Source | Bohu Finance (bohuFN)

XPeng Motors (hereinafter referred to as 'XPeng'), which once self-deprecatingly claimed to 'not understand marketing,' seems to be undergoing a transformation lately. Not only is it vigorously promoting its new cars but is also talking up a 'new AI story,' a departure from its previous low-key style of 'nerdy' car manufacturing.

In just two months, XPeng has launched two models consecutively—XPeng MONA M03 and XPeng P7+. The MONA M03 has helped XPeng emerge from a sales slump, achieving over 20,000 monthly sales for the first time this year. The P7+ has set a new sales record for XPeng, with orders exceeding 31,528 units within just three hours of its launch.

At the recent 'XPeng AI Technology Day,' XPeng also announced its entry into the extended-range segment and shared its innovations in five key areas: AI vehicles, AI chips, AIOS, AI robots, and flying cars. XPeng's share price surged by up to 25% as a result.

From an outside perspective, XPeng seems to have truly 'listened to advice' in recent years. After being mocked for 'not understanding marketing,' it actively increased its marketing efforts. When questioned about insufficient product capabilities, it introduced 'general' Wang Fengying to reshape its organizational structure. Facing setbacks in premiumization, it tried to focus on both 'cost-effectiveness' and 'intelligent driving'…

After celebrating its 10th anniversary, XPeng seems to have finally learned to let go of obsessions and adapt to the times, sweeping away the previous sales gloom.

01 'Equalization of Intelligent Driving,' Turning the Tide

This year, XPeng has shown an unprecedented 'fast pace.' Not only has it launched two popular new models consecutively, but He Xiaopeng has also revealed that within the next three years, XPeng plans to introduce or modify about 30 new products. The frequency of new car launches next year is expected to be 'quarterly.'

Additionally, XPeng has been 'speeding' along in the field of AI. In May this year, XPeng launched China's first end-to-end large model for mass production vehicles. In July, XPeng's XNGP was upgraded from 'usable nationwide' to 'excellent nationwide.' In August, XPeng announced the 'transition from software-defined vehicles to AI-defined vehicles,' becoming the first domestic automaker to explicitly adopt AI as its strategy.

In the 10 years since its establishment, XPeng has launched a total of 8 models. The release of the second model, the P7, followed more than two years after the first model, the G3. However, starting this year, XPeng has significantly accelerated its efforts in intelligent driving and new product launches.

While sales pressure has certainly played a role, as of October this year, XPeng had delivered a cumulative total of 122,478 vehicles. With an annual sales target of 280,000 vehicles, its completion rate is less than 50%. In the first six months of this year, XPeng only achieved about 20% of its target sales volume. The voice that XPeng has fallen behind among emerging automakers has grown louder.

He Xiaopeng is well aware of the current market situation. In an internal letter during this year's Chinese New Year, he clearly stated that this year is the first year of 'bloody' competition for Chinese automotive brands, marking the first year of the elimination round.

Against this backdrop, XPeng urgently needs to further consolidate its intelligent driving advantage and simultaneously build a 'consumer perception advantage.' Only then can it create popular models and change XPeng's sales dilemma, but this is not an easy task.

Firstly, a simple 'intelligence' label is difficult to translate into consumer perception of the XPeng brand, especially as the level of intelligence in the automotive industry is gradually increasing. 'Intelligent driving' has almost become a standard feature for new energy vehicles, and the sharpness of XPeng's 'intelligence' label is diminishing.

Currently, XPeng's strategy is to anchor itself to giants in the field of intelligent driving, such as Tesla and Huawei, continuously strengthening its intelligence label to regain a distinct perception among consumers.

For example, XPeng was the first to follow the end-to-end intelligent driving route. Before this, most domestic intelligent driving suppliers chose the lidar route, and the pure vision solution based on the end-to-end large model was only adopted by Tesla, the 'minority.'

After this, He Xiaopeng personally traveled to the United States to experience Tesla's FSD, which uses end-to-end technology, describing it as 'almost close to human driving levels.' He Xiaopeng has also stated on multiple occasions that pure vision intelligent driving will be the future trend.

Additionally, with the addition of HarmonyOS, XPeng and Huawei are considered the 'two titans' in the domestic intelligent driving industry. At the 2024 China EV100 Forum in March this year, Yu Chengdong stated that in the past, domestic automakers excelled in intelligent parking and driving, with He Xiaopeng's being the best. However, with Huawei's entry, the industry will be rewritten.

