“When will your deliveries finally be reliable?”

Author: Zhang Wen

Editor: Jiang Jiao

Cover: XPeng Motors

After achieving its highest monthly delivery volume with a 100,000 yuan model, XPeng Motors has once again fallen into a production capacity dilemma. This is not the first time XPeng has encountered such an issue.

XPeng MONA M03's production issues may be even more severe. Currently, the delivery cycle for the most popular 620 ultra-long-range version of this model has been extended to as long as 17 weeks, with customers having to endure at least a 4-month wait. Some customers who placed orders in September originally expected delivery by December, but most have now been pushed back to January next year.

XPeng Motors had to expand production twice last month, but still could not keep up with the surge in orders. On October 12, XPeng Motors announced compensation measures, stating that it would provide 1,500 XPeng Mall points per day to customers who placed orders before September 30.

The compensation measures did not receive the approval of car owners. Some customers who hoped to take delivery within the year to enjoy trade-in subsidies were particularly angry, as the subsidy policy would expire at the end of the year, and they would have to face a loss of over 10,000 yuan in subsidies.

Under XPeng Motors' social media accounts on various platforms, a large number of car owners flooded the comment sections to express their dissatisfaction, saying, “Please give us an explanation for the delayed delivery of M03!”

“No credibility.” Said a customer in Hebei who placed an order for XPeng MONA M03. “This is just playing with consumers. If you don't have the production capacity, why take so many orders?”

01 | Order Explosion

In December 2018, He Xiaopeng launched XPeng Motors' first model, the G3, in Guangzhou. At this time, it had only been a year and a half since he announced his official joining of XPeng Motors. The G3, priced at 135,800 yuan after subsidies, was the cheapest car among the “NIO, XPeng, and Li Auto” trio at the time, and XPeng has not launched a brand-new model priced below 150,000 yuan since then.

Six years later, He Xiaopeng has once again entered the price range below 150,000 yuan with the MONA M03, which he acquired from Didi. They hope this model can boost XPeng's sales in the second half of the year, and are willing to set the starting price at a low 119,800 yuan, which is 100,000 yuan lower than NIO's second brand, Letao L60.

XPeng's internal discussions on the final pricing of MONA lasted for a long time. He Xiaopeng said they held a meeting every day to discuss pricing, but it was still not finalized until the morning of the launch day. “We've never been so indecisive about pricing before. This car was especially difficult to price, it was really hard to set a price.”

XPeng MONA M03 Launch Event / Source: XPeng Motors

XPeng's sales in the first half of the year were poor. In the first half of this year, XPeng did not launch any new models besides the X9. They sold less than 80,000 vehicles in the first eight months, with an average monthly sales volume of less than 10,000 units, ranking last among “NIO, XPeng, and Li Auto”, and even surpassed in weekly sales by Xiaomi, which only has one model.

The MONA M03, which entered the 100,000 yuan market, did not disappoint He Xiaopeng's expectations. It is XPeng's best-selling model ever, without a doubt. There are many numbers to support this claim: over 30,000 orders placed within 48 hours of launch, over 10,000 deliveries in the first month of launch, and XPeng sales have even claimed that M03 currently has 100,000 orders.

“Our test drive cars didn't stop running for a while.” Said an XPeng salesperson in Beijing. MONA M03 was extremely popular at its launch, with cars constantly being driven out for test drives from morning to evening. Often, as soon as one customer finished their test drive, another was waiting by the roadside.

In September, XPeng's monthly delivery volume exceeded 20,000 units, reaching 21,352 units, a significant increase from both the previous month and year, setting a new record for deliveries. Among them, MONA M03 alone contributed over 10,000 units in sales.

XPeng stated that MONA M03 received over 2,000 new orders per day in September. During the National Day holiday, the auto market was booming, and auto blogger Sun Shaojun claimed that XPeng received over 16,000 new orders during the holiday, with MONA and G6 being the main models.

XPeng's sales volume over the past 9 months / Source: XPeng MONA M03's popularity is solely due to its affordable price. “For cars in this price range, affordability is the hard truth.” Said an automotive industry insider to Shangshan, adding that M03 has made pricing for future models more difficult, “This is accelerating the pace of the industry's final battle.”

02 | Delayed Delivery

Currently, most affected by delayed delivery are customers who placed orders in September. Many customers were hoping to take delivery within the year to enjoy the trade-in subsidy policy of around 15,000 yuan. According to the “Implementation Details of the Automobile Trade-in Subsidy Policy” jointly issued by the Ministry of Commerce, Ministry of Finance, and other departments, the subsidy policy will expire at the end of the year.

A MONA M03 customer in Hebei who placed an order on September 27th said that the salesperson promised a delivery cycle of 9 to 13 weeks at the time of order. Calculating based on 13 weeks, he could take delivery by the end of December at the latest and enjoy Hebei's 15,000 yuan trade-in subsidy.

However, after the National Day holiday in October, he suddenly discovered that the delivery cycle had been extended again, pushing it back to January 2025. “At the time, they gave a very broad delivery cycle, with a difference of 4 weeks before and after, which is equivalent to a one-month buffer period. Now they still can't guarantee on-time delivery despite such a long delivery cycle.”

