Losses widen and cash reserves dwindle, Xiaopeng is learning to “save money”

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Text / Zhou Xiongfei

Source/Link Travel (ID: lianxiachuxing)

After the ideal, Xiaopeng also handed in the transcripts for the first quarter of this year.

On Monday night, Xiaopeng Motors released its financial report for the first quarter of 2022. The data shows that its revenue in the first quarter of this year was 7.455 billion yuan, an increase of 152.6% compared with the first quarter of 2021; in terms of net loss, small In the first quarter, Peng recorded 1.701 billion yuan, an increase of 116.2% year-on-year.

Looking at it this way, Xiaopeng’s financial performance in the first quarter of this year can be described as falling into a downward trend of “increasing revenue without increasing profit”, but from the perspective of the change in revenue and net loss, the situation is more severe. The former fell by 12.9% month-on-month. The latter continued to expand by 32.13% month-on-month.

Not only that, as of the end of the first quarter of this year, Xiaopeng’s cash reserves also decreased by 1.83 billion yuan compared with the end of last year.

It can be said that Xiaopeng had to start saving money.

From the perspective of financial data, Xiaopeng’s capital investment in R&D and sales, general and management in the first quarter of this year increased year-on-year, but compared with the fourth quarter of last year, there was a significant decline in investment. Peng has been investing continuously in these two aspects.

Because of this phenomenon, it seems that in the industry, there may be the occurrence of the “Xpeng breach of contract graduating student” incident that was circulated inside and outside the industry and even appeared on the hot search. After all, after the incident, Xiaopeng also explained that due to the adjustment of some departments, the adjustment of some fresh graduates’ positions is also a side evidence of Xiaopeng’s “saving money”.

The reason why Xiaopeng is in such a situation can be seen from its gross profit margin.

In the first quarter of this year, Xiaopeng achieved an overall gross profit margin of 12.2%, although it increased slightly by 0.2% compared with the fourth quarter of last year, but from the perspective of the gross profit margin of the automotive business, it achieved 10.4% in the first quarter of this year, compared with last year. In the fourth quarter, it fell by 0.5%. In other words, Xiaopeng is still in a state of “selling cars at a loss”.

The reason for this state is that, on the one hand, the entire industry is still suffering from the adverse effects of cost factors such as the lack of cores and rising battery raw materials brought about by the epidemic; The sharp increase in sales of the P5 model and the decline in the sales of the higher-priced P7 model have resulted in a small profit margin for Xiaopeng as a whole.

In domestic and foreign difficulties, compared with the previous strides, Xiaopeng began to slow down and think about how to solve the problem.

Xiaopeng who started “saving money”

What does Xiaopeng Motors CEO He Xiaopeng think of Xiaopeng’s financial performance in the first quarter of this year?

He Xiaopeng said in the financial report that “the first quarter performance is a strong start to 2022.” In his view, with its self-developed technology development capabilities and active supply chain management, Xiaopeng can well cope with semiconductor shortages and the new crown epidemic. challenge to come.

The reason why he has the confidence to say such words is also based on the performance of Xiaopeng in the first quarter of this year. Data shows that in the first quarter of this year, its revenue was 7.455 billion yuan, a year-on-year increase of 152.6% compared with the first quarter of last year, which not only exceeded Xiaopeng’s previous forecast of 7.2-7.3 billion yuan, but also exceeded Bloomberg’s expectations. 7.368 billion yuan.

In terms of revenue, compared with the same period last year, although there is a large increase, if you look at the change from the month-on-month perspective, it will show a different picture.

Revenue in the first quarter of this year fell 12.9% from the 8.556 billion yuan in the fourth quarter of last year. By looking at Xiaopeng’s previous revenue data, Connected Travel can find that the quarter-on-quarter decline in revenue in the first quarter of this year also broke its positive trend of quarterly revenue growth since the first quarter of 2020.

Compared with the year-on-year growth and month-on-month decline in revenue, the performance of net loss is even less optimistic.

