Original link: https://www.latepost.com/news/dj_detail?id=1832
In the second quarter earnings conference call 10 days ago, He Xiaopeng, chairman and CEO of Xiaopeng Motors, announced that Xiaopeng Motors is confident that it will launch a fully automatic driving car in the most mainstream 150,000 yuan market. Today, the boots land.
Today, Xiaopeng Motors and Didi Chuxing jointly announced that Xiaopeng will acquire Didi’s car manufacturing project at a total consideration of about 5.4 billion yuan. The two parties will jointly launch a new brand code-named “MONA”.
Xiaopeng co-president Gu Hongdi said in a small media communication meeting this morning that MONA’s first model will be an A-class smart electric car priced at 150,000 yuan, which is expected to be launched in 2024 and sold to ordinary consumers ( C-end) and the demand side (B-end) for operating vehicles such as online hailing fleets. MONA will be a key step for Xiaopeng to promote advanced autonomous driving to cheaper vehicles.
“Later Auto” learned that Didi’s sales channels will get a certain percentage of car purchase discounts based on MONA’s price of 150,000 yuan. It is a customized online car-hailing car that Didi cooperated with BYD in 2020. It will be delivered on a large scale in the following year, and the cumulative sales so far have not exceeded 50,000.
The Didi car manufacturing project acquired by Xiaopeng this time is the customized car D2 independently developed by Didi starting in 2021. This project was once called “Da Vinci” internally. D2 is a new project launched immediately after the mass production of D1. Although the code name continues D1, D2 is completely independently developed by Didi. Taking this as a sign, Didi moved from cooperative car manufacturing to independent car manufacturing at that time.
Gu Hongdi said that Xiaopeng bought “a highly completed, mass-produced A-class smart electric car model”, and also bought assets such as research and development equipment related to the MONA project, as well as some core team members. In addition, Didi will support the sales and operation of this car. Xiaopeng will be responsible for the follow-up research and development, manufacturing and sales of MONA to ordinary consumers.
At the same communication meeting, He Xiaopeng said that Xiaopeng will also use the XNGP (full-scenario intelligent assisted driving) and X-EEA3.0 electronic and electrical architecture to transform MONA. This car will be mainly for ordinary consumers, and then for the online car-hailing market such as Didi.
After cooperating with Volkswagen Group in July this year, Xiaopeng Motors’ circle of friends continues to expand. “Whether it is cooperation with Volkswagen or Didi, Xiaopeng takes the initiative to cooperate and deploy according to its own strategy.” He Xiaopeng said.
He Xiaopeng also mentioned: “MONA is the beginning of the second brand or even the third brand for Xiaopeng. Some related actions.”
According to the announcement, the acquired Da Vinci project suffered a total loss of RMB 3.4 billion in the past two years. “Later Auto” learned that the Da Vinci project has laid off staff twice this year, and the team size has shrunk from more than 1,700 people in the second half of last year to less than a thousand people recently. Didi has also reached the moment to choose whether to let go or continue.
At present, Xiaopeng’s Hong Kong stock market value is 125.015 billion Hong Kong dollars (about 16 billion U.S. dollars), and Didi’s market value in the US stock market is comparable.
Didi needs to complete 360,000 units sales betting for 5% of the shares. For every car sold, Xiaopeng will give Didi 15,000 yuan
Xiaopeng did not use cash, but obtained the Da Vinci project that Didi had been developing for more than two years through the issuance of additional shares. All Xpeng shareholders jointly bear the cost of stock price dilution. According to the Xiaopeng Hong Kong stock announcement, Xiaopeng intends to issue a maximum of 91.13179 million additional shares to Didi, accounting for about 5% of the enlarged share capital. The price per share is the average price of Xiaopeng Hong Kong shares 5 days before the agreement is reached, which is HK$64.03, so the total consideration is HK$5.835 billion (approximately RMB 5.4 billion), which consists of four parts:
For Didi, the most certain benefit is the first item of the total consideration, that is, on the day of the transaction, Xiaopeng issued more than 58 million Class A ordinary shares, with a total value of 3.724 billion Hong Kong dollars (about 3.462 billion yuan).
