions in the second half of this year, the first half of next year, and within next year. He believes that a 25% cost reduction does not mean that XPeng is so great, but that XPeng’s cost control in the past has not been good enough.

For example, the XPeng G6 this year will be online with integrated stamping, and the cost of PACK can also be reduced by 40%-50% in the whole vehicle. In addition, the current design of the battery cell platform is also being done, and the cost of battery cells has a considerable downward potential, all of which will contribute to the achievement of this target.

As for whether the goal can be achieved, capital markets may still have doubts, after all, it is not uncommon for business executives to draw a pie for Wall Street investors. I think that the capital market really began to believe that XPeng was coming out of the trough when He XPeng expressed strong confidence in the conference call that XPeng Motors’ sales will see significant increases in quarter-on-quarter and year-on-year from the third quarter of 2023, and a larger proportion higher than the industry’s growth rate.

After all, in the car market that has reached this level of competition, sales can almost explain everything.

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