TAKE 1: Chinese EV maker Xpeng to break even later next year, president says
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Chinese EV maker Xpeng to break even later next year, president says
By Reuters
November 20, 2024
SHANGHAI, Nov 20 (Reuters) - Chinese electric car maker Xpeng is expected to break even sometime later in 2025, its President Brian Gu said, betting that strong demand for its new models and expanding into new overseas markets will improve its profitability. Meeting the goal Xpeng first set in 2023 could make it the first Chinese automaker to turn profitable mainly on EV sales. Rivals BYD and Li Auto (2015.HK), opens new tab are profitable but they rely on hybrids for the majority of total car sales.
"I think we are indeed entering the super cycle," said Gu in an interview with Reuters by phone on Wednesday.
"I think sometime in next year, probably towards the later part or the end of next year, we will see as reaching the break even point... We are in a very confident position to see that becomes more likely."
Xpeng has forecast fourth-quarter revenue above Wall Street estimates, thanks to the introduction of new models Mona 03 and P7+. It said the momentum will extend to the fourth quarter and 2025.
The company is also being helped by the roll-out of Chinese government subsidies of up to $2,800 each for trading in older cars for EVs and more fuel-efficient cars.
Xpeng will launch four new models next year and will ramp up expansion in overseas markets apart from North America, where Chinese EVs face 100% tariffs, a de facto ban, said Gu.
It faces being hit with more than 20% tariffs to sell in Europe but the automaker is exploring all options to address the tariff issue, he added.
When asked if they had seen any progress in their bid to build an independent European factory, Gu said "Nothing is ruled out but I think we need to find a way that fits our current capability rather than do something that may not solve our current perspective."
Revenue from tech services, which nearly doubled in the third quarter from a year ago driven by its partnership with Volkswagen accounted for more than 12% of Xpeng's total revenue.
The company is also working closely with Volkswagen and hopes to expand the technology service partnership with the German automaker to other areas in and outside China, Gu said.
Gu said the company has also been discussing with "dozens" of players in the auto industry on smart driving collaborations.
Xpeng is among Chinese developers of advanced assisted driving systems that have their own large AI models, similar to what Tesla has been doing with its Full-Self Driving, which is expected to be rolled out in China in the first quarter of 2025.
Xpeng has spent 3.5 billion yuan (USD483.07 million) in the last four quarters on artificial intelligence development, including computing power and software development. Such investments will grow steadily next year and become a "large chunk" of its overall R&D spending, Gu said.
(USD1 = 7.2453 Chinese yuan renminbi)
Reporting by Zhang Yan, Brenda Goh; Editing by Himani Sarkar and Louise Heavens
https://www.reuters.com/business/autos-tran...ays-2024-11-20/TAKE 2: Most China carmakers won’t survive next 10 years: Xpeng chief
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Chinese EV manufacturer Xpeng CEO He Xiaopeng said his company aims to balance profitability with long-term success.
Lee Nian Tjoe
Senior Transport Correspondent
Updated Nov 18, 2024, 03:10 PM
SINGAPORE -
Most of the Chinese carmakers today will not survive in the coming decade, and artificial intelligence (AI) technology will be one of the keys to the success of those that remain.This was a point made by Mr He Xiaopeng, chairman and chief executive of Chinese electric vehicle (EV) manufacturer Xpeng, in an exclusive interview with The Straits Times during his visit to Singapore in October.
“From 300 start-ups, only 100 of them survived. Today, there are fewer than 50 companies that still exist, and only 40 of them are actually selling cars every year,” said Mr He, 47, whose company is headquartered in Guangzhou.
“I personally think that there will only be seven major car companies that will exist in the coming 10 years.”He did not specify which Chinese automakers these might be.
He added: “AI is one of the core competencies that the large-scale car companies need to survive. They also have to learn from the global brands in terms of product quality and service levels.”His somewhat grim forecast for Chinese car companies comes at a time when the country’s EV brands are thriving in Singapore. Riding on a surge in demand for EVs, Chinese brands accounted for 52.1 per cent of all EV registrations here in the first 10 months of 2024, compared with 30.3 per cent in 2023.
The number of Chinese car brands in Singapore has also grown – from two in 2018 to nine as at November. Xpeng made its debut here in July.
Industry watchers said motor dealers here have been actively courting Chinese carmakers, with more expected to set up in the city state in 2025.
Since its Singapore launch, Xpeng has registered 212 units.
This puts it ahead of three other Chinese EV brands that made their debut here in 2024 – Zeekr (65 units registered), Chery (48 units) and Seres (one unit). GAC Aion, which launched here in April, has sold 262 units.
