On August 27, during the media Q&A session after the launch of Xpeng's MONA M03, He Xiaopeng, Chairman and CEO of Xpeng, received a note from a colleague in the audience and said, "The initial orders have exceeded expectations and may surpass 10,000 before this interview ends."

Although the storyline is somewhat clichéd, the popularity of Xpeng MONA M03, priced below 120,000 yuan, is not surprising. According to Xpeng's official account, this "first smart pure electric hatchback" for young people, priced between 119,800 and 155,800 yuan, received over 10,000 orders within 52 minutes of its launch.

Image Source: Xpeng Auto Launch Event Photography

Xpeng's previous models, such as the G9, fell short of expectations due to pricing and SKU issues, while the G6 failed to gain traction due to delivery delays, and the X9, as a luxury MPV, appeals to a niche market. After the P7, Xpeng has been lacking a true hit. With MONA M03, Xpeng has no room for retreat, leading to an aggressive pricing strategy.

With a youth-friendly price point and features tailored to young consumers, MONA, as a sub-brand of Xpeng, echoes Xiaomi's Redmi strategy from years past.

01

Xpeng's "Redmi"

As He Xiaopeng's mentor and one of Xpeng's early investors, Lei Jun has frequently appeared alongside "Da Shixiong" (He Xiaopeng's nickname within the company). Last week, Lei Jun visited Xpeng's Guangzhou headquarters to test drive the MONA M03, and attended the MONA M03 launch event in Beijing on August 27 to add to the atmosphere.

Under the close interaction between "Da Shixiong" and "Leishen," even the MONA M03 launch event bore some resemblance to Xiaomi events.

Offering accessories such as a 399 yuan sunshade, 169 yuan headrest, 179 yuan lumbar support, 99 yuan fragrance, and 599 yuan external instrument panel, Xpeng MONA M03's official merchandise selection rivals that of Xiaomi's SU7, which gained popularity with its official phone mount earlier this year.

Image Source: Xpeng Auto Launch Event Photography

These accessories have had a positive impact on the MONA M03, as evidenced by the audience's reaction. In particular, the external instrument panel addressed a common complaint among media and consumers who had tested the car—the lack of a dashboard or HUD display for speed and gear information.

During the pricing announcement, Xpeng employed a Xiaomi trope, stating that "setting this price was indeed very difficult." He Xiaopeng almost echoed Lei Jun's famous line about "convincing the top brass overnight."

This approach extended to the MONA M03 itself, positioned as Xpeng's sub-brand with a surprisingly low price point and a focus on appealing to young consumers with its design and smart cockpit features, reminiscent of Xiaomi's Redmi strategy.

In July 2013, Xiaomi launched its new product line, Redmi, and the first Redmi smartphone. Priced at just 799 yuan, the Redmi phone featured the same quad-core processor as TCL, Gionee, and Konka models costing 1500 yuan or more, with a screen pixel density 50% higher than similar phones in its price range.

The Redmi phone quickly gained popularity due to its excellent cost-effectiveness, with the Redmi 1 and Redmi 1S models selling a combined 44.6 million units, providing a crucial boost to Xiaomi's finances at the time.

Looking at Xpeng MONA M03, given that the 155,800 yuan MONA M03 Max model won't be released until the 2025 Chinese New Year, the car currently targets the 120,000-130,000 yuan market segment.

In this segment, MONA M03 competes with models like the BYD Qin PLUS, Aion AION S MAX, and Changan Qiyuan A07. According to on-site experiences and insights, MONA M03, with its lower starting price, offers comparable range and performance while falling slightly short in rear passenger space but excelling in trunk space and smart cockpit features, including audio, voice control, and navigation.

Notably, Xpeng's younger brand image also positions MONA M03 favorably against competitors in the young consumer market.

02

Will Success Depend on "Fengtou"?

Both MONA M03 and Redmi smartphones employed the strategy of offering surprisingly low prices and abundant features. MONA M03's initial surge of over 10,000 orders within 52 minutes of its launch mirrors the Redmi phone's million pre-orders within half an hour of its debut.

Image Source: Xpeng Auto Official Promotional Image

MONA M03's strong start is a good omen for Xpeng's turnaround efforts. However, the challenges have only just begun, particularly for "Fengtou" (Wang Fengying's nickname within the company), who oversees supply chain and sales channels.

"MONA M03's small reservations far exceeded those of G6 during the same period, and I'm particularly concerned about maintaining our supply chain," He Xiaopeng admitted before MONA M03's launch.

Xpeng G6 experienced a similar surge in pre-orders but fell flat due to extended delivery times caused by lidar production constraints, leading some customers to switch to competitors like IM Motor's LS6.

Wang Fengying bears some responsibility for the G6's underwhelming performance. As the head of manufacturing, marketing, and sales at Xpeng, her leadership will be crucial in the second half of MONA M03's turnaround effort.

Having learned from the G6 experience, Wang Fengying prepared well for MONA M03's launch, allocating additional resources to secure the supply chain months in advance. This level of support was unprecedented for Xpeng's previous models like the G6 and X9.

Given MONA M03's simpler SKU and the absence of lidar or other supply-constrained components in its base models, Wang Fengying's supply chain efforts are expected to pay off, with current delivery times estimated at 1-3 weeks, starting in September.

03

Guarding Against MONA's "Side Effects"

While supply chain management and marketing are known challenges for Xpeng, based on experiences with models like the G9, G6, and X9, a more pressing issue is differentiating Xpeng's main brand from its MONA sub-brand.

As both MONA and Xpeng's main brand emphasize "intelligent driving," a cornerstone of Xpeng's identity, MONA offers similar capabilities at a more affordable price.

To control costs, MONA M03 forgoes lidar in favor of a vision-based system but retains advanced features like urban autonomous driving in the MONA M03 Max model.

"Thanks to improvements in our algorithms, Xpeng will update both lidar and vision-based systems simultaneously, ensuring a consistent experience in 99.99% of cases," He Xiaopeng said at the MONA M03 launch event.

Image Source: Xpeng Auto Launch Event Photography

With a vision-based system capable of handling advanced driving tasks, Xpeng may struggle to justify higher prices for lidar-equipped models.

In a post-launch interview, He Xiaopeng revealed that future Xpeng models will adopt vision-based systems, while L4 autonomous driving models will use lidar. However, true L3 autonomous driving vehicles are yet to hit the market, with L4 expected in 2-3 years.

As advanced driving features become more common, Xpeng will need new selling points to justify prices above 200,000 or even 300,000 yuan for its vehicles. This poses a challenge for Xpeng, which has long positioned itself as a leader in intelligent driving technology.

Perhaps this is why, during Xpeng's 10th-anniversary internal meeting, He Xiaopeng emphasized both "technology" and "art" as the new foundations for product competitiveness.

In March 2019, Xiaomi spun off Redmi as a separate brand, allowing Xiaomi to focus on premium products while Redmi continued to compete in the cost-effective market. Could Xpeng follow a similar path in the future?

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