He Xiaopeng broke the “small cycle”: cost reduction, G6, supply guarantee

Original link: https://www.latepost.com/news/dj_detail?id=1674

On the second day after Xiaopeng Motors released its first-quarter financial report, He Xiaopeng traveled 114 kilometers from Guangzhou to Zhaoqing, where the factory is located, to participate in the first supplier conference held by Xiaopeng Motors. He shared some of Xiaopeng’s recent thoughts on the supply chain.

First, Wang Fengying, as the newly appointed president of Xiaopeng Motors, will be responsible for Lacy product planning, balance of production, supply and marketing, and large product matrix, “to ensure that our supply chain is more stable, sustainable and long-term.” He admitted, “We did not do it in the past. good.”

Second, before the end of 2026, Xiaopeng Motors will do a good job in product quality, cost and supply guarantee based on the Fuyao structure.

Third, let high-quality suppliers who are willing to cooperate for a long time “cooperate on a variety of cars or even most models”, which will help increase the order scale, bring profits to suppliers, and make Xiaopeng’s supply chain more efficient. Stablize.

He Xiaopeng did not evade the current difficulties, saying that Xiaopeng is in a “small downward cycle of life cycle”. “If the manufacturing industry encounters a down cycle, it will be very difficult to turn it back into an up cycle.” He Xiaopeng said that he once asked a manufacturing tycoon for advice, and the other party said it would take at least 18 months.

His goal is 12 months, from the G9 turmoil in September last year to the completion of adjustments in the third quarter of this year, entering a “positive cycle”.

He Xiaopeng reflected on the detours he has taken in the past period of time: he did not think clearly about intelligent operation, “if the software running on the car is different, there will be many problems”; he did not think clearly about product planning, “focus on the best bicycle, every This car has made multiple SKUs, pursuing innovation, but the cost control is not good enough…

At the end of last year, He Xiaopeng began to “self-reform” and “start a second business” internally, adjusting strategies, product portfolios, and management teams to “desperately change.”

Organizational changes attracted the most attention. On January 30, Wang Fengying, former president of Great Wall Motors, joined the company to be responsible for product planning, product portfolio management and sales. In a recent interview with the media, He Xiaopeng commented on Wang Fengying, “Not like an Autobot, but more like an entrepreneur.”

In terms of products, he said that Xiaopeng now pays more attention to cost efficiency and embraces users. Based on the SEPA2.0 Swinging Architecture, make the product deep and refined, “Each product should not exceed 2 SKUs at most, preferably 1.”

The G6, the first product of the Fuyao architecture, unveiled at the Shanghai Auto Show, was regarded by He Xiaopeng as the “inflection point of sales”. “The qualifying result for G6 is to reach twice the sales volume of P7 or more,” he said.

The car is expected to be officially launched in mid-June this year, with delivery starting in July. People close to Xiaopeng revealed that Xiaopeng’s sales forecast for the G6 is to reach 8,000 units in August.

He Xiaopeng believes that 2023 will be a “battle of scale”, and various car companies will compete to sell cars. Xiaopeng’s goal is to achieve monthly delivery of more than 20,000 units in the fourth quarter, and the operating cash flow will become positive. In the next two years, Xiaopeng will have about 10 products on the same platform.

In 2025, He Xiaopeng believes that auto companies will enter multi-dimensional competition in terms of scale, innovation, and quality. Only auto companies that are comprehensively leading in various fields will be able to advance. Today, all contestants still have a chance. Xiaopeng has more than 30 billion yuan in cash and cash equivalents, restricted cash, short-term investments and time deposits in its account, and there are many things that can be done.

Have a scale, but be healthy

In the first quarter of this year, Tesla fired the first shot to cut prices, and the price range of Model 3 and Model Y dropped to 229,900-361,900 yuan. Automakers such as BYD and Dongfeng quickly followed suit, and a bloody price war swept across the entire auto industry.

Xiaopeng Motors also made a price adjustment for the Spring Festival at the beginning of this year, and the price adjustment range of its three models (G3, P5, P7) reached 20,000-36,000 yuan.

In the price war, consumers are in a wait-and-see mood, and price cuts may not be able to exchange for sales. In the first quarter, Xiaopeng was in the product replacement period. The P7i, the replacement of its best-selling product P7, started to be delivered at the end of March. Some consumers are waiting for new products. Due to the superimposition of various factors, Xiaopeng’s sales in the first quarter were only 18,200 vehicles.

Xiaopeng needs growth, but it also needs healthy growth. The scale obtained through losses is not a healthy scale.

Tesla’s high gross profit is based on its excellent cost control capabilities. For example, it is very restrained in marketing expenses, rarely puts in TV advertisements and outdoor advertisements, and its marketing expenses are 60% to 70% lower than traditional car companies. Links to lower costs.

Xiaopeng has been thinking about cultivating the ability to stabilize gross profit margins. In the first quarter of this year, Xiaopeng Motors’ sales, general and administrative expenses were 1.39 billion yuan, not only a huge drop from the high point (in the fourth quarter of 2021, the expenditure reached 2.015 billion yuan), it was even lower than the ideal for the same period. car. In the first quarter of this year, the ideal cost was 1.65 billion yuan.

Platformization also provides room for Xiaopeng to reduce costs. In April this year, Xiaopeng released the SEPA 2.0 Fuyao Global Intelligent Evolution Architecture. He Xiaopeng said that the R&D cycle of new models based on the Fuyao architecture will be shortened by 20%, the commonality rate of parts and components will reach up to 80%, and the commonality rate of costs will exceed 80%. In the past, a car of Xiaopeng used to have as many as 6-7 types of battery packs. Production line construction, engineering development, sample procurement, verification testing and other links have a lot of repeated cost input.