On the day XPeng announced its compensation measures, he called XPeng customer service for half an hour straight before finally being transferred to a human agent, but the official customer service did not provide a specific solution. His delivery specialist explained to him that the latest delivery date is now January 10th.

A customer who placed an order on September 13th also told Shangshan that his earliest delivery cycle was 8 to 10 weeks, but it has now been delayed by another month, causing him to lose out on the 13,000 yuan national subsidy. After negotiating with XPeng sales, he finally cancelled his order and switched to another brand's new energy vehicle.

Car owners are dissatisfied with XPeng's compensation measure of 1,500 points per day – the points are not enough to make up for the 15,000 yuan subsidy loss, especially since the compensation is just XPeng Mall points, “Many automakers directly offer cash subsidies.” Said the aforementioned customer in Hebei.

The XPeng salesperson in Beijing also told Shangshan that they are also worried about delayed deliveries and are exhausted from dealing with angry customers. One of the solutions they offer is to transfer orders for impatient customers to other XPeng models, such as the G6.

Delayed delivery has even affected current XPeng MONA M03 sales. The salesperson said that some potential customers have given up on ordering due to the unbearably long delivery cycle. “Just the other day, a customer directly gave up on the test drive after hearing that delivery would take 17 weeks.”

XPeng's newly launched P7+ has also affected some potential MONA M03 customers. The P7+ was launched on October 12th with a starting price of 209,800 yuan, but it offers significant improvements in configuration and space compared to the MONA M03, and is the first to be equipped with XPeng's latest generation of AI Hawk Eye vision system.

The salesperson said that after the launch of the P7+, some customers who had originally booked the MONA M03 began to regret their decision. On social media platforms, many customers who had booked the MONA M03 also posted that they planned to switch their orders to the P7+.

03 | The Test

This year marks the tenth anniversary of XPeng Motors, and He Xiaopeng sees the launch of MONA M03 and P7+ as the beginning of XPeng's new decade. He previously stated during XPeng's Q4 2023 and full-year earnings call that XPeng will usher in a major product cycle with 10 all-new models over the next three years.

Starting from the fourth quarter of this year, XPeng will launch new models every quarter for the next three quarters, and with revised models, they have planned up to 30 models in total.

More models mean a greater test for XPeng's sales and production capabilities. In the past, XPeng has repeatedly encountered production capacity issues leading to delayed deliveries.

The most recent example was the launch of the G6 in 2023. At the time, the delivery cycle for the G6 was once stretched to as long as 17 weeks, followed by weak sales. Media reports at the time claimed that the limited production capacity of the G6 was due to overly conservative order forecasts for the MAX version by management, leading to insufficient lidar supply.

The aforementioned XPeng salesperson also told Shangshan that sales were poor after the delayed delivery of the G6. Earlier, XPeng also encountered production issues with models such as the P5.

For the MONA M03, XPeng management's forecasts also seem somewhat conservative. XPeng management initially expected monthly sales of around 10,000 units for MONA, with an overall monthly delivery forecast of around 20,000 units for the third quarter.

During the second-quarter earnings call, XPeng's Vice President of Finance and Accounting, Wu Jiaming, also stated publicly that they had anticipated supply constraints for some key components and had made adequate plans to prepare for contingencies. “To date, we have not seen any issues related to supply chain or production capacity.”

Now, they have to pay for their conservative forecasts in the past. Even after two production expansions in September, XPeng's MONA production capacity still cannot keep up with the surge in orders.

“The biggest problem lies in the supply chain.” Said Jiang Wen, head of XPeng's MONA series R&D, in a recent media interview. The production end at XPeng's Zhaoqing base is not a problem, but the bigger bottleneck is in the supply chain, and they have sent staff to work jointly with suppliers.

Over the past month, Jiang Wen has been actively posting updates on production progress and reassuring car owners on social media platforms, stating that they are investing heavily in ramping up production. However, the effect has been minimal. His latest Weibo post is still flooded with angry car owners complaining about delayed deliveries, saying, “When will your deliveries finally be reliable?”

Jiang Wen's post on social media

“In the past, XPeng has always been a somewhat one-sided company.” He Xiaopeng said during the second-quarter earnings call that starting from the second half of the year, he will focus on improving XPeng's business capabilities. He promised at the time that everyone would see quarterly results continuously throughout the second half of the year and even next year.

At least from the perspective of the past two months, XPeng Motors has made up for its shortcomings in product definition. The latest data shows that XPeng P7+ received over 30,000 orders within less than 2 hours of its launch. Media outlets have begun to say that He Xiaopeng has found the key to a hit model.

XPeng promotional image / Source: XPeng

However, looming over all hit models is a more profound, longer, and heavier challenge than product definition – delivery.“If MONA's deliveries can exceed 20,000 this month, it indicates that production capacity is still improving. If it remains similar to last month's level, I estimate that deliveries will continue to be delayed.” Said the aforementioned XPeng salesperson.

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