Didi needs to meet certain performance conditions in order to obtain the remaining additional shares. According to the announcement, there are three bets:
- To reach the SOP (Small Batch Production Stage) milestone within the specified time limit, Xiaopeng needs to issue 4.63 million shares to the seller;
- In the first stage, when the delivery of new cars reaches 180,000 units, Xiaopeng needs to issue a maximum of about 14.0546 million shares to the seller;
- In the second stage, when the delivery of new cars reaches 180,000 units, Xiaopeng needs to issue a maximum of about 14.2765 million shares to the seller.
Combined with what Gu Hongdi said in the communication meeting this morning, Xiaopeng and Didi have actually reached an annual sales betting agreement with a minimum of 100,000 units and an upper limit of 180,000 units for two consecutive years. When the sales volume reaches 100,000 units, Didi will start to obtain additional shares from Xiaopeng. When the sales volume reaches 180,000 units, it can obtain the highest number of additional shares. If the sales volume exceeds this number, no additional shares will be issued.
When the latter three performance bets are completed, the total value of the shares acquired by Didi depends on the stock price of Xiaopeng at that time, so the final total consideration of this transaction converted into currency value may be higher or lower than the 58.35 disclosed in the announcement. billion Hong Kong dollars.
This transaction design binds the interests of Xiaopeng and Didi. When the sales volume of MONA is good enough, Didi can not only get share incentives, but also is very likely to get additional benefits from the rise of Xiaopeng’s stock price due to the progress of Xiaopeng’s MONA business. dividend. Didi has the motivation to help Xiaopeng sell MONA together.
He Xiaopeng expressed his confidence in MONA’s first car at the small communication meeting after the agreement was reached. He called the annual sales target of more than 100,000 units “very conservative.”
In theory, Didi has a certain channel and ability to sell cars. Before the launch of D1 in 2021, Didi has cooperated with BAIC, BYD, GAC Aian and other car companies to purchase vehicles at discounted prices.
The usual transaction process is that Didi approached a car manufacturer in the name of the company, and negotiated a discounted price (usually about 20% off the retail price) for a certain model, and then Didi distributed the discounted price to the cooperative car of its operating fleet service company, and the car service company subscribes the vehicle. In the transaction, Didi’s Xiaoju Car Service will also participate simultaneously, providing financial services such as loans for car service companies, and earning purchase price differences and financial service fees.
In addition to selling cars, Xiaopeng will also become the first complete vehicle company to receive the support of Didi’s entire ecosystem. Gu Hongdi introduced: “Didi will also promote Xiaopeng related financial and insurance products to our MONA customers through their platform, and we can have further cooperation in the operation of Robotaxi in the future.”
However, if Didi can really rely on its influence on car service companies to help MONA reach an annual sales volume of at least 360,000 in two years, it will be a considerable cost to Xiaopeng.
Assuming that several milestones are achieved in the future, Xiaopeng will use about 5.4 billion yuan in exchange for a total sales volume of 360,000 units, which is 15,000 yuan per car. For a car with a price of less than 150,000 yuan, when the cost control is not good enough, the “cost of sales” of 15,000 yuan is enough to eat up the gross profit. And cost control is a subject that Xiaopeng is still working on.
Building cars, a business that Didi had to give up
MONA once carried the ambition of Didi to build cars. It was a key step for Didi to move from cooperative car manufacturing to independent car manufacturing. They invested a lot of resources for this. According to the transaction announcement, Didi’s project will have a net loss of 2.638 billion yuan and 763 million yuan in 2022 and 2021, respectively.
“Didi has invested several billion yuan in the early stage, and this smart electric car has a very high degree of completion,” commented Gu Hongdi, co-president of Xiaopeng, “this is a very attractive asset for Xiaopeng.”
The biggest cost items in the online car-hailing business are vehicle and driver salaries. If the platform wants to earn more money, it can only further reduce the cost of these two pieces. Didi’s early thinking was to study how to provide lower-cost cars and develop autonomous driving at the same time. In the short term, the platform can increase revenue through vehicles, and in the long term, it will gradually replace drivers after the maturity of autonomous driving technology to increase profit margins.
