Original link: https://www.latepost.com/news/dj_detail?id=1816
After the downturn in the first quarter, Xiaopeng’s gross profit margin fell again in the second quarter.
In the second quarter, Xiaopeng sold a total of about 23,000 vehicles and earned about 5.06 billion yuan in revenue. Compared with the first quarter, sales and revenue increased by 26% and 27.2% respectively, but still lower than the same period last year (34,000 vehicles sold and 7.4 billion yuan in revenue).
Xiaopeng’s gross profit margin has also reached a new low. In the first quarter of this year, Xiaopeng’s comprehensive gross profit margin was 1.7%, and the vehicle gross profit margin was -2.5%. In the second quarter, it fell further, with the comprehensive gross profit margin falling to -3.9%, and the gross profit margin of vehicle sales falling to -8.6%.
This number is not even 3 years ago. In the second quarter of 2020, Xiaopeng only had one car, the G3, and sold 3,200 vehicles in the current period, with a gross profit margin of -2.7% and a vehicle gross profit margin of -5.6%. In the third quarter of that year, Xiaopeng achieved a positive gross profit margin, with a consolidated gross profit margin of 12.5% in 2021 and 11.5% in 2022.
Today, Xiaopeng has sold about 311,000 vehicles in total, of which about 121,000 vehicles will be sold in 2022, which is 4.5 times that of 2020, but the gross profit margin is lower than that of 3 years ago, and it has not shown scale advantages.
According to the second-quarter financial report, the reduction in Xiaopeng’s gross profit margin in the second quarter was affected by two factors, one of which was “inventory impairment and purchase commitment losses related to G3i” – which reduced the gross profit margin by 4.5%, or about RMB 200 million .
The G3 released in December 2018 is Xpeng’s first mass-produced car. In July 2021, Xiaopeng released the facelift G3i of the G3, which has upgraded the intelligent driving hardware architecture and other aspects, and the price is 168,900 to 201,900 yuan. According to terminal sales data, G3 and G3i only sold more than 3,000 units this year, averaging more than 300 units per month. The chain effect caused by failure to complete the purchase contract according to the agreed quantity caused a book loss of 200 million yuan to Xiaopeng.
In the third quarter of last year, Ideal also made an impairment loss of 800 million yuan due to the “discontinuation” of Ideal ONE. Li Xiang once explained at the financial report meeting that the listing of L9 and the early listing of L8 both accelerated the exit of Ideal ONE, but the company had not expected this situation before and failed to accurately predict the demand for raw materials.
In addition to the loss in the supply chain caused by the decline in G3i sales, Xiaopeng’s gross profit margin in the second quarter was also affected by promotional policies and the decline in new energy subsidies. In the first quarter of this year, Tesla fired the first shot at cutting prices. Many car companies launched a round of price wars. Xiaopeng was also forced to “follow the cards” and lowered the prices of G3i, P5, and P7. The highest price reduction up to 36,000 yuan.
Starting from January this year, the purchase of new energy vehicles will no longer enjoy state subsidies. In order to ensure sales, Xiaopeng has subsidized consumers by itself and issued a policy to ensure that “the national suggested retail price of each model of Xiaopeng Motors in 2023 will remain the same as the comprehensive subsidy at the end of 2022. The price is the same.”
When multiple cost reduction measures are in progress
In order to operate healthily, Xiaopeng is taking a number of measures to reduce costs and improve efficiency.
As of the end of June 2023, the total number of Xiaopeng employees is 14,425, which is more than 1,000 fewer than the 15,829 at the end of 2022.
Xiaopeng’s sales, general and administrative expenses in the second quarter were 1.54 billion yuan, a decrease of 7.3% from 1.66 billion yuan in the same period in 2022. However, due to the launch of the new car G6 in the second quarter and the increase in marketing and advertising investment, this expense increased by 11.3% compared with the first quarter.
In the second quarter, the number of Xpeng stores dropped from 425 in the first quarter to 411. In the second half of this year, He Xiaopeng said that he will further accelerate channel changes, including international market channels. “Survival of the fittest will be carried out drastically in the sales network, and excellent dealer partners will be introduced at a faster speed, so as to accelerate the expansion of market share in second-tier and lower-tier cities.”