In the first quarter of this year, Xiaopeng recorded a net loss of 1.701 billion yuan, which not only increased by 32.2% compared with the 1.287 billion yuan in the fourth quarter of last year, but also increased by 116.1% compared with 787 million yuan in the same period last year.

This means that in the first quarter of this year, Xiaopeng did not achieve a quarter-on-quarter increase in revenue, but showed a trend of quarter-on-quarter decline; in terms of net losses, it continued to maintain a trend of quarterly expansion, and Xiaopeng could be said to be caught in the In the dilemma of “neither increase in income nor profit”.

Due to the less optimistic performance in terms of revenue and net loss, Xiaopeng’s cash reserves also tend to decline.

According to the financial report data, as of March 31 this year, Xiaopeng’s cash and cash equivalents, restricted cash, short-term deposits, short-term investments and long-term deposits were 41.714 billion yuan, a decrease from 43.544 billion yuan on December 31 last year. 1.83 billion yuan.

It should be noted that in the fourth quarter of last year, Xiaopeng’s cash reserves had decreased by 1.816 billion yuan, while Weilai and Ideal had maintained the growth of this indicator. In the first quarter of this year, while the ideal cash reserves continued to grow, the reduction in Xpeng’s cash reserves even expanded.

Because of this, Xiaopeng began to learn to “frugal food and clothing” in the first quarter of this year.

Among the three “Wei Xiaoli” brothers, Xiaopeng has always taken “technological attributes” as its main strategy, and it has been proved that it has also maintained a high R&D investment. The enterprise took the lead in realizing the implementation of the NGP function in the city.

However, in the first quarter of this year, Xiaopeng’s investment in research and development declined slightly. According to the data, Xiaopeng’s R&D expenses in the first quarter of this year were 1.221 billion yuan, a year-on-year increase of 128.2%, but a month-on-month decrease of 15.9%.

The ideal, which has always been known as “stingy”, in the first quarter of this year was even 149 million yuan higher than that of Xiaopeng. This is the first time that the former has surpassed the latter in terms of research and development expenses.

For the month-on-month decrease in R&D expenses, Xiaopeng explained that it was due to the decrease in design and development expenses affected by seasonal factors related to the Spring Festival holiday. It’s a surprise for the industry.

Similar to R&D investment, Xiaopeng has also adopted a reduction strategy in marketing investment.

According to the financial report data, in the first quarter of this year, Xiaopeng invested 1.642 billion yuan in sales, general and administrative expenses (hereinafter referred to as “three fees”), an increase of 127.7% year-on-year, but a decrease of 18.5% from the fourth quarter of last year.

In response to the decrease in investment in three fees, Xiaopeng attributed the reason to seasonal factors. The decrease in the cost of three means that Xiaopeng’s marketing and administrative layout has begun to slow down. According to the calculation of Longqiao Dolphin Investment Research, the number of new Xpeng stores in the first quarter of this year was only 9, and in the fourth quarter 86 more.

Perhaps it is because of this that the previous incident of “Xpeng’s breach of contract for fresh graduates” occurred.

According to recent reports from several media, some fresh graduates reported that they had obtained offers from Xiaopeng Automobile Technology Co., Ltd. through school recruitment and signed employment agreements. However, this month, due to business adjustments, Xiaopeng could not provide jobs, unilaterally terminated the contract, and compensated 5,000 yuan in liquidated damages in accordance with the employment agreement.

Once the news was reported, it once became the focus of attention both inside and outside the industry, and was even “sent” on the hot search by netizens. In this regard, Xiaopeng officially responded that due to the adjustment of positions and performance optimization of some departments, the adjustment of a small number of fresh graduates and related employees will be involved, and they will continue to communicate and handle them properly.

From this point of view, compared with Xiaopeng’s previous high investment in R&D and three-cost investment, the decline in investment in these two aspects in the first quarter of this year is obviously contrary to Xiaopeng’s “technology first, full-stack self-development”. ” strategy, so much so that he started to be careful about “saving money”.

Behind this change, the hidden worries that Xiaopeng is currently encountering are revealed.