The rivalry between the two has also brought higher attention to XPeng. For example, He Xiaopeng and Zhou Hongyi drove an XPeng P7+ with a pure vision intelligent driving solution to brave Beijing's most congested intersection, followed by an AITO 07 equipped with Huawei's ADS 3.0 challenging Beijing's evening rush hour.

Secondly, XPeng is also trying to set its own pace by accelerating the popularization of intelligence. He Xiaopeng believes that intelligent driving has not been a top-three purchasing consideration for customers in the past, mainly due to its high price. If the gap between high-level intelligent driving and basic assisted driving can be reduced to 10,000-20,000 yuan, high-level intelligent driving will quickly capture the market.

To this end, XPeng launched the 'affordable intelligent driving model for young people'—the XPeng MONA M03—this year, driving the popularization of high-level intelligent driving. Additionally, XPeng has broken conventions and plans to equip all its models with high-level intelligent driving. Currently, XPeng P7+ has announced no subscription or payment required.

By taking the lead in raising the banner of 'equalization of intelligent driving,' XPeng essentially hopes to maximize the value of its intelligent driving advantage. Given the current popularization of intelligent driving, its benefits for high-end models are limited. However, for mid-to-low-end models, 'downscaling intelligent driving' will open up new market segments.

XPeng's idea is straightforward. By entering the mainstream market around the 150,000 yuan price range through intelligent driving, it can quickly boost XPeng's sales. As the scale increases, positive cycles can be formed in terms of production costs and data iteration, gradually expanding its leading edge.

02 'Going with the Flow,' Entering the Extended-Range Segment

'More for less' is strikingly similar to Xiaomi's previous strategy. Beyond this, there is an overlapping trend in their labeling on various levels.

For example, Xiaomi proposed 'the first car for young people,' while XPeng proposed 'the first AI intelligent driving car for young people.' Xiaomi's SU7 emphasizes aesthetic marketing, and He Xiaopeng repeatedly emphasized 'attractiveness and fun' at the XPeng MONA M03 launch event.

Xiaomi proposed a 'complete human-car-home ecosystem,' and XPeng also announced the launch of XPeng Tianji AIOS, which will support XPeng's comprehensive layout in multiple fields such as AI vehicles, AI robots, and flying cars in the future.

Of course, He Xiaopeng has also stated multiple times that the XPeng P7+ is not a competitor to Xiaomi's SU7 but a 'peer.' However, within a similar price range, direct competition between the two is inevitable.

But currently, after the SU7, Xiaomi has launched the Xiaomi SU7 Ultra priced at up to 800,000 yuan, suggesting that it does not intend to solely follow the 'cost-effectiveness' route but rather create a high-performance car image.

Therefore, XPeng, which focuses on 'equalization of intelligent driving,' will have a greater advantage in the Downward market . Especially since XPeng has announced its entry into the extended-range segment, future costs are expected to further decrease, further highlighting 'cost-effectiveness.'

Regarding its entry into the extended-range segment, He Xiaopeng believes it is 'going with the flow,' but what exactly is this 'flow' that made He Xiaopeng, who was once firm in pursuing a pure electric route, change his mind?

Firstly, it's the market trend. According to data from the China Association of Automobile Manufacturers, in the first nine months of this year, pure electric vehicles sold a total of 4.988 million units, a year-on-year increase of 11.6%. Plug-in and extended-range hybrid vehicles sold 3.328 million units, a year-on-year increase of 84.2%.

Hybrid models are growing significantly, and many automakers also view 'extended range' as an incremental market. For example, Zeekr, IM Motors, Aion, and others have successively announced the launch of hybrid products. Even NIO, which has always adhered to a pure electric route, is rumored to launch extended-range products in overseas markets.

Currently, the market share of new energy vehicles and fuel vehicles is roughly equal. Although there is constant talk of 'fuel vehicles exiting the market,' in reality, the share of fuel vehicles will not be comprehensively surpassed in the short term, and the growth rate of new energy vehicles is also slowing down. Therefore, 'compromising' extended-range vehicles will have greater growth potential.

Secondly, it's mental set. The emergence of extended-range vehicles is dominated by a 'user mindset.' Current charging and refueling facilities cannot fully address users' range anxiety, and there are limits to the range of new energy vehicles. As long as users need it, extended-range vehicles will always have value.

