*Author: Feng Jingang
Introduction
The turning point has arrived, “Work hard.”
Recently, many data have shown that the turning point in the development of new energy vehicles has arrived.
In terms of the penetration rate of new energy vehicle sales, after exceeding 50% in Norway, other countries and regions around the world have also successively come up with good news, including a Q1 penetration rate of 15% in Europe and a March penetration rate of over 10% for new energy passenger cars in China, and a Q1 penetration rate of 31% in Shanghai.
In terms of brands, Tesla’s global monthly sales exceeded 100,000 units for the first time, and Chinese new energy development stalwarts such as NIO Xiaoli maintained a monthly sales volume of around 5,000 units, and are making a push towards 10,000 units, while Lingouzha and other mid-to-low-end brands are also unstoppable.
While the global development of new energy is in full swing, the financial performance of each company will be the key to supporting sustainable development. Will it be walking the volume but not the price? Or will it be soaring quantity and price?
On May 13, XPeng released its 2021 first-quarter financial report, which showed sales of 13,340 units, revenues of 2.951 billion yuan, and a new high gross margin of 11.2%. From the Q1 financial report, XPeng belongs to the soaring quantity and price group.
So, what else is there to look for in the XPeng financial report? What did He XPeng say during the conference call?
Financial Highlights – Gross Margin of 11.2%
Let’s start with the finances. XPeng’s total revenue in the first quarter was 2.951 billion yuan, an increase of 616.1% from the same period in 2020, which is a significant growth.
Among them, the revenue from car sales was 2.810 billion yuan, an increase of 655.2% from the same period in 2020.
Based on the first-quarter sales volume and revenue from car sales, XPeng’s average selling price for the quarter was about 210,000 yuan, which is nearly half that of NIO, but ranks high among all Chinese car brands.
While the overall revenue increased, XPeng’s gross margin also exceeded 10 percentage points for the first time, with a Q1 gross margin of 11.2%, compared to -4.8% for the same period last year and 7.4% for the fourth quarter of 2020.
Compared to high-end brands such as NIO and Ideanomics, XPeng’s gross margin for the mid-to-high-end market is not high, but compared to traditional car brands, this gross margin is quite considerable.
Regarding gross margins, He XPeng believes that start-up companies should not maintain very high gross margins.
Although revenue and gross margins have reached new highs, XPeng is still in the red during Q1 with a net loss attributable to shareholders of -787 million yuan, which is lower than the market’s expected net loss attributable of -969 million yuan.
In terms of cash flow, XPeng has cash, cash equivalents, restricted funds, short-term deposits, short-term investments, and long-term deposits totaling RMB 36.2 billion, and the financial situation is still good.
For Q2, XPeng has made predictions with total revenue between RMB 3.4 billion to RMB 3.5 billion, with a year-on-year increase of about 475.5% to 492.4%, with a slightly lower growth rate.## Highlights on Sales – Almost 5-Fold Year-on-Year Growth
Regarding Q1 financial report, XPeng Motors Vice Chairman and President Gu Hongdi summarized, “Good financial and strong cash position enable us to better implement our growth strategy, consolidate our competitive advantages and seize the huge growth opportunities in the field of intelligent electric vehicles.”
Looking at sales figures, XPeng Motors delivered 13,340 vehicles in Q1, an increase of 487.4% compared to the same period in 2020 when 2,271 vehicles were delivered, achieving an almost 5-fold year-on-year growth.
In terms of specific models, G3 delivered 5,366 units, ranking first in the China A-level pure electric SUV market in Q1.
P7 delivered 7,974 units, ranking third in the China B-level pure electric sedan market in Q1. Since deliveries began in June of last year and until Q1 of this year, P7 has delivered a cumulative total of 23,000 vehicles.
In addition to the domestic market, XPeng Motors also entered the Norwegian market last year. According to the financial report, XPeng Motors exported more than 300 G3 vehicles to Norway in Q1.
Furthermore, XPeng Motors stated, “P7 will also begin deliveries in Norway in the second half of this year, and we will continue to actively expand our sales, delivery and service systems in Norway and more European countries.”
Regarding Q1 deliveries, XPeng He said, “Despite the traditional sales off-season and the challenge of chip shortages in the first quarter, our vehicle deliveries still reached a historical record high, laying a good foundation for the start of 2021.”
Regarding the chip shortage adjustment, XPeng He said during the Q&A session, “It will be relieved in the third quarter, and more pessimistically, probably in the first quarter of next year.”
Highlights on Autonomous Driving – A Payment Rate of Up to 20%
Turning to intelligent aspects, XPeng’s smart labels were further highlighted in the first quarter, whether in terms of first generating revenue reports or in terms of NGP starting to be installed in cars. More details were divulged in the financial report.
In the P7 vehicles delivered in Q1, 96% supported XPILOT 2.5 or XPILOT 3.0. Particularly noteworthy is that the cumulative payment rate for XPILOT 3.0 exceeded 20%, reaching about 25% in March this year, which leads the industry.
