Tesla’s price war prompts Xpeng to focus on cheaper manufacturing

Chinese electric vehicle maker Xpeng Inc. Co hopes the dramatic cut in manufacturing costs will propel the eight-year-old company to profitability, co-chairman Brian Gu told reporters at the Shanghai International Auto Show, which opens to the general public on April 20.

Gu said the Guangzhou-based company plans to cut costs by 25% on its power train, including battery cells, and save 50% on intelligent driving features by the end of 2024. So far, the two account for more than half of the cost of manufacturing Xpeng EVs, he said.

Last year, disappointing sales forced Xpeng to push back its timeline for profitability to 2025.

But battery materials are getting cheaper, Gu said, making savings this year and next. The company is also trying to reduce the use of laser-based radars, chips, sensors and cameras in its automated driving features.

The company is also betting on a new design and manufacturing architecture it calls SEPA2.0 that will help increase efficiency and reduce costs, He Xiaopeng, the company’s chief executive, said at a launch event on Sunday.

Xpeng will introduce its first model developed on the new platform, a mid-size sports utility vehicle to rival the Tesla Model Y, when the show opens to the media on April 18. It is not saying how much it will cost, but Gu said the company will focus on developing core products with a price range of 150,000 yuan ($21,800) to 350,000 yuan. The company may launch another model by the end of this year.

“The industry is becoming a lot more competitive, and there are a lot more models,” Gu said. Not long ago, EV buyers were a small, wealthy group, he said, but as this has changed, it requires “a focus on offering attractive products at an affordable price.”

A price war waged by US automaker Tesla Inc at the start of the year has put pressure on carmakers in the world’s biggest market. Nearly 20% of passenger cars on the market saw price cuts of more than 10,000 yuan ($1,500) in the first quarter, according to data compiled by research provider China Auto Market Show.

Xpeng said its intelligent driving technology is “much better suited for the Chinese market” than Tesla’s, Gu said, pointing out that the technology originally developed in the US does not work with high-definition maps and cannot be used locally. Lack of development and testing.

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