In comparison, the top-selling Chinese EV brand, BYD, which has been in Singapore since 2017, is well ahead with 4,560 units registered between January and October.
When asked about Xpeng’s decision to establish a presence in Singapore, Mr He said: “We make medium- to high-end cars. So the market we enter needs to be more advanced and able to afford such vehicles.”
Xpeng, which is in more than 30 countries, has yet to turn a profit.
In the second quarter of 2024, the company reported a net loss of 1.28 billion yuan (S$237.7 million), compared with a net loss of 2.8 billion yuan for the same period in 2023.
Mr He said his company aims to balance profitability with long-term success.
“Now, it involves heavy investment in research and development and brand. This will continue,” he said. “But when the industry stabilises, then profit will be very good.”
In a wide-ranging interview at the brand’s showroom in Leng Kee Road, Mr He also spoke about autonomous vehicles and his company’s ongoing project to build flying cars.
Xpeng uses AI technology to power its autonomous driving system, which was first piloted with some Guangzhou-based cars in 2022. This was expanded to cars from other Chinese cities in the second half of 2023.
It was the first company in China to introduce an advanced driver assistance system that enables the car to tackle urban driving conditions, such as changing lanes to overtake other vehicles, reacting to traffic lights, navigating roundabouts, and avoiding pedestrians and cyclists.
Mr He believes it would be easy to roll out this feature in Singapore because the driving environment is highly regulated and drivers keep to the rules. 
“By 2025, the Xpeng driver will have to take over from the assistance system only one to two times per 100km. This makes driving easier and safer,” he said.
The rare times when a driver needs to intervene, Mr He said, will be during instances such as when he or she prefers to park in a spot that differs from what the car has identified.
The system can be set to mimic the motorist’s driving style.
Mr He’s target is for the cars to behave like an experienced human driver in any given situation and be deemed a “good driver”.
There are six levels of driving automation, ranging from Level 0 to 5, as defined by the US-based Society of Automotive Engineers.
Xpeng’s technology is classified as a Level 3, where the vehicle can detect the environment and do most of the driving. Level 5 vehicles can move independently without any human intervention under all conditions.
The Land Transport Authority told ST that, at present, vehicles approved for registration and sale in Singapore have only up to Level 2 automation, but it will evaluate applications for Level 3 automation. Cars with Level 2 automation can steer and accelerate on their own, but the human needs to monitor the controls and can take over at any time.
Singapore is not about to venture into robotaxis yet because of the complexity of dealing with different routes.
Instead, the Government is looking into deploying self-driving minibuses on less technically challenging routes with lower traffic and ridership. Safety drivers will be on board the minibuses in the initial stage before a remote safety operator is allowed to control them from afar.
Self-driving logistics vehicles will also be a focus for Singapore.
Mr He does not see Level 5 automation happening any time soon globally. “If there is a typhoon today and the roads are already flooded, it is difficult even for a human driver to handle the situation. So I think Level 5 is something that is very far away.”
Xpeng is not limiting itself to full EVs. It announced in November that it will launch its first extended-range vehicle, which carries an internal combustion engine and an electric motor, in 2026. The vehicle is expected to have a range of 1,400km before needing a refuel and recharge.
The company is also expected to start delivering its flying car to customers from 2026. This includes an order for 150 units from two Hangzhou-based companies that provide air travel services.
In a sign of the state of affairs for some Chinese EV companies, Neta – which has been exporting its cars to markets such as Malaysia and Thailand – has reportedly halted production at its Zhejiang factory and cut salaries in November. The brand is on track to launch in Singapore by the end of 2024.In the past year, there have been reports of Chinese EV producers struggling in their domestic market because of stiff competition and price wars. Trade barriers put up by the European Union are also making it difficult for them to expand overseas.
TAKE 3: XPeng Launches its First Store in Singapore
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XPeng Launches its First Store in Singapore: 3 Things You Should Know About This Chinese EV Company
Recently, Chinese electric vehicle maker, XPeng, announced its official entry into the Singapore market. Here are several interesting facts about this company.
Aw Kai RuiBy Aw Kai RuiNovember 20, 2024
When we think about electric vehicles (EVs), our attention usually turns to well-known names such as Tesla (NASDAQ: TSLA) and BYD (SEHK: 1211).
Therefore, the mid-cap Chinese EV marker XPeng (NYSE: XPEV) often flies under the radar.
With a market capitalisation of US$12.3 billion, XPeng ranks as one of China’s more successful EV companies.
