Among the "new forces" that have already been listed, Xpeng Motors-W (09868.HK) is a very diligent and progressive representative: about six years since 2018, it has released ten models (including facelifts and limited editions), and still offers six models on the market. In addition, in addition to seeking capacity expansion and intelligent technology and platform upgrades, it is also constantly expanding domestic and foreign markets.
Although this year has suffered Alibaba (09988. According to the equity disclosure data of the Hong Kong Stock Exchange, as of March 22, 2024, Alibaba may hold a total of 75.92 million shares of Xpeng, accounting for 4.94% of the issued voting shares, compared with 142 million shares held by Alibaba at the end of 2023, but in recent years, Xpeng has reached strategic cooperation with other peers to absorb more industrial investment, which may offset the related negative impact.
No, Xpeng (XPEV.US) and Volkswagen have just announced that the two sides have entered into a strategic cooperation framework agreement on electronic and electrical architecture technology, which will be based on the latest generation of Xpeng Motors' electronic and electrical architecture, jointly develop and integrate it into Volkswagen's CMP platform in China. The E/E architecture jointly developed by the two companies is expected to be applied to Volkswagen-branded electric models produced in China from 2026 onwards.
Xpeng's recent strategic cooperation
The strategic technology cooperation between Xpeng and Volkswagen Group began as early as July 2023.
As early as 1984, the Volkswagen Group established its first joint venture in China, SAIC Volkswagen, in 1991, FAW-Volkswagen Co., Ltd. in Changchun, and Volkswagen (Anhui) Co., Ltd. in 2017, specializing in the development and manufacturing of new energy vehicles. In 2021, Audi FAW New Energy Automobile Co., Ltd. was established to focus on the production of luxury pure electric vehicles. In 2023, Volkswagen Group China and its joint ventures will deliver 3.23 million vehicles annually, making it a very important foreign-owned car brand in China.
Xpeng announced on July 26, 2023 that it would issue to Volkswagen shares equivalent to 4.99% of its Class A common stock at a price of $15 per ADS, for a total value of approximately $700 million.
At the same time, the two parties have reached a strategic technical cooperation, under which Xpeng Motors and Volkswagen Group will jointly develop two B-segment electric vehicle models based on their respective core competencies and Xpeng's G9 model platform, intelligent cockpit and advanced driver assistance system software, and sell them in the Chinese market under the Volkswagen brand. Production of the model is expected to begin in 2026.
In addition, the two companies will explore other potential strategic collaborations in a number of areas, including future EV platforms, software technologies, and supply chains.
On March 11, 2024, Xpeng Motors and Volkswagen Group signed a joint development agreement for strategic technology cooperation in platform and software, accelerating the joint research and development of two B-segment pure electric vehicles and laying the foundation for broader and deeper strategic cooperation between the two parties in the future. As an important part of the joint development agreement, Xpeng Motors and Volkswagen have also entered into a joint procurement plan for common parts for their models and platforms, with the aim of reducing platform costs and creating synergies through scale advantages and Volkswagen's supply chain capabilities, and enhancing the product competitiveness of the B-segment pure electric models jointly developed by the two parties. Volkswagen hopes to work with Xpeng to shorten the product development cycle, improve efficiency and optimize the cost structure.
Therefore, this cooperation is a continuation of the previous cooperation.
In addition, on August 27, 2023, Xpeng entered into a share purchase agreement with Didi and Didi's wholly-owned subsidiaries to acquire the entire issued share capital of Xiaotang Group through the consideration of Xpeng's new issuance of Class A ordinary shares, which is expected to be able to operate Didi's previous smart car development business. At the same time, Xpeng and Didi signed a strategic cooperation agreement to cooperate in the research and development of new smart electric vehicles, the operation of Xpeng smart electric vehicles on Didi's shared mobility platform, marketing, financial and insurance services, charging, autonomous driving, and joint development in the international market. By mid-November 2023, Xpeng had issued 58.16 million Class A ordinary shares to Didi, which is also wholly owned by Xpeng for its smart car development business.
Alibaba is more financially invested in Xpeng, so it's normal to scale back its investments when it needs to manage its finances. But while Alibaba is reducing its holdings, Xpeng is expanding its cooperation with industry giants such as Volkswagen and attracting strategic investment from it, which means a different thing – it is more conducive to industrial upgrading, and because the two sides can achieve mutual benefit through strategic cooperation, the investment is more stable.
Efforts to expand overseas markets
In addition to the strategic cooperation with Volkswagen Group, Xpeng's recent series of overseas initiatives have also sparked heated discussions.
Xpeng was the first to enter Norway in December 2020, and by 2022, it has set up stores in Norway, Denmark, the Netherlands, Sweden and other Nordic countries, and in 2023, it has set up delivery and service centers in Norway, the Netherlands, Sweden and Denmark.