Under the pressure of cost reduction, Xiaopeng did not tighten up R&D expenditure. In the second quarter, Xiaopeng’s research and development expenses increased to 1.37 billion yuan from 1.3 billion yuan in the first quarter, an increase of 8.1% over the same period last year.
Xiaopeng has always dared to invest in research and development. From 2020 to 2022, Weilai’s total R&D investment is 17.9 billion yuan, ideally 11.16 billion yuan, and Xiaopeng 11.04 billion yuan.
In the first and second quarters of this year, Xiaopeng’s sales, general and administrative expenses decreased by 15.5% and 7.3% respectively compared to the same period last year, but research and development expenses increased slightly year-on-year. Research and development expenses accounted for 27% of revenue in the second quarter.
Xiaopeng did not cut R&D expenses, but hoped that through the platform strategy, R&D investment could create greater value.
In April this year, Xpeng released the Fuyao architecture, which is compatible with E, F, H and future R&D platforms, and integrates core technologies such as X-EEA3.0 electrical and electronic architecture, XNGP intelligent assisted driving system, and Xmart OS vehicle intelligent system. According to Xiaopeng Motors, on the basis of Fuyao, Xiaopeng Motors can reduce R&D costs by 50%.
He Xiaopeng gave an example: “From the perspective of the entire electronics and electrical industry, we are even thinking about how to logically implement two SoC (system-on-a-chip) on a PCBA (printed circuit board assembly) to do everything.”
He predicts that in 2024, the overall cost of Xiaopeng’s autonomous driving system can be reduced by 50%, and it will be standard equipment for all models. In 2024, Xiaopeng also plans to charge software subscriptions for autonomous driving functions.
Two years ago, He Xiaopeng said at the 13th Automobile Blue Book Forum that due to cost reasons, no car company can launch a competitive fully automatic driving car at the 150,000 level. But with the cost reduction of the whole process, he believes that Xiaopeng is confident to “launch fully automatic driving on the most mainstream 150,000-class cars.”
In 2024, He Xiaopeng predicts that the overall cost of Xiaopeng Motors is expected to be reduced by 25%, and many individual fields exceed this goal.
“I will work with President Wang Fengying to benchmark the best cost control levels of global and Chinese car companies, and make cost reduction one of the core goals of product, R&D, manufacturing, supply chain, marketing and other teams.” He Xiaopeng said.
Wu Jiaming predicts that Xiaopeng Motors will achieve an overall breakeven in 2025.
But at the moment, the car prices are the lowest, the gross profit is the lowest, the sales volume is the lowest, and the cost is not low, making Xiaopeng’s financial situation the tightest among the three new car manufacturers. In 2022, Xiaopeng’s operating expenses (the sum of research and development and sales, general and administrative expenses) will be 11.9 billion yuan, ideally 12.45 billion yuan, and Weilai 21.38 billion yuan. In the first half of this year, the ideal sales volume is 3.4 times that of Xiaopeng, and the operating expenses are only 1.5 times that of Xiaopeng.
According to the announcement of Xiaopeng Motors and the estimation of Wandian Finance, at the end of the second quarter, Xiaopeng Motors had 33.7 billion yuan in cash in hand (including restricted deposits, about 31.5 billion yuan after excluding). During the same period, long-term and short-term borrowings and other expenses and liabilities are about 29.7 billion yuan, which belongs to the state of tight funds after listing.
However, the outflow of cash flow has narrowed. From 34.12 billion yuan in the first quarter of this year to the second quarter, Xiaopeng’s cash flow only decreased by 380 million yuan. With the announcement of the Volkswagen Group on July 26 that it will invest approximately US$700 million in Xpeng Motors, Xpeng’s cash flow security has been strengthened to a certain extent.
In the earnings conference call, He Xiaopeng revealed that Xiaopeng and Volkswagen will jointly develop two B-class pure electric models and sell them domestically under the Volkswagen brand.