“In the past, Xiaopeng Motors mainly focused on innovation. In the next year or so, I want to focus on cost.” He Xiaopeng said.

But in terms of research and development, Xiaopeng does not intend to be too stingy. In the first quarter of this year, Xiaopeng Motors invested 1.3 billion yuan in research and development, which is higher than the 1.221 billion yuan in the same period in 2022.

He Xiaopeng believes that “technological changes and fierce competition will reshape the pattern of the auto industry in the next three years.” In the fields that must be invested, Xiaopeng will not hesitate.

One revolution, two inflection points

In the Q1 financial report conference call, He Xiaopeng predicted two inflection points in the future of Xiaopeng Motors: G6 will become Xiaopeng Motors’ “first sales inflection point”; 2023 will be Xiaopeng’s “intelligent technology inflection point”.

He Xiaopeng has high hopes for the G6, and the sales volume is expected to be twice that of the P7. The P7 is Xiaopeng’s star product. It was launched in April 2020 and sold 60,600 units in 2021, accounting for 62% of the total sales that year. It also made Xiaopeng Motors the sales champion of new forces that year. Last year, the P7 delivered 59,000 vehicles. Using this as a reference, the passing line for the G6 is at least 120,000 vehicles a year, which is comparable to the sales of the Model 3 (125,100 vehicles) last year.

All internal employees know the significance of G6 to Xiaopeng. The G9 launched last year targets a market of more than 300,000 people, and the current sales volume has not yet exploded. This year’s P7i is a facelift of the P7. “G6 is the key product of Xiaopeng.” A salesperson commented.

As a five-seat coupe SUV with intelligent positioning, the G6 is equipped with an 800-volt high-voltage platform and a 3C fast-charge battery as standard, and supports the XNGP intelligent assisted driving system. In terms of pricing, He Xiaopeng said that this car will adopt a “scale-first balanced pricing method”-that is, give the most competitive price under the condition of cost control.

At the financial report conference call in the fourth quarter of 2022, He Xiaopeng once introduced: “At the end of 2022, Xiaopeng Motors will start to carry out strategic review and adjustment, promote the optimization of the organizational structure, and strengthen the core of the short board of comprehensive capabilities, and carry out the second entrepreneurship. .” After a series of adjustments, G6 will be a demonstration of Xiaopeng’s reform achievements.

Former Great Wall Motor President Wang Fengying joined the company in January as president, responsible for product planning, product portfolio management and sales; former Geely executive Yi Han joined Xiaopeng as vice president of marketing. “Some executives who started our business from 0 to 1 with us left after completing the tasks of the previous stage, while some students who were young and full of entrepreneurial passion quickly stepped up.” He Xiaopeng said.

After Wang Fengying joined, the original Xiaopeng automobile trade and sales departments were combined into one, and the vice president Wang Tong was in charge; in terms of channels, the four major districts of Xiaopeng’s sales system, East, South, North, and Central, were merged into one. It was changed to 25 “theater zones”, and the relevant personnel were adjusted to make the channel management more flat and unify the original multiple business lines into one server. According to He Xiaopeng, as of April, the core indicator NPS (Net Promoter Score) of Xiaopeng Motors has returned to the forefront of the industry.

Wang Fengying is also building marketing service efficiency tools, establishing a middle office that responds faster to front-line needs, and improving the efficiency of internal communication and operations.

While improving the efficiency of the sales network in first- and second-tier cities, Xiaopeng Motors is introducing more dealers to third- and fourth-tier cities. Dealers have richer channel resources and flexible store building funds, which will reduce Xiaopeng’s financial pressure , making the operation more stable.

Intelligence is still the core competitiveness of Xiaopeng. He Xiaopeng gave a set of data: In March this year, Xiaopeng Motors pushed the city NGP to owners of the Max version of multiple models in Guangzhou, Shenzhen, and Shanghai. The mileage penetration rate in the first month after the push exceeded 60%. Xiaopeng Motors plans to officially launch high-speed NGP 2.0 in June, and it is expected that within 2023, the number of takeovers per thousand kilometers in high-speed scenarios will be less than one.

Urban NGP without high-definition maps is regarded by He Xiaopeng as “a watershed in testing technology”. He said that it will take 12 to 16 months for the grayscale test of a city to be implemented, and the self-circulation and accuracy of the data must also be realized. In the third quarter of this year, Xpeng Motors will gradually open XNGP, which does not rely on high-definition maps, in cities across the country that do not have high-definition maps.

“I believe that as we continue to make breakthroughs in XNGP’s experience, coverage and cost, the inflection point of XNGP’s popularity will accelerate.” He Xiaopeng said.

After a series of adjustments on the organization and product side, He Xiaopeng is very grateful for the crisis he encountered last year. He said that among the more than 100 car companies in the industry, “the vast majority have not yet considered how to make qualitative changes from the logic of organization, product, technology, planning, marketing, and globalization.” Xiaopeng saw his own problems early on, Start thinking about changing strategies, adjusting reforms, and evolving to a better organization, which will make Xiaopeng more defensive when the next crisis comes.

New energy vehicles are the most fiercely competitive and brutal battlefield in the world since smartphones, and only a very small number of participants will advance. Xiaopeng’s goal is to become “No. 1 in China” by 2030. Xiaopeng has gone through a detour, and he must not relax in every part of the road after that. “In such a big change, we must be number one in China in 2030 in order to survive.” He Xiaopeng said.

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