On February 22, 2024, Xpeng entered into a strategic partnership with Ali&Sons, a UAE dealer group. So far, Xpeng Motors has reached a strategic partnership in the Middle East and Africa market with Ali &Sons, Egypt RAYA Group, Azerbaijan SR Group, Jordan T Gargour &Fils Group, Lebanese Gargour Asia SAL Group, Xpeng Motors A number of models will be launched and delivered in five Middle East and Africa countries from the second quarter, of which Xpeng P7 and G9 will be launched in Jordan in the first quarter. Deliveries in Lebanon will be made in Egypt in the third quarter, and sales of the Xpeng G6 and G9 SUVs in the UAE will begin in the third quarter.
In late March 2024, Xpeng Motors announced that it has added another high-quality dealer in Southeast Asia, including dealer groups such as Singapore's Premium Automobiles and Malaysia's Bermaz Auto, to join the ranks of Xpeng Motors' partners. Xpeng will launch a right-hand drive version of the Xpeng G6 in Thailand, Singapore and Malaysia, with deliveries starting in the third quarter of this year.
In addition, Xpeng said that it will expand into the European market including Germany, the United Kingdom, Italy and France in 2024. On March 28, 2024, Xpeng Motors announced its entry into the German market, launching the Xpeng G9 and Xpeng P7 versions, which will be officially sold from May, and Xpeng aims to achieve a 3% market share in the German new energy vehicle market by the end of this year. According to the official account released by Xpeng on April 9, nearly 1,000 G9 units have been shipped to Germany, with a total export value of more than 500 million yuan.
In the recent April, Xpeng announced that it would cooperate with Hong Kong's Sime Darby Automobile Group and Macau's New Hengkang Group to introduce Xpeng Motors to Hong Kong and Macau, Xpeng's key models G6 and X9 will be launched in Hong Kong in mid-May, and are expected to be delivered in the third quarter of this year, and will introduce G9, X9, G6 and P7i models to the Macau market, and the left-hand drive model will be delivered in May this year.
It can be said that Xiaopeng's internal and external market expansion has not stopped, but is getting faster and faster. However, these efforts may not bear fruit in the short term.
What's the problem?
The demand for new energy vehicles has grown or slowed down, mainly because with the support of favorable policies in recent years, the consumption growth rate of new energy vehicles has continued to rise, and now, the penetration rate of new energy vehicles in China has risen to the target level, and the proportion of new energy vehicle sales in the first quarter of 2024 has increased from 26.10% in the first quarter of 2023 to 31.10%, but it is slightly lower than the 31.55% in the whole year of 2023, or related to the measures introduced by many cities to relax the licensing of fuel vehicles since the beginning of this year.
In addition, since automobiles are durable goods, strong sales growth in recent years may mean that it will take a few more years to usher in a wave of replacement, and sales growth of new energy vehicles may stabilize rather than grow as fast as in past years.
In the first quarter of 2024, the national automobile sales increased by 10.60% year-on-year to 6.72 million units, of which the sales of new energy vehicles increased by 31.80% year-on-year to 2.09 million units, although the growth rate of new energy vehicle sales is still 20 percentage points higher than the overall growth rate of automobile sales, but it can be seen from the figure that the gap between the two growth curves is narrowing, reflecting that the sales growth rate of new energy vehicles will stabilize.
In the context of the normalization of the growth rate of new energy vehicle sales in the country, many existing brands and new brands are pushing new cars and doing marketing in order to gain a foothold in this market. In addition to the recent high-profile debut of the Xiaomi SU7, the question industry has also been aggressive to achieve a far ahead.
As shown in the chart below, since 2024, Xpeng's delivery volume (purple column) has been "far ahead" by its peers.
On January 1, Xpeng's seven-seater model X9 was officially launched, with a starting price of 359,800 yuan, and deliveries began that month. In March this year, Xpeng has revealed that it has officially entered the global market of 10-150,000 yuan A-class cars, and the first product is expected to be launched in the third quarter of 2024.
However, other new forces are more aggressive than Xpeng. NIO (09866.HK) HK) will also launch the economy car brand "Ledao", focusing on the price range of 150,000-250,000 yuan, or the brand will be released in mid-May, with new cars released in the third quarter and delivered in the fourth quarter. In addition, NIO (NIO.US) will also start deliveries of the 2024 ET7 on April 30.
Other new forces are not idle, Nezha L will be launched and delivered in April, and Leap (09863.HK) recently released a new car C10, with a starting price of 128,800 yuan, and released the new C11, the new C01 and the new T03. Ideal (02005. HK) just announced and started deliveries of MEGA, a family MPV, in March, and will release the L6 on April 18, 2024 (tomorrow night). Pre-orders for the all-new M5 will also open in late April......
At the macro level, in the face of issues such as the growth or slowdown of domestic demand, external trade barriers (some parts of Europe may introduce measures to increase the cost of imported products from Asia), and from the industry level, the prospect of Xpeng is still facing considerable resistance in the face of more fierce competition among its peers. In 2023, Xpeng's automobile sales business revenue increased by 12.77% year-on-year, but the operating cost of automobile sales increased by 26.52% year-on-year, and the gross loss ratio of automobile sales business reached 1.60%, compared with 9.45% gross profit margin in the previous year.
In 2024, the competition in the new energy vehicle industry will only become more intense, and Xpeng's short- and medium-term profit prospects are still not optimistic.
Author: Mao Ting