In 2016, Didi established an autonomous driving team, and obtained road test qualifications in Beijing, Shanghai, Suzhou, and California in the following years. In June 2020, Didi launched a self-driving manned demonstration application project in Shanghai. This is the first time that Didi has opened its self-driving service to the public.
In 2017, Didi also found car companies such as BAIC, FAW, Geely and GAC, hoping to jointly build online car-hailing with car companies, and finally locked two partners-BYD and Ideal Auto.
It is understood that Didi’s plan at that time was to cooperate with BYD, which has the strongest cost control ability, to position the D1 model, and position it as a fast car; to cooperate with Li Auto, which has the strongest product capability, to create an MPV, and position it as Youxiang. But the MPV plan eventually aborted, and the two sides fell apart.
Three years later, in October 2020, Didi officially released the first customized online car-hailing D1 jointly built with BYD. Didi is responsible for product definition including shape, size, battery life and performance, while BYD is responsible for product engineering development and implementation.
Didi has done a lot of work to improve the D1. When riding D1, passengers can use their mobile phones to adjust the temperature of the air conditioner in the car; in order to make the ride more comfortable, D1 is an MPV with only one row of seats, the second-row leg room can reach 1000 mm, and the head room can reach 992 mm; at the same time, D1 is equipped with ADAS (Advanced Driver Assistance System), which optimizes the body structure to ensure that passengers are better protected in the event of a collision. Considering that a considerable number of traffic accidents come from passengers being collided by vehicles coming from behind when getting off the vehicle, D1 also specially designed electric sliding doors to avoid visual blind spots.
A comparison is that the Denza D9, the best-selling MPV model in the Chinese market today, has a maximum third-row legroom of 1040 mm (the second row can slide back and forth with the help of electric slide rails), and the third-row headroom It is 980mm.
The above-mentioned improvements have directly increased the cost of the vehicle. The cost of the electric sliding door alone increased by 3,000 yuan. For a car worth 100,000 yuan, the cost of a single door is generally about 1,500 yuan.
D1’s optimization of passenger experience has been recognized by passengers, but most passengers are not willing to pay for this premium. “Later Auto” learned that Didi originally hoped that the D1 could add a certain premium to the express car, and the unit price and daily turnover were 5% to 10% higher than the express car. After the unsatisfactory response from passengers, the premium was cancelled.
For drivers and car rental companies, what they care more about is not whether the vehicle is comfortable and beautiful, but the purchase price. Car rental companies need to purchase D1 from Didi. The guide price of D1 is 160,800 to 169,800 yuan. It uses BYD blade batteries and has a battery life of 418 kilometers. During the same period, the Dongfeng E70, another pure electric car underwritten by Didi, has a guide price of 139,800 to 149,800 yuan at dealers, and a battery life of 330-430 kilometers.
“The cost of purchasing a D1 for a car rental company is about 120,000 yuan, and the purchase price of Dongfeng E70 is around 80,000 yuan. Buying 5 D1s can buy 7 Dongfeng E70s.” A person close to Didi commented.
According to the plan, Didi hopes to put 50,000 D1s on the market every year for five consecutive years. However, from 2021 to the present, the cumulative sales of D1 have not exceeded 50,000 vehicles.
After the D1 was launched on the market, in April 2021, Didi began to move from cooperative car manufacturing to independent car manufacturing, and established a new project “Da Vinci”. At that time, Didi had the most resources. As of the end of the first quarter of 2021, Didi’s book cash, cash equivalents, and restricted cash totaled 23.991 billion yuan.
Didi and BYD did not cooperate happily in R&D and production capacity. After realizing the various problems of D1, Da Vinci project planned a new car – D2.
Didi has changed its design thinking, from the passenger experience of D1 to the driver’s money-making orientation of D2, including considering the reduction of body size, cancellation of side sliding doors, selection of cheaper motors, and lower purchase and maintenance costs as much as possible. Didi’s most optimistic goal at the time was that D2 could achieve a purchase price of 80,000 to 90,000 yuan per bicycle, and sell 100,000 vehicles a year within 5 years after its launch, a total of 500,000 vehicles.