Behind “saving money”, Xiaopeng is trapped in low gross profit

Announcement of sales has gradually become the best way for new energy vehicle companies to prove their strength.

According to the financial report, Xiaopeng achieved sales of 34,561 units in the first quarter of this year, an increase of 159% compared with 13,340 units in the first quarter of 2021. If this sales performance is compared with the new forces in the whole country, it also has certain advantages.

At the beginning of last month, NIO, Xiaopeng and Ideal and other new energy car companies successively handed over their sales report cards for the first quarter of this year. Among them, Xiaopeng took the first place in the sales volume of domestic new car manufacturers with sales of 34,561 vehicles. After it, ideal, Nezha, Weilai and Leapmotor car companies ranked second to fifth in terms of sales.

Although it has an advantage in sales, it turns out that Xiaopeng is not making money.

As a car company, Xpeng’s revenue growth is generally due to the revenue from car sales. In the first quarter of this year, Xiaopeng achieved car sales revenue of 6.999 billion yuan, accounting for 93.88% of total revenue. Although it increased by 149% from 2.810 billion yuan in the same period last year, it fell by 14.5% from the fourth quarter of last year.

In other words, it is precisely because of the month-on-month decline in car sales revenue, which accounts for 90% of revenue, that the revenue in the first quarter of this year declined month-on-month.

The reason for this phenomenon may be seen from the gross profit margin.

For a car company, gross profit margin has become an important indicator for judging its profitability. According to the financial report data, Xiaopeng’s overall gross profit margin in the first quarter of this year was 12.2%. Although this gross profit margin performance stopped the decline in gross profit margin in the fourth quarter of last year, it was only 12.0% in the fourth quarter of last year. Up 0.2%, little changed.

Due to the relatively simple business structure of Xiaopeng, the performance of the overall gross profit margin depends on the gross profit margin of the vehicle. In the first quarter of this year, Xiaopeng’s vehicle gross profit margin was 10.4%. Although it increased by 0.3% compared with the same period last year, it fell by 0.5% compared with the fourth quarter of last year.

In contrast, the ideal of both new energy vehicle companies, achieved a gross profit margin of 22.4% in the first quarter of this year, and Xiaopeng has a clear gap with it.

In response to the month-on-month decline in the gross profit margin of the vehicle, Xiaopeng attributed the reason to the increase in raw material costs. Wired Travel has previously pointed out in several articles that due to the continuous impact of the global epidemic, the entire automotive industry has been caught in the unfavorable situation of supply chain shortages and rising power battery raw material prices since the beginning of last year.

In this regard, He Xiaopeng also said frankly before: “This year, new energy vehicle manufacturers face three major challenges, one is materials (mainly referring to batteries); the other is chips. We previously expected that the shortage of cores in the second half of 2022 may be alleviated. However, in the first half of this year, instead of relieving, it has further deteriorated; the third is the change of the epidemic situation in China this year.”

Xpeng has also been threatened by these challenges. In October last year, after Xiaopeng started the delivery of the P5 model, many P5 owners reported on platforms such as Black Cat Complaints that they had encountered the situation of not receiving the car after ordering.

In the face of complaints from car owners, Xiaopeng quickly responded: “Due to the impact of the epidemic, the industry is faced with extremely tight supply of major components including lithium iron phosphate batteries, which has brought great inconvenience to the production of Xiaopeng P5 models. Certainty, resulting in orders not being delivered in a timely manner within the expected lead time of the next time.”

“Due to the rising prices of raw materials such as lithium and nickel for power batteries, coupled with the shortage of spare parts supply, the overall production cost of each vehicle of Xiaopeng Motors has further increased and the circulation efficiency of each vehicle has been extended. The decline will naturally occur.” Sun Hao, head of research and development of a leading domestic car company, said to Connected Travel.

In addition, from the perspective of the industry, the reason why Xiaopeng’s vehicle gross profit margin has been kept at a low level is that its product portfolio cannot provide higher profits.