Autonomous driving also appeared for the first time in the financial report. XPeng He said during the earnings call, “In this quarter, our vehicle revenue for the first time included separately charged revenue for XPILOT autonomous driving software. I believe we are the only car company in China that has achieved the separate charging of full-stack self-developed autonomous driving software.”
According to XPeng He’s comments during the Q&A session, XPeng’s software revenue was 80 million yuan in Q1, including 50 million yuan from last year and 30 million yuan in the first quarter of this year. There will be more significant growth in the second quarter.
Regarding these changes, XPeng He said, “I believe XPILOT software monetization will become a sustainable source of revenue and profit for us, in addition to the sales of vehicle hardware.”On January 26th this year, XPeng pushed the NGP high-speed automatic navigation assisted driving function to car owners. As of March 31st, NGP has assisted in driving 2.3 million kilometers, and grows by more than 1 million kilometers per month.
In addition, XPeng also revealed that for vehicles that have activated NGP, the NGP mileage penetration rate exceeds 50%.
In March of this year, XPeng conducted an NGP expedition with a mileage exceeding 3000 kilometers, the longest in China. The core data showed that the average number of manual takeovers per 100 kilometers was 0.7 times, and the success rates of lane change, overtaking, ramp and tunnel passing all exceeded 90%.
Regarding this, He XPeng believes that “I believe it leads all currently commercially available self-driving systems in the market.”
As the core of autonomous driving, XPeng Motors has achieved rapid algorithm iteration on a weekly basis.
He XPeng said, “With the continuous improvement of P7 deliveries, I believe XPeng Motors will have the largest and fastest-growing fleet with data loop capability on public roads in China.”
New Car Highlights-P5 Demand Exceeds Expectations
Looking at the new car, just before the Shanghai Auto Show in April, XPeng released its third car, the P5. Although the result was not satisfactory, according to the financial report information disclosed this time, market demand exceeded expectations and it is highly possible that the P5 will become the mainstay of XPeng’s sales.
XPeng said, “P5 was open for reservation for 53 hours before the Shanghai Auto Show, and the amount of intention fees received exceeded 10,000, exceeding our expectations.”
In the QA section, He XPeng further explained that “after the release of P7, the feedback from sales staff was under a certain pressure at that time. But the feedback for P5 is very positive, and we are very confident that its sales data will far exceed that of P7.”
In addition to the P5, XPeng also launched the phosphate iron lithium version (LFP version) of G3 / P7. He XPeng said in QA that “the demand for phosphate iron lithium is higher than originally predicted. The demand for LFP battery cores has rapidly increased for both G3 and P7, and the order quantity has exceeded the original 10% and 20% ratio.”
However, XPeng also stated that due to short-term difficulties in keeping up with LFP battery core production capacity, it will take about a quarter to ramp up, so there are still challenges in the supply of battery cores in the second quarter, which will be resolved in the third quarter.
Also, XPeng revealed the cost reduction brought by the LFP battery cores, which decreased by 5-10% in the first quarter. XPeng said, “We are quite confident that the proportion and gross profit of LFP will further increase.”
Other Highlights-P7 / P5 / New G3 Convergent Production
Looking at other details, XPeng disclosed a small detail in the financial report:In terms of production and manufacturing, the production line transformation of the P5 and P7 co-line production in Zhaoqing Factory has been completed, and the prototype trial production of P5 is underway. We believe that with the co-line production of P7, P5, and the new G3, manufacturing costs will be significantly reduced.
Different models and platforms, co-line production, XPeng is sparing no effort in technological innovation in production.
In terms of retail channels, as of March 31, 2021, XPeng’s sales and service network has included 178 sales outlets and 61 service outlets, covering 70 cities. By the end of this year, XPeng plans to increase the total number of sales outlets to about 300, covering more than 110 cities.
In terms of supercharging layout, as of March 31, 2021, XPeng’s brand of supercharging stations has been put into operation, covering 172 stations (with a target of 500 by the end of the year) and 60 cities. By the end of April, XPeng’s free supercharging system had more than 1,000 supercharging stations, covering over 160 cities.
On April 30, XPeng announced the formal connection of the Sichuan-Tibet Highway, including one supercharging station and 12 destination charging stations.
The supercharging network has become an important embodiment of XPeng’s product strength, playing a key role in eliminating consumer anxiety about battery life.
At the same time, the improvement of the supercharging network will also help XPeng reduce the battery capacity of the whole vehicle, eliminate range anxiety, reduce costs, boost product competitiveness, promote terminal sales, and complete the “Tesla closed loop”.
It is worth mentioning that XPeng announced in April the construction of its third factory in Wuhan, with a planned production capacity of 100,000 vehicles. Coupled with the factories in Zhaoqing and Guangzhou, XPeng’s cumulative production capacity has reached 300,000 vehicles. With moderate modification and increased shifts, peak production capacity of nearly 500,000 vehicles can be achieved.
Regarding the consecutive landing of Guangzhou and Wuhan factories, XPeng stated that it is “laying the foundation to embrace the arrival of the full intelligence of the automobile industry.”
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.