The company brands itself as a leading Chinese smart EV company that manufactures vehicles for technologically-savvy middle-class consumers.
Let us find out more about this smart EV company, which has recently expanded its operations in Singapore by opening its first showroom at UOB Plaza in July.
Road to profitability
Founded in 2014, XPeng is still navigating its path to profitability.
While concerns continue to swirl over its losses, it’s important to remember that XPeng is relatively young in the automotive industry.
To put it into context, it took Tesla, the world’s leading EV company, 18 years to finally achieve profitability.
Let us dissect XPeng’s financials to determine whether the company has the potential to turn profitable.
For the second quarter of 2024 (2Q 2024), XPeng reported RMB 8.1 billion in total revenue, marking a 60.2% year on year increase.
Despite this growth, XPeng recorded a net loss of RMB 1.3 billion, which is nevertheless an improvement from the previous year’s RMB 2.8 billion loss.
A reassuring sign for investors is XPeng’s gross margin, which has significantly improved from negative 3.9% a year ago to 14% in 2Q 2024.
This indicates that XPeng is selling its vehicles at a vehicular profit margin of 6.4%, with its net loss largely attributed to research and development efforts and administrative expenses.
When compared to other mid-cap EV companies, we can see that XPeng stands out for its stability.
For example, its Chinese competitor, NIO (NYSE: NIO), has a gross margin of 9.7% in 2Q 2024.
Meanwhile, Rivian (NASDAQ: RIVN) has a negative gross margin of 45% for 3Q 2024, with the company losing US$39,130 for every vehicle delivered.
As XPeng continues to scale up its production to meet growing demand, we can expect its margins to improve, paving the way for future profitability.
Growing deliveries
XPeng has demonstrated consistent delivery growth over the past four years, supported by the company’s three manufacturing factories across China.
For 1Q 2024, XPeng delivered a total of 30,207 vehicles, up 30.2% year on year.
For the entire 2023, the company has delivered a total of 141,601 vehicles.
Source: XPeng’s Investor Relations
The reason behind XPeng’s strong year on year growth is the company’s strategic expansion.
Rather than focusing solely on the Chinese market, XPeng has set its sights on international expansion.
The company is rapidly expanding throughout Europe, with vehicle sales in several Nordic countries, the Netherlands, Germany, and France.
XPeng is also exploring market launches in the UK and Italy.
This ongoing expansion is taking place despite the EU tariffs on Chinese EVs, underscoring the company’s commitment to its vision to become a global company.
Looking at 2024, delivery numbers are looking very positive.
For the first 10 months of 2024 till October 2024, XPeng announced 122,478 deliveries, representing an impressive 21% year on year growth.
Technological advancements
As previously mentioned, XPeng positions itself as a smart EV company, emphasizing not just automobile manufacturing but also technological innovation.
In May 2024, XPeng revealed the industry’s first artificial intelligence (AI) powered in-car operating system.
This system features a personalised AI assistant called Xiao-P, an in-built AI chauffeur and bodyguard, that enhances the smart driving experience for XPeng car owners.
A new model, dubbed “Mona”, launched in August.
The company has sparked interest by uploading a video on Weibo showing XPeng’s AI robot pre-ordering Mona.
By the fourth quarter of 2024, the company aims to achieve further breakthroughs in smart driving technology, addressing common challenges like parking, roundabouts, and narrow paths.
On 7 November, Xpeng launched XPENG P7+, an AI-defined smart electric fastback sedan.
The company also held its AI day on 6 November where it unveiled plans for an extended range hybrid system, updates on its autonomous driving chip, and flying cars, among others.
Beyond smart vehicles, XPeng is also venturing into robotics and flying vehicles.
Founded in 2016, XPeng Robotics is currently developing a quadruped robot named XPeng Robot Pony.
Additionally, XPeng has recently made a groundbreaking debut with its flying car, the “AEROHT X2”.
XPeng described this vehicle as a revolutionary piece of technology that is poised to transform urban mobility.
The company assures that its flying vehicles are designed to be safe, efficient, and eco-friendly.
To date, XPeng has completed over 20,000 test flights with its flying vehicles.
In a discussion with CNBC, the company revealed its goal to deliver its first flying car in 2026.
These two initiatives showcase XPeng’s dedication to diversifying its technological portfolio, making it stand out from other EV manufacturers.
This post has been edited by EnergyAnalyst: Nov 20 2024, 11:25 PM 
Mar 12 2024, 01:48 PM, updated 4d ago
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