Xiaopeng Automobile: the champion of sales and the king of losses

The sales champion and loss king of the new car-making forces, this is Xiaopeng Automobile in 2021.

In 2021, among the three "Wei Xiaoli", Xiaopeng Automobile delivered a total of 98,155 vehicles throughout the year, an increase of 360% year-on-year, higher than Weilai's 91,429 vehicles and the ideal 90,491 vehicles, becoming the new force sales champion.

Cars sell more and earn more, but at the same time, losses are further expanded, with Xiaopeng Motors having the highest net loss among the three in 2021.

On March 28, Xiaopeng Automobile released the fourth quarter and annual financial report of 2021, which showed that The annual revenue of Xiaopeng Automobile was 20.99 billion yuan, an increase of 259.1% year-on-year; the net loss was 4.86 billion yuan, an increase of 78% year-on-year. Among them, the fourth quarter revenue was 8.56 billion yuan, an increase of 200.1% year-on-year, an increase of 49.6% over the previous quarter; the net loss was 1.29 billion yuan, an increase of 63.5% year-on-year, narrowing by 19.3% over the previous quarter. In 2021, WEIO lost 4.02 billion yuan and Ideal Auto lost 320 million yuan.

Compared with Weilai and Ideal, Xiaopeng Automobile is more affordable to the people, and although the sales volume is high, the gross profit is low. According to the financial report, the gross profit margin of Xiaopeng Automobile was 12.5%, ideal automobile was 21.3%, and Weilai was 18.9%. Next, improving gross profit margin is one of The goals of Xiaopeng Motors.

"The medium- to long-term goal is to increase the company's overall gross margin to more than 25 percent." He Xiaopeng, chairman and CEO of Xiaopeng Motors, said on a conference call. He said that through a series of advanced manufacturing technologies to achieve better cost control, the G9 medium and large SUV listed and sold in the third quarter of this year will enter a higher price range and improve the overall gross profit margin. After the G9, in 2023, Xiaopeng Motors will also launch two new model platforms and two models based on this.

A week ago, in response to the rise in raw material prices, Xiaopeng Automobile has announced a price increase, ranging from 10,100 to 20,000 yuan, which belongs to the car companies with large increases.

"At present, it seems that [the price increase] has not affected our sales." On March 26, He Xiaopeng said in an interview with the media at the 8th China Electric Vehicle 100 Forum that the current price increase is more suitable for Xiaopeng Automobile, and there may be some new ways for car companies with small increases to cover costs, and this year Xiaopeng Automobile will gradually put its main production capacity on models with higher gross profits.

How does high growth continue?

With annual sales up 360% year-on-year and revenue up 259.1%, Xiaopeng Motors has experienced a year of high growth. In the fourth quarter of 2021, the delivery of the compact electric sedan P5 began, further driving sales growth.

In the fourth quarter of 2021, Xiaopeng Automobile delivered 42,000 units, an increase of 222% year-on-year and 63% month-on-month, becoming the sales champion of "Wei Xiaoli". From January to February this year, The total sales volume of Xiaopeng Automobile was 19,000 units, higher than Weilai and slightly lower than ideal.

One reason for the increase in sales is that Xiaopeng Motors is trying to seize markets outside of first-tier cities. He Xiaopeng said that in 2021, Xiaopeng Automobile adopted the strategy of channel sinking, accounting for nearly 80% of sales points outside first-tier cities, basically at the end of last year or the second half of last year.

At the same time, Xiaopeng Motors is also under pressure from supply chain tensions. According to media reports, some P5 users have encountered delays in delivery due to tight supply of vehicle batteries and other reasons, and have chosen to protect their rights. In the user's view, Xiaopeng Automobile did not truthfully explain the delivery time, hoping that Xiaopeng Automobile, like some other car companies, would provide compensation to users. The relevant person in charge of Xiaopeng responded that users who have postponed delivery can choose to unsubscribe, reassign or continue to wait, and there is currently no compensation plan.

In order to alleviate the tension in the battery supply chain, Xiaopeng Automobile has selected multiple battery suppliers. In addition to the previous media reports of China New China, a certain version of xiaopeng G9 has also been exposed to use Sunwanda's power battery, with a supply share of more than 50%. Xiaopeng Motors responded by saying "unofficial news."