From the perspective of sales in the first quarter of this year, among the total sales of 34,561 units, the P7 achieved a sales performance of 19,427 units; as a new P5 launched in October last year, the sales volume was 10,486 units, while the remaining 4,648 units were Sales of G3 and G3i models.

In terms of product sales distribution, although Xiaopeng P7 still occupies the bulk of the total sales, accounting for 56.21% of the total sales, this sales performance has dropped by 8.97% compared with the 21,342 vehicles in the fourth quarter of last year. In contrast, the sales of the P5 in the first quarter of this year continued to increase by 37.59% from the fourth quarter of last year.

P7 and P5 have a large separation in price. The price range of Xiaopeng P7 is 249,900-349,900 yuan, and the price range of Xiaopeng P5 is 177,900-242,900 yuan. Since the price of the P5 is lower than that of the P7, and its intelligence is not inferior to that of the P7, it has been regarded as the model responsible for the volume of Xiaopeng’s product system since its birth.

It turns out that sales of the P5 are indeed growing rapidly quarter-to-quarter, while sales of the pricier P7 are in decline. Guosheng Securities believes in its research report that due to the substantial increase in the sales of P5 models with lower profit margins, it will further reduce the gross profit margin of Xiaopeng vehicles.

This also means that although under the support of the sales of P5, P7 and other models, Xiaopeng maintains a large advantage in the new domestic car-making forces, but due to the rising cost of the supply chain and the shortage of parts, as well as the inability of products to obtain relatively high-quality products. Under the influence of high profits, its vehicle gross profit margin and overall gross profit margin are at a low level or even declining, so that Xiaopeng cannot obtain relatively ideal revenue and net loss performance.

Faced with this predicament, Xiaopeng’s main task in the future is to solve the problem to get it out of trouble.

Will the price increase, the launch of the G9, and the fee for software help Xiaopeng get out of trouble?

Xiaopeng wants to get out of trouble, and improving gross profit margins has become a prerequisite for achieving this goal.

In the first quarter earnings conference call of this year, He Xiaopeng’s medium and long-term goal is to increase the overall gross profit margin to more than 25%.

In order to achieve this gross profit margin target, He Xiaopeng and Xiaopeng have made a series of layouts.

In response to the rising cost of raw materials in the supply chain, Xiaopeng has reduced costs by adjusting the rights and interests of car owners. Earlier this month, Xpeng announced that users who purchased Xpeng G3i, P5 and P7 would no longer enjoy lifetime free charging, free home charging piles and installation rights.

On the other hand, Xiaopeng also dilutes the cost pressure by adjusting the product price. In January this year, Xiaopeng said that it would raise the price of all its models, with an average price increase of about 5,000 yuan. Two months later, Xiaopeng announced again that due to the continued sharp rise in upstream raw material prices, Xiaopeng Motors will adjust the prices of models on sale, and the price increase before subsidies will range from 10,100 to 20,000 yuan. .

Although the above approach is effective in the short term, it will also affect Xiaopeng’s reputation among consumers to a certain extent. As a result, Xiaopeng is also actively establishing cooperation with more battery factories to deal with the risk of rising raw material costs.

According to reports from Sohu Technology, mainstream power battery companies such as Ningde Times, Yiwei Lithium Energy, Zhongxinhang, and Xinwangda have maintained good cooperation with Xiaopeng. “The situation of insufficient batteries will be completely reversed, and we will do better in terms of cost,” He Xiaopeng said at the earnings conference.

In addition to the supply chain and raw materials, to achieve a gross profit margin of 25%, Xiaopeng also has more plans in terms of products.

It can be seen from the above that the most expensive model of Xiaopeng is the P7, which is priced in the high-end market of 200,000-300,000 yuan, while models such as Xiaopeng P5 and G3 are in the mid-to-high-end market of 100,000-200,000 yuan middle. Because of this, the next model of Xiaopeng is the G9, which is mainly for the high-end market.