A person from Didi believes that when the cost of vehicles is reduced, the income of drivers will increase, and the cost of taxis for passengers will decrease. When more people are willing to take taxis, the number of online car-hailing markets will increase, and Didi’s income will further increase.
The Da Vinci project is located in Shunyi, Beijing. At its peak, it had 2,000 people. The main team came from Baoneng Automobile and BAIC, but Da Vinci’s road to car building was not smooth. In March 2022, it was reported that Didi plans to acquire a traditional car company in order to independently engage in car research and development, production and manufacturing, and enter the mass consumer market. But the deal fell through. Since then, Didi has considered continuing to manufacture D2 by BYD, but the cooperation has not been further implemented.
The threshold for building a car is high and requires longer investment. But for Didi, since its establishment in 2012, Didi has lost more than 100 billion yuan. According to the prospectus, from 2018 to 2020, Didi’s net losses were 15 billion yuan, 9.7 billion yuan and 10.6 billion yuan respectively. Didi’s first financial report after it announced its delisting showed that Didi’s operating income in 2022 will be 140.8 billion yuan, a year-on-year decrease of 19%, and its net loss will reach 23.8 billion yuan.
A person close to Didi summarized the reasons for Didi’s abandonment of car manufacturing to “Late Auto”: First, the price of new energy vehicles is involuntary, the D1 product is not smooth, the progress of D2 is not as expected, and the top management is not sure about the independent car business; Second, before Didi returns to Hong Kong for listing, it needs to focus on its main business and increase the market share of online car-hailing; third, the problem of production qualification cannot be resolved in the short term.
“Didi divested the ‘non-performing asset’ of Da Vinci, and Xiaopeng also bought a relatively mature model at a low price, which is a win-win situation for both parties.” A person close to Didi commented.
Before the acquisition, Da Vinci had fewer than 1,000 employees. Previously, Da Vinci had two rounds of layoffs at the beginning of this year and in June. The remaining employees will follow the deal and merge into Guangzhou-based Xpeng Motors.
In order to seek scale, Xiaopeng entered the multi-brand era
He Xiaopeng said that he hopes that MONA will become the beginning of Xiaopeng’s second brand or even the third brand. Through cooperation, Xiaopeng Motors will officially enter the multi-brand stage.
The launch of the new brand MONA will help Xpeng expand its scale and promote the implementation of Xpeng’s intelligent driving technology.
According to data from the Passenger Federation, in July this year, in the 100,000-200,000-yuan pure electric vehicle market, the best-selling product was BYD Yuan PLUS with a starting price of 139,800 yuan, with a monthly sales volume of 21,700 units; The third places are BYD Dolphin (starting price of 116,800 yuan) and GAC AION Y (starting price of 119,800 yuan), which sold 21,600 and 15,500 vehicles respectively.
Compared with the above models, the biggest advantage of MONA is intelligence. He Xiaopeng introduced that MONA will use the Xiaopeng Fuyao architecture including XNGP. Xiaopeng Motors, which is labeled as intelligent driving, has been promoting the full implementation of intelligence. He Xiaopeng believes that “in the process of intelligently transforming the entire automobile industry, there is no way to avoid the 150,000-level range.”
But MONA still needs to grab time, and Tesla’s cheaper models are eyeing Xiaopeng. In March of this year, the progress of Tesla’s new car was exposed, positioning it as a compact model of 25,000 US dollars, which is equivalent to about 180,000 yuan. The car is tentatively scheduled to start mass production in 2024 and officially launch in 2025.
In addition to sales at the C-end, MONA can also use Didi to rapidly expand sales at the B-end. He Xiaopeng said, “A-class cars need a very large scale in order to have a cost competitive advantage.” Didi’s 2022 annual report shows that China’s travel business has 411 million annual active users and 19 million annual active drivers.
Connecting to the B-end is a way for car companies to quickly increase volume. Nezha Auto chose the B + C sales model from the beginning. From 2018 to 2020, the B-end market contributed nearly 5,000 sales to Nezha, accounting for more than 30% of its total sales.
