Remarks from He XPeng
In Q4 2020, we broke our quarterly delivery record, with a total of 27,041 vehicles delivered for the year. We generated RMB 5.8 billion ($900 million) in revenues and achieved positive gross profit for the first time. In 2020, which marked the first year of China’s smart EV development, XPeng has remained vertically integrated and differentiated through our proprietary products, driving the industry forward.
Smart cockpit and NGP
In October 2020, we launched the OTA upgrade of our second-generation Smart Cockpit and cloud system, enabling multi-scene interaction through voice commands inside the vehicle. Customer voice usage rate exceeded 90% daily.
NGP has been activated on 20% of our P7 models and users have driven over 1.3 million kilometers. More than 50% of available routes are enabled with NGP. We will conduct a long-distance expedition using NGP on the Guangzhou-to-Beijing expressway in March. We will introduce more NGP functionalities, including Memory Parking, and other enhancements could be expected.
New car models & production capacity
On March 3, XPeng launched lithium iron phosphate versions of the G3 and P7, which are planned for delivery in April and May, respectively, thus expanding the customer base.
In Q2 2021, XPeng will release the third volume production smart EV model equipped with automotive-grade LIDAR, to be delivered in Q4. XPeng will also launch a new Smart Cockpit in 2022, powered by the 4th generation of the XPILOT hardware platform. A mid-term facelift of the G3 model is expected in Q3.
Our Zhaoqing plant will increase its annual production capacity to 10,000 and our Guangzhou base is expected to start production in Q3 2022.
Charging solutions & service locations
As of December 2020, XPeng has 159 Supercharging Stations, covering 54 cities. We plan to significantly expand our Supercharging Network, aiming to roll out over 500 chargers nationwide by the end of 2021. The XPeng Supercharging Free Plan started in 100 cities in 2020 and will be expanded to over 200 cities this year. The plan will also be extended to airports, highways, and other public charging scenarios.
XPeng currently has 160 sales and service locations, including 72 self-operated sales outlets and 54 service centers. Over 300 service locations are expected to become available by the end of this year, covering 110 cities.
Other updates:
Since December 2020, XPeng G3 has been delivered to customers in Norway. Our services will be further enhanced in 2021.
The projected deliveries for Q1 is approximately 12,500 units, generating RMB 2.6 billion in revenue.
Q&A
Q: What impacts and challenges do you foresee for the new lithium-ion phosphate models?The next 6 months will be a focus for us on the battery. With the release of the lithium iron phosphate version of our vehicles, there will be new challenges in the second quarter. Since the lithium iron phosphate battery is new, we will also work closely with suppliers. The second quarter will be a ramp-up process, and we believe there will be a significant increase in the third and fourth quarters.
Based on our experience with the G3, with a range of less than 500 km, we are confident in the gradual and rapid scaling of the lithium iron phosphate version. 20% of the new P7 orders are for the lithium iron phosphate version, and we expect healthy growth in Q2.
Q: What are the growth expectations for the next two quarters? What are the expectations for the second half of the year? What impact does semiconductor shortages have?
A: We will be introducing new products in each of the next three quarters. We have already ordered 2-3 months of supply, and we are closely monitoring further progress. Currently, we are not greatly affected, with smaller volume compared with some large OEMs, but we will still pay attention to industry trends.
Q: Will XPILOT adopt a subscription model? Will the higher version of XPILOT with a LIDAR result in an increase in price?
A: Charging will be adjusted based on the level of XPILOT, and subscription models will be based on customer and market feedback, but overall pricing will undoubtedly increase.
Q: What are the sales expectations for different battery version vehicles?
A: The lithium iron phosphate version accounts for 20% of P7’s new orders and 10% of G3’s new orders. This growth will continue, with more P7 orders for assisted driving configurations. In terms of profits, there are two advantages to introducing lithium iron phosphate versions: increased sales and lower costs. Both the P7 and G3 will bring us profit growth.
Q: XPILOT revenue is conservative in Q1. What is the expected revenue for XPILOT 3.5, and the penetration rate?
A: The activation rate for XPILOT 3.0 on P7 is over 20%, and as we update NGP in January, the penetration rate will increase. As XPILOT is upgraded, new models will remove old versions. The third model will not have XPILOT 2.5, and all paid functions will be XPILOT 3.0 or higher. Our fourth model will only have XPILOT 4.0. In the near future, we will explore the feasibility of making automated driving hardware standard on all models and charging for it through software.
Q: Is NGP expected to be implemented in cities by the end of the year for the next model, earlier than originally planned? Is the launch date for XPILOT 4.0 planned for 2022? Will the progress of autonomous driving R&D be advanced in the next two years?The development of XPILOT 3.0 in 2020 has given us more confidence in 3.5, 4.0, and 5.0. 3.5 and 4.0 will be released moderately early because of the large amount of data now being used in 3.0. LIDAR and higher-level computing power will be standard in the future. LIDAR can work together with cameras and millimeter wave radar, and computing power can interact with various road conditions. The wider application of autonomous driving in China will take longer, but the advent of quasi-unmanned driving will be faster than expected. With regards to R&D investment, it has been greatly increased this year compared to last year, with a focus on autonomous driving, software, data algorithms, and internationalization.
Q: How does the overseas market differ from the domestic market? Is there a demand for suppliers for autonomous driving internationalization, software, and hardware? Will there be challenges or bottlenecks for the intelligent cockpit, which is a strength and internationalization?
A: As opposed to others, I believe that the overseas market requires a long time to establish. Currently, our domestic and international markets have not undergone major changes to ensure product lines and operations remain stable. The development progress of XPILOT 4.0 overseas is the same as in the domestic market and is mainly being promoted in Europe and developed areas. As for the intelligent cockpit, we will expand the team for independent research and development this year, which may take one year to lay the foundation, but we will eventually improve greatly.
Q: Previously, it was mentioned that one-third of the 1,500 research and development engineers in Xpeng Motors are part of the autonomous driving team. What will be the scale of the team’s expansion in the future?
A: Starting this year, the research and development, sales, and service teams have all grown. We expect to double our research and development staff by the end of 2021 and will locate technology research and development personnel in the ecological system.
Q: Currently, the selection rate of the assisted driving function is still low (about 20% for P7). Have you considered adjusting the strategy, such as reducing the price of the initial assisted driving software to allow more consumers to use it and obtain more data, or increasing the price of advanced assisted driving? Have you considered making high-spec models compatible with low-version assisted driving?
A: First, we do not plan to do this because we need to focus manpower on advancing technology, so we will not be supporting old technology with new models. Second, unmanned autonomous driving will have new extended applications beyond the software costs with better experience and revenue.
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.