The G9 was unveiled at the Guangzhou Auto Show last year. According to He Xiaopeng’s disclosure at this financial report, the G9 will be officially launched and put into production in the third quarter of this year, and will be delivered on a large scale in the fourth quarter. “I believe the G9 will become a hit in the high-end smart pure electric medium and large SUV market,” he said at the same time.

Bloomberg analysts have made similar predictions before. They believe that after Xiaopeng’s new model G9 is officially launched, since the price of its model will increase to about 350,000-400,000 yuan, with the increase in sales of this model, Perhaps it can improve the performance of Xiaopeng’s overall gross profit margin.

In addition to the G9, according to He Xiaopeng, Xiaopeng also plans to launch new models based on two new model platforms in 2023, which will target the C-segment and B-segment car markets. He emphasized that a variety of mass-produced models will completely cover the price range of 150,000 yuan to 400,000 yuan, so as to structurally improve gross profit and achieve the overall gross profit margin target of more than 25%.

While announcing more product plans, He Xiaopeng also revealed that Xiaopeng is considering launching a new service charging method. This information has also become a highlight of this financial report.

According to He Xiaopeng, starting from the 9th of this month, Xiaopeng began to standardize intelligent assisted driving system software and upgrade services for some models. In his view, when high-level autonomous driving has enough data, it is possible to launch a service method that charges by time or mileage, such as a new service charging method that combines software packages and scenarios, which will be considered in the future.

From the perspective of the industry, He Xiaopeng will have such considerations and plans, and it is also to allow Xiaopeng to have more sources of income in terms of overall revenue, and to further reduce the cost of R&D investment. After all, Tesla has been doing this for a long time before Xpeng, and has further increased its revenue by charging for software services.

Although He Xiaopeng proposed these plans, in the industry, it seems that Xiaopeng wants to achieve an overall gross profit margin of more than 25%, and even let Xiaopeng get out of trouble, it is not easy to achieve in the short term.

“In view of Xiaopeng’s current overall gross profit rate of about 12%, there are only two ways to achieve the goal of 25%. One is to increase sales, especially the sales of high-margin models; the other is to reduce costs. Such as research and development, marketing and other expenses, but these two paths are difficult to take.” Zhang Xiang, a specially-appointed expert from the China Bolian Think Tank, told Connected.com.

First of all, for the upcoming G9, although He Xiaopeng is very optimistic about it, after this model is actually launched, it is likely to be blocked by the ideal ONE and NIO ES8, as well as high-end new models from traditional car companies such as Volkswagen and BMW. Threats to energy products.

At the same time, if G9 wants to go into mass production, it will still be constrained by the supply chain and raw materials.

He Xiaopeng predicted at the conference call that the power battery supply problem will likely be solved to a certain extent from the end of 2022 to the beginning of 2023. This also means that the G9 will still be affected a lot when it is delivered in the fourth quarter of this year.

In addition, since Xiaopeng will support the launch of new models in the future, and He Xiaopeng proposed the Robotaxi operation plan in the fourth quarter of last year, this means that Xiaopeng will inevitably need to spend more funds to support research and development after this.

According to He Xiaopeng’s plan, Xiaopeng Motors will deploy the next generation of superchargers on a large scale from the fourth quarter of this year, directly upgrading from 180kW charging piles to 480kW supercharging piles, to achieve the ultimate charging experience of 200 kilometers of battery life in 5 minutes. It is said that after this, Xiaopeng will also invest more in the three costs.

Regarding the subsequent sales performance, Xiaopeng President Gu Hongdi said at the financial report, “Sales have recovered in areas without travel restrictions, and orders in May are still very strong. If the supply chain returns to normal, we can follow up in Q3. With capacity, we can increase deliveries.”

Although it seems that Xiaopeng is not worried about the future, for it, in order to maintain its dominant position in the future new energy vehicle battlefield, it is unsustainable to trade losses for development, and the key is to solve problems such as low gross profit margins , so that you can have more chances of winning before the second half of the game.

(The head image of this article comes from the official WeChat account of Xiaopeng Motors, and Sun Hao is a pseudonym in the article.)

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