EV company profiles — #3
Xpeng
Tesla Copycat?
Xpeng represent the third China manufacturer that we are analyzing in this EV Company Profile Series, the previous being Nio and Li Auto.
While Nio is trying to position itself into the premium sector and Li Auto is not exactly an EV maker but have the range extender hybrid technology, Xpeng seems to compete head to head on prices with Tesla.
So far the results have seemed consistent and sales are picking up specially for the new P7 model, but lower prices equal to lower margins, and it is not easy to achieve profitability starting from zero, while competing with a company like Tesla, which already is profitable and can cut costs more easily due to higher volumes and margins.
Moreover, there are many controversies around Xpeng, accused of stealing secrets from Apple’s autonomous car project, and more recently also of copying part of Tesla autopilot source code, by hiring a former Tesla employ.
So much for a start, let’s carefully analyse the company and its future outlook together.
The company
Xpeng motors was co-founded in 2014 from Henry Xia and He Tao. Initial backers included additionally He Xiaopeng, now CEO and former Alibaba executive.
As usual for Chinese Start-ups, there is a strong financing coming from bigger tech companies, such as:
- Alibaba: the company of Jack Ma, e-commerce giant considered the Chinese Amazon. In a funding round in 2018 Alibaba vice-president Joseph Tsai have also joined the board of Xpeng
- Xiaomi: the company of Lei Jun, who was directly involved into Xpeng founding process. Xiaomi is a Chinese electronics corporation producing smart domestic appliances and currently the third smartphone manufacturer in the world and invest also into Nio.
- Foxconn: founded by Terry Guo, is a Taiwanese electronic contract manufacturer, famous for example to be among iPhone producers.
Xpeng have its headquarters in Guangzhou (Canton), the industrial city of South China province of Guangdong, and have also recently raised over 600 million USD from the metropolitan area Government to construct the second factory in 3 years. The Guangzhou government, trough a fund, is also one of the company investors and ultimately is helping Xpeng having additional financing at interest rates of no more of 4%, showing how big is the Government support and trust into the future of Xpeng as a global EV actor.
The Founders
- “Henry” Xia Heng
Heng studied Automobile Engineering at Tsinghua University. Prior to co-founding Xiaopeng Motors, Henry served as the supervisor for the New Energy Vehicle Control Section, a research and development team at Guangzhou Automobile Group. He received multiple awards in research, innovation and management.
Heng has worked as a resident engineer in multiple European countries. He has published more than 10 papers and patents about electric and smart vehicles and has expertise in vehicle integration and project management.
- He Tao
He earned his master’s degree of Automotive Engineering in Tsinghua University, was in charge of Shanghai Expo’s new energy bus system and R&D project of GAC New Energy electric vehicles.
- He Xiaopeng
Born in Huangshi, Hubei, he graduated from the South China University of Technology with a bachelor degree in Computer Science.
He co-founded UCWeb with Liang Jie in 2004 overseeing the company product strategy and R&D efforts. In June 2014, UCWeb was bought by Alibaba for $4.3 billion making He Xiaopeng a billionaire. From 2014 to August 2017, he than served as senior executive of Alibaba Mobile Business Division.
On August 2017 Xiaopeng officially announced his resignation from all his positions in Alibaba to embark on a new adventure and lead Start-up Xpeng Motors, using a portion of those previous winnings to help get the company off the ground.
Models
With a starting price of around 150,000 RMB (23,000 USD) post subsidies, G3 is an SUV competing with Tesla Model X. It had a NEDC range of 520 km and 0–100 km/h performance of 8.6 seconds.
The new P7 is a very captivating Sedan with a starting price of 230,000 RMB (35,000 USD) post subsidies. It is directly competing with Tesla Model 3. The declared NADC range is a impressive 706 km and the 0–100 km/h performance is 4.3 seconds for the 4WD high end model.
Technology
The P7 is based on what Xpeng call a Smart Electric Platform Architecture (SEPA) , with a built-in neural network back by dual-chip computing system, with an NVIDIA Autonomous Driving Engine and a Qualcomm Snapdragon vehicle processor.
Both vehicles are equipped with the Xpilot, L2-level Autonomous control and with Xmart OS In-Car System, the in-car services and App stores that Xpeng say will progressively improve, enriching the experience with each system OTA upgrade.
The Future
In the last weeks Xpeng made 2 quite important announcements.
The first one is the technical cooperation with Nio: the two companies have decided to share charging services. Based on the agreement, the two sides will connect their network data and payment processes, allowing customers of both companies to use each other’s charging stations at no extra cost. They will be able to check for locations, status, charge and pay at both Nio and Xpeng stations.
On the other side Xpeng is trying to take advantage of the recent run up of its stock and just filed to raise another 2 billion USD by diluting the shares. Among the possible uses of this increased capital, Xpeng listed R&D expenses for its EV models and software, hardware and data technologies, development of sales and service channels and supercharging network, as well as expansion in the international markets.
Xpeng is very young company and is still far from profitability. The choice to compete in the same vehicle’s categories with Tesla, has taken them to work with limited margins. But on the long run this approach might as well pay off, considering the strong government support and the industrial capacity with already two owned plants. I imagine part of the money will be used to develop and lunch new vehicles based on the SEPA architecture, to further attack the market.
China plans for EV transition is definitely helping, by making the cake large enough for everyone at this stage. But to eat a more significant slice, there is much work to do.