Target: Gross profit margin turned positive in the fourth quarter
He Xiaopeng said that in the first half of this year, in order to cope with the fierce competition and rapid changes in the industry, Xiaopeng made internal changes in strategy, organization, products and markets.
Drastic reforms are accompanied by drastic personnel adjustments. Since October last year, six executives at the vice president level of Xiaopeng have resigned. The most recent resignation is Lu Xueqing, vice president of finance. In May of this year, Lu Xueqing spoke on behalf of Xiaopeng at the first-quarter earnings call.
Xiaopeng’s new vice president of finance and accounting, Wu Jiaming, who succeeded Lu, once held comprehensive financial management positions at GM’s US and China headquarters, and SAIC-GM-Wuling. He Xiaopeng said that he believes that under the leadership of Wu Jiaming, “our financial and operational work will be better.”
He Xiaopeng believes that the changes in products, organization and strategy in the past period of time will bring Xiaopeng to an “initial positive cycle”. He himself will lead the “big intelligence team” to plan autonomous driving, smart cockpit, electrical and electronic architecture, and the evolution of multiple intelligent innovation technologies.
Compared with the first quarter, Xiaopeng’s revenue and sales volume increased by 26% and 27.2% month-on-month. This is also the first time that Xiaopeng has experienced a positive quarter-on-quarter growth since the first quarter of 2022, when revenue and sales volume declined for five consecutive quarters.
Compared with its peers, Xiaopeng still has a gap. In the second quarter of this year, Li Auto delivered a total of about 86,000 vehicles, and its revenue reached 28.65 billion yuan, a record high, 3.7 times and nearly 6 times that of Xiaopeng in the same period, respectively.
He Xiaopeng predicts that starting from the third quarter of this year, Xiaopeng will enter an initial positive cycle of sales, brand, morale, and cash flow. In the third quarter, Xiaopeng’s target delivery volume is 39,000-41,000 vehicles, an increase of 68.1% to 76.7% quarter-on-quarter, and its revenue is expected to be approximately RMB 8.5-9 billion.
The Xpeng G6, which went on the market in June, is the key for Xpeng to achieve its sales growth target in the third and fourth quarters. The G6 is the first car based on the Xpeng Fuyao architecture, and it is also the cheapest 800V smart electric car on the market. In July this year, 3,900 G6 vehicles were delivered in the first month of its launch. As the subsequent production capacity climbs, He Xiaopeng predicts that the G6 in September will drive Xiaopeng’s monthly delivery to exceed 15,000 vehicles.
Xiaopeng G6 produces complete vehicles at the Guangzhou factory, and the Wuhan factory is responsible for the production of integrated die-casting parts. The two new factories are currently working overtime to solve the problem of ramping up production capacity. Yi Han, vice president of marketing at Xpeng, said that Xpeng’s factory is currently operating at full capacity in a single shift of 12 hours, and it is expected that the situation will ease in September and October, and a balance between supply and demand will be achieved.
“Xpeng is working with suppliers to increase the production capacity of G6, especially the Max version.” He Xiaopeng said. In the fourth quarter, Xiaopeng’s goal is to deliver more than 20,000 vehicles per month, and the G6 will hit the monthly delivery of more than 10,000 vehicles.
Since G6 adopts a pricing method close to the cost, some investors expressed concerns about Xiaopeng’s gross profit rate in the earnings conference call. However, He Xiaopeng said that the increase in sales of “G6 and other new products” will gradually restore Xiaopeng’s gross profit margin. In the second half of this year, the overall positive operating cash flow will be realized, and the gross profit margin will return to positive in the fourth quarter.
In addition to the G6, Xiaopeng will also launch an MPV model (X9) this year, and replace the three old models of P7i, G9 and P5. “Later Auto” learned that the P7i may launch a lithium iron phosphate battery version, which will further reduce the starting price.
In the earnings conference call, He Xiaopeng disclosed three points of information about the X9: it is based on the Swing architecture like the G6; it has the largest interior space within the same price range; it is leading in terms of driving control.
The new car is expected to be launched by the end of the fourth quarter of this year. “There is little support for the real delivery volume this year, but large-scale delivery will start next year.” He Xiaopeng said.
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