This is the 1302nd original article from 'New Energy Frontier'. Click on 'New Energy Frontier' above to follow and 'star' this account. The article only records the thoughts of 'New Energy Frontier' and does not constitute investment advice. The author does not have groups, does not charge for stock recommendations, and does not manage clients' finances.

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Today, let's continue to explore the future of XPENG Motors.

 01 The Woes of Intelligent Driving

The first issue that must be addressed is whether intelligent driving solutions possess differentiated attributes.

Objectively speaking, in the long run, intelligent driving solutions do not possess significant differentiation. From an ultimate perspective, they will all converge on the end-to-end pure vision technical route (if you don't believe this, we can verify it later). Moreover, given the intense competition in China, it will be difficult for OEMs to implement a subscription model like Tesla's in the United States (of course, this possibility cannot be completely ruled out. If the remaining few new energy vehicle giants reach a consensus, intelligent driving could collectively adopt a subscription model, although this possibility is relatively small). More likely, it will be a buyout model. Therefore, hoping for intelligent driving to become a value-added service model may be challenging in the medium to short term in China, although this could be feasible for vehicles sold overseas.

Although implementing a subscription model for intelligent driving in China in the medium to short term is undoubtedly a significant loss for OEMs, as it means losing out on a clear long-term revenue stream, there's nothing that can be done about it given the national context. Fortunately, the advent of the intelligent driving era will still comprehensively transform the business models of OEMs.

After the full arrival of the intelligent driving era, people will be freed from the tedium of driving, and vehicles will gradually transition from traditional displacement tools to entertainment and rest tools (from this perspective, the concept of 'vehicle as home' proposed by Li Auto is quite advanced and aligns with the ultimate form of the intelligent driving era). In vehicles, people can watch videos, conduct business, and more using the large in-car screens. This also means that leading intelligent driving OEMs will transform into one of the important family entertainment portals.

However, compared to the transformation on the B-side, the transformation of the C-side business model is just a drop in the ocean.

 02 The Daring Leap of Business Models

Once the era of autonomous driving truly arrives, intelligent driving OEMs will become the world's largest robotaxi companies, or alternatively, the world's largest express delivery companies, the world's largest auto insurance companies, the world's largest advertising companies, or e-commerce companies, and so on.

It is emphasized once again that these considerations are based on an ultimate perspective and may seem far-fetched in the medium to short term. However, if carefully deduced, as long as the technology matures, these outcomes will naturally follow. At that point, the biggest issue will be whether the enterprise's management capabilities can keep up. Fortunately, the development of AI largely fills this significant gap in management capabilities.

Compared to humans, virtual employees such as AI and robots are much easier to manage, as they have no emotions, do not get tired, do not demand salary increases or more rest days, and do not need to take leave for various reasons.

Due to the long-term homogenization of intelligent driving technology, the core determinant of who becomes the leading intelligent driving OEM lies in who can seize the time window and gain a scale advantage in hardware.

Currently, from a global perspective, Tesla remains in a league of its own, whether it's in terms of the FSD algorithm, scale advantages in manufacturing, or globalization. Many people previously criticized Tesla's unconventional pursuits in manufacturing, but when viewed from an ultimate perspective, it becomes clear that these were all geared towards serving the era of autonomous driving.

In China, BYD has vertical integration and scale advantages in hardware, but it still lags behind in software. Fortunately, Chairman Wang has changed his mind about intelligent driving. Since the widespread adoption of intelligent driving last year, BYD has at least gained an advantage in data. As long as it continues to increase R&D investment in algorithms, it has the opportunity to catch up and, combined with its hardware advantages and advantages in globalization compared to other domestic OEMs, it also has the strength to compete.

 03 XPENG Has the Potential to Be One of the Ultimate Winners

Additionally, there is XPENG Motors, which can even be said to possess comprehensive advantages over BYD at present. There's no need to mention its intelligent driving algorithms, which are currently unparalleled in China. Although its hardware advantages are not as significant as BYD's, with the arrival of Wang Fengying, the company's shortcomings in the supply chain have been largely addressed and are no longer considered significant.

More critically, XPENG Motors has the potential to become the leading domestic OEM with its robotaxi services. This will not only allow it to continuously outperform other companies in terms of algorithms with its data advantage but also, with the large-scale deployment of robotaxis, it is expected to gradually close the scale gap with other giants in hardware.

The XPENG G9 received approval for road testing from the Guangzhou Municipal Industry and Information Technology Bureau, Public Security Bureau, and Transportation Bureau as early as 2022, allowing it to conduct autonomous driving tests on general test roads in Guangzhou as a zero-modification mass-produced vehicle (with only software upgrades). In 2023, the XPENG G9 further obtained a passenger transport operation test license, covering all general test roads in Guangzhou and possessing the preliminary qualifications for providing passenger services. By the end of 2025, it once again obtained an L3 autonomous driving road test license in Guangzhou and initiated regular L3 road tests, all of which are preparations for the deployment and operation of robotaxis. The second-generation Robotaxi has already started public road testing and is expected to launch three Robotaxi models and commence trial operations in 2026, with AutoNavi as its first global ecological partner.

At this point, someone might say that XPENG's progress is not fast enough, considering that Baidu's Luobo Kuaipao has already accumulated millions of orders in Wuhan, and companies like Pony.ai and WeRide have already commenced trial operations.

However, 'New Energy Frontier' would like to point out that the ultimate leader in intelligent driving can only be a new energy vehicle leader, determined by the dual constraints of algorithms and hardware. Algorithms require a sufficient amount of data feeding, and only OEMs possess the most significant data advantage. Additionally, the need for integrated collaboration between hardware and software also gives OEMs an advantage. Not to mention that the companies currently in trial operations primarily use multi-sensor fusion solutions and lack pure vision technical routes, putting them at a significant disadvantage in the ultimate scenario. Although they currently have some time advantage in commercial progress, compared to their other disadvantages, this slight time advantage is insignificant. Once algorithm technology matures and OEMs increase production and deployment of hardware, they can quickly gain ground through traditional vouchers or even free trials.

Compared to concerns about algorithms and hardware, 'New Energy Frontier's biggest concern is actually regulations and whether local governments will prioritize local OEMs, thereby negating the time advantage of companies like XPENG that possess advantages in both software and hardware. This requires continuous observation. If this concern is alleviated, we only need to focus on the progress of XPENG's robotaxi services. If it stays ahead, our ultimate vision for OEMs in the era of autonomous driving will gradually come to fruition.