Finally, it's overseas development trends. He Xiaopeng believes that if a company wants to enter the global market, it needs a new energy replenishment method, including extended-range hybrids. Considering that overseas charging infrastructure is not well-developed and global enthusiasm for pure electric vehicles is waning, XPeng's entry into the extended-range segment is more conducive to a lighter starting point.

If we combine XPeng's recent 'equalization of intelligent driving' strategy, entering the extended-range segment can also bring significant cost reduction advantages. Firstly, the research and development and production costs of extended-range vehicles are lower. Secondly, the technology for extended-range hybrid vehicle batteries is more mature. The entry of giants like CATL will further drive down core costs, promoting the 'popularization' of XPeng's intelligent driving.

But perhaps the more important 'flow' is that the extended-range route has been proven feasible multiple times. Ideal Auto was certainly the first to 'taste the soup,' but ZERUN, known as the 'Ideal substitute,' also saw its sales soar after following Ideal's lead in launching dad-friendly extended-range vehicles.

From pure vision intelligent driving to the development of extended range, XPeng's technological route has undergone significant adjustments, reflecting changes in XPeng's brand positioning.

As one of the earliest emerging automaker brands, XPeng has anchored itself in 'intelligence' since its inception. In the early days of new energy vehicle development, this was indeed a differentiating label.

However, as the new energy vehicle industry has continued to develop, XPeng has realized after multiple setbacks in pursuing premiumization that, beyond 'intelligence,' it has many shortcomings in product structure, organizational structure, and other areas. For XPeng now, re-recognizing its self-positioning is crucial to 'survive' better.

03 Crossing the River by Feeling the Stones, Hidden Currents Flowing

Therefore, XPeng has embarked on an intelligent transformation, not only focusing on both 'intelligent driving' and 'low prices' but also further expanding its AI territory to cover AI vehicles, AI chips, AIOS, AI robots, and flying cars, hoping to lead a new revolution in intelligent driving through AI.

He Xiaopeng stated that in intelligent driving, XPeng is crossing the river by feeling the stones, while others are crossing by feeling XPeng. But currently, the 'stones' XPeng is feeling seem a bit too big.

Regarding XPeng's new AI territory, many netizens find it familiar, with elements like large models, chips, robots, etc., bearing the influence of giants like Tesla, Xiaomi, and Huawei.

Of course, learning from the excellent is not a problem, but these projects require investments in the tens of billions. He Xiaopeng himself has also stated that 50 billion yuan is not enough to make good AI robots. If XPeng is to fill all these 'AI pies,' can it handle it?

Currently, XPeng will continue to increase its investment in intelligent driving. He Xiaopeng revealed that XPeng will invest 3.5 billion yuan in intelligent research and development in 2024 and will invest over 700 million yuan annually in computing power training.

He Xiaopeng believes that the reason for persisting in high investments in 'intelligence' is that under the framework of 'technological homology,' 'intelligence' can be reused across the entire territory. Relying solely on scale expansion is not a long-term solution for improving gross profit margins. 'Technological cost reduction' is the trend.

Additionally, while He Xiaopeng believes that scale effects are not a long-term solution, XPeng currently also needs sales to boost morale. Besides delving into the sink market through 'equalization of intelligent driving,' going overseas has also become crucial for XPeng to turn around its sales situation.

It is understood that XPeng plans to enter over 60 countries by 2025, potentially with nearly 300 after-sales service outlets. Currently, XPeng is seeking to produce electric vehicles in Europe and plans to establish a large data center there, hoping to address EU constraints on tariffs and data security through these layouts.

He Xiaopeng believes that the best path for Chinese automakers to go overseas is not by focusing on cost-effectiveness but by enhancing technological content. Judging from these actions, XPeng hopes to make long-term layouts in overseas markets, not just vehicle sales.

In terms of actual performance, in the second quarter of this year, XPeng ranked first in China's pure electric brand exports of mid-to-high-end models, with overseas sales contributions exceeding 10% for the first time.

Various indications show that XPeng's self-disruption has already brought many positive impacts. The two new models embody the 'popularization of intelligent driving,' and their traffic is also starting to benefit XPeng's other models. In October this year, driven by the XPeng MONA M03, XPeng set another monthly delivery record.

In terms of entering the extended-range segment, overseas layouts, and cost reduction and efficiency enhancement, XPeng also places high hopes on the empowerment of 'intelligence.' However, the new energy vehicle industry is constantly changing. Whether XPeng can truly create a new era and lead the industry in the next decade remains to be verified over time.

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