MONA will be produced at Xiaopeng’s existing production base, but the specific base has not yet been confirmed. Xiaopeng has three major factories in Zhaoqing, Guangzhou and Wuhan, with production capacities of 200,000, 120,000 and 100,000 vehicles respectively. For the whole year of 2022, the cumulative delivery volume of Xiaopeng Motors will be 120,000 units. Production capacity is far from saturated.
Scale is a word frequently mentioned by He Xiaopeng in the past year.
“Even if you become the number one new power, it is useless, because judging from the future competition situation, no more 50,000 or 100,000 units will survive.” He Xiaopeng said after a press conference in April this year. It is believed that the sales scale of 3 million vehicles is just an entry ticket for car companies.
Since the fourth quarter of 2021, Xiaopeng’s sales have declined for five consecutive quarters. It was not until the second quarter of this year that Xiaopeng sold 23,200 vehicles that it achieved a positive month-on-month growth. In 2022, the sales of Xiaopeng Motors will rank 12th in the annual new energy sales list.
In He Xiaopeng’s view, the competitiveness of MONA will far exceed that of the products on the market. He conservatively expects the sales volume to be more than 100,000 units a year.
Scale is also crucial to the implementation of autonomous driving, because the final battle of autonomous driving is a data battle. “In the autonomous driving industry, whoever can mine the value of data efficiently and at low cost will become the king of the competition.” Gu Weihao, CEO of Momo Zhixing, once publicly stated. The volume and running time of online car-hailing are the lowest cost and most efficient way to collect data. Gu Hongdi said that under the premise of data compliance, Xiaopeng will obtain the necessary data support for Didi platform to support the operation of platform operators.
He Xiaopeng is very confident in adhering to the route of intelligent driving, thinking that this is a “difficult but correct thing”. Although at present, intelligent assisted driving is not the primary consideration for consumers when buying a car, He Xiaopeng said that in the next five years, the demand for intelligentization will become a rigid demand. This requires car companies to achieve three points in intelligent assisted driving: safe enough; wide enough to use; cheap enough.
Therefore, the promotion of affordable self-driving cars is consistent with Xiaopeng’s mission of realizing technology inclusiveness.
“Electrification, networking, intelligence, and sharing of the entire automobile industry are constantly integrating. Under this background, many high-quality cooperation will be born.” He Xiaopeng said that the cooperation between Volkswagen and Didi is based on Xiaopeng’s own strategy Take the initiative to cooperate and arrange.
Before cooperating with Didi, in July this year, the Volkswagen Group announced a strategic investment of approximately US$700 million in Xpeng Motors. Xpeng and Volkswagen will jointly develop two B-class pure electric vehicles. Xiaopeng mainly invests resources in technology and platforms, and adopts a relatively asset-light cooperation model.
Operating multiple brands requires more effort. Xiaopeng said that it has set up a special project team for MONA, and the entire organizational structure of Xiaopeng will be adjusted and upgraded accordingly as the project progresses.
The pricing of MONA overlaps with that of Xpeng P5. Xiaopeng P5 is priced at 156,900 to 202,900 yuan. In July this year, Xiaopeng P5 sold 1,263 units, a year-on-year decrease of 64.8%; this year, it sold a total of 11,378 units, a year-on-year decrease of 57.5%. The launch of MONA will further encroach on the market share of P5.
He Xiaopeng explained that the P5 is a model of the Xiaopeng brand, which is completely different from MONA’s customers. “Scale and data are very important in software, which is completely different from hardware. We think we are on the right path today.”
In the first quarter of this year, Xiaopeng’s vehicle gross profit margin was -2.5%, which fell further in the second quarter, and the gross profit margin of vehicle sales fell to -8.6%. 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. Now that the price of MONA has dropped further, it is hard to say whether it is a profitable business.
But in He Xiaopeng’s view, compared with financial indicators such as hardware costs and gross profit margins, scale is the most important thing at the moment.
Zhao Yu also contributed to this article.
Title map source: Visual China
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