Xpeng pushes back target goal after rough year

Chinese electric car maker Xpeng Inc. has pushed back its profit target to 2025 after a dreadful year in which its stock plummeted 80% and missed half of its annual sales target.

Having previously aimed to reach break-even by late 2023 or early 2024, the Guangzhou-based automaker now expects to achieve operating profitability in 2025, he said. CEO He Xiaopeng told Bloomberg News.

To reach that goal, he’s making a bold bet on fully autonomous driving. This is technology that even Elon Musk’s electric car pioneer, his Tesla Inc., has been unable to perfect despite years of hard work. He aims to capture at least 20% of what he calls the “all-intelligent vehicle” market, referring to vehicles that are “nearly level 4 self-driving” capable of handling complex urban conditions. I’m here. At Level 4, a human driver can control the car, but in theory could also take a nap while in the car.

Currently available mass-produced passenger cars do not meet that definition, but the rapid development of technology will see the market grow to about 5 million units annually in five years, he said. To get his fifth of the market, Xpeng would have to build a million cars a year. This is well above his 120,757 he shipped in 2022 and well below his target of 250,000.

“The number one priority right now is scale,” he said in an interview at Xpeng’s Guangzhou headquarters. He added that it might not be possible. for 5 years. Xpeng has yet to report full-year results, but his revenue for the first three quarters of 2022 was just 21.7 billion yuan.

Xpeng is one of the automakers hit hardest by China’s COVID restrictions and lockdowns last year. Because the only factory and many of its major suppliers are based in Guangdong and Shanghai, his two regions most affected by the restrictions. Guangzhou is the capital of Guangdong Province.

The company has also been embroiled in a price war sparked by Tesla, cutting the price of some models by 12.5% ​​earlier this month.

Xpeng’s U.S.-listed stock has plunged in 2022. Once worth nearly $50 billion, outpacing then-U.S. giant Ford Motor Co., the company’s market value plummeted to just $8.7 billion.

As part of its planned comeback, Xpeng is restructuring the company’s management team to improve planning capabilities and make operations more client-focused. Automakers are also simplifying their product offerings. Although Xpeng only has four models, he was criticized for the confusing array of electric motors, batteries, software and internal configuration within each model. There will also be fewer suppliers, he said.

For example, when Xpeng’s latest model, the G9 sport utility vehicle, launched in September, Xpeng came under fire for its complicated configuration and pricing system. There were six variants based on motor type, range, and some intelligent features, with more optional features that customers had to pay for, such as music systems, self-driving features, and fast-charging batteries. Strategy in just 2 days.

“I myself will play a stronger role and do more.” As part of the change, the company will streamline design and manufacturing across three platforms to improve efficiency and control costs. Some executives have also been redeployed, including co-founder Xia Heng, who stepped down as his director. Xpeng added a new president on Monday – Wang Fengying is a female executive at Great Wall Motors, an industry veteran she has worked for more than 30 years.

Wang Hanyang, an automotive analyst at Shanghai-based 86Research Ltd, wondered if Xpeng could step up its supplier relationships given last year’s underperforming performance and potential challenges this year. He said he didn’t know yet. Xpeng’s planned production expansion, he said, is unsure if the target will be met.

“The company is probably going through its toughest time right now, and it is still questionable whether it will be able to win back its customers,” said Wang.

In order to keep costs down and focus on its core product, Xpeng is not looking to develop its own battery cells like rivals Nio Inc. and BYD Co. are doing, and this has been discussed before. movement, he said. Rather, he leaves it up to battery manufacturers to compete on cost and efficiency.

The battery supply problem that has plagued the EV industry over the past year is “not just going to be a problem, it’s not going to be a problem” in the next five years, he said.

As part of the drive towards self-driving, a key task in the second half of the year is to develop a version of self-driving that does not rely on high-definition maps and scale it to 50 to 100 cities, he said. . Starting in 2024, the company aims to upgrade its intelligent system to not only drive the car, but also learn the owner’s driving habits and make automatic adjustments.

“I like the driving logic and the mode of copying yourself, so you will feel very comfortable,” he said. Eventually, all vehicles will come standard with fully autonomous driving technology, and in the long term, these intelligent features could become the company’s main source of revenue, he added.

Still, the commercialization of self-driving cars will not only require policies and regulations to be met, but the public will need to embrace the technology, Vice Chairman Brian Gu said in the same interview. Gu said it will take more time for the fully autonomous system to become compatible with the international market. After Xpeng first entered Norway in 2020, he recently opened four showrooms in Europe.

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