On the conference call, He Xiaopeng said that working with a number of battery suppliers is "very valuable to us": the main reason for the delivery of Xiaopeng Automobile is the lack of battery supply, especially the model of lithium iron phosphate battery, which should have had a larger proportion, but accounted for only a very small proportion of last year's deliveries.

In 2021, Xiaopeng Automobile developed and validated hundreds of supply chain alternatives. He Xiaopeng said that this year's battery supply will still have greater challenges, and there will be a greater relief in the second or third quarter of next year. During the Spring Festival, Xiaopeng's Zhaoqing plant completed a technology upgrade, and "orders in late February and early March quickly returned to the peak season level in December 2021."

For the explosive model P7, He Xiaopeng's sales expectation is to deliver 10,000 vehicles in a single month of impact this year. Xiaopeng G9 will be listed in the third quarter, and He Xiaopeng believes that it can become a hit in the smart medium and large SUV market. However, this market is also the main battlefield of new forces such as Weilai, and whether Xiaopeng Automobile can catch up with the latecomers is still facing a test.

How long will we lose?

In 2021, Xiaopeng Automobile's net loss was 4.86 billion yuan, an increase of 78% year-on-year, becoming the largest loss in "Wei Xiaoli".

This is related to the high research and development investment of Xiaopeng Motors. Xiaopeng Motors is considered to be the most similar to Tesla's new car-making force, before entering the car-making industry, He Xiaopeng wrote an email to Tesla CEO Musk to ask him a "manufacturing + technology" question. Although Musk did not reply, the Silicon Valley pioneer concept represented by Tesla is what He Xiaopeng appreciates.

Benchmark Tesla for full-stack self-research, Xiaopeng Automobile invested a lot of real money and silver.

In 2021, Xiaopeng Automobile's R&D investment was 4.11 billion yuan, an increase of 137.6% year-on-year. This research and development expenditure is higher than the ideal car's 3.29 billion yuan and lower than WEILAI's 4.59 billion yuan. However, if you look at the proportion of R&D investment in revenue, the R&D investment ratio of Xiaopeng Automobile is 19.6%, higher than Weilai's 12.7% and the ideal 12.2%. Prior to this, in 2019 and 2020, the research and development of Xiaopeng Automobile was 2.07 billion yuan and 1.726 billion yuan, respectively, and the R&D investment ratio was 89.2% and 29.5% respectively.

High investment in exchange for intelligent continuous iteration.

He Xiaopeng said that among the P5 and P7 delivered in the fourth quarter, the penetration rate of the assisted driving system XPILOT 3.0 was close to 20%. This year, Xiaopeng Automobile will launch XPILOT 3.5 from high-speed to urban scenarios, adding lidar and new planning algorithms. In the first half of 2022, Xiaopeng Motors plans to launch XPILOT 4.0 to achieve all-scenario intelligent assisted driving.

At the end of this year, Xiaopeng Motors plans to conduct robotaxi testing on the G9 in preparation for the transition to driverless cars in 2026. But on the other hand, robotaxi has the characteristics of large investment and long front, and how to control costs has become a problem that Xiaopeng Automobile needs to solve.

In addition, with the expansion of sales channels, Xiaopeng Automobile's sales, general and administrative expenses reached 5.3 billion yuan in 2021, an increase of 81.7% year-on-year. In the fourth quarter, the month-on-quarter growth rate of this expense was about 31%, exceeding the growth rate of research and development expenses.

Next, Xiaopeng Motors hopes to increase gross profit margin, and He Xiaopeng first proposed a medium- and long-term target of 25% gross margin.

Related to the selling price, the gross profit margin of Xiaopeng Automobile is the lowest in "Wei Xiaoli". The gross profit margin of Xiaopeng Automobile in 2021 is 12.5%, which is much higher than the 4.6% in 2020, but there is still a gap compared with Weilai and Ideal Automobile. In the third quarter of 2021, Xiaopeng Automobile's gross profit margin reached the highest in the whole year, at 14.4%. However, due to the rising cost of raw materials, it fell back to 12% in the fourth quarter.

To this end, Xiaopeng Motors urgently needs models with higher gross margins. He Xiaopeng said that he hopes that with the listing of new models (such as the G9), the company's gross profit will undergo structural changes.