On March 18, XPeng Motors unveiled its Q4 and full-year 2024 financial results. The company achieved revenues of 40.87 billion yuan in 2024, marking a 33.2% year-on-year increase, with Q4 revenues hitting a new high of 16.11 billion yuan. XPeng's net loss for the year stood at 5.79 billion yuan, indicating notable improvement. Over the past year, the company underwent transformations in its organization, sales channels, and product offerings. In Q4 2024, XPeng's technology-based revenue streams, low-price car sales, and cost control strategies finally bore fruit. A crucial factor in this success may be the hands-on and increasingly assertive approach of CEO He Xiaopeng, who has stepped away from his love for novels. This underscores that a competent CEO must continually evolve, with talent identification and utilization being just one facet. Perhaps the most vital aspect is self-reflection and the integration of knowledge and action. In this regard, He Xiaopeng could serve as an exemplary model for Li Bin.

Two Key Signals

Following organizational restructuring, sales channel transformation, and product structure repositioning, XPeng Motors in 2024 corrected past mistakes and witnessed improvements in key automaker health indicators such as revenue and gross profit margin. The financial report revealed that XPeng generated 40.87 billion yuan in revenue in 2024, a 33.2% year-on-year increase. In Q4 2024, XPeng's revenue reached 16.11 billion yuan, a 23.4% year-on-year increase.

In 2024, XPeng's growth rate ranked mid-to-upper tier among automakers, starting from a low base and making substantial progress. Due to a product gap in the first half of 2024, the full sales potential of MONA M03 and P7+ was unleashed only in the second half. Thus, 2024 can be accurately described as a "turnaround" year for XPeng, particularly in the second half. XPeng's Q4 growth also revealed two major signals. Firstly, the technology-based payment model's contribution to revenue and gross profit margin improvement surpassed that of car manufacturing, and this "dividend" continues. Since collaborating with Volkswagen, technology service fees, a source of "extra income," contributed 1.43 billion yuan in revenue for XPeng in Q4, a 74.4% year-on-year increase. Additionally, this segment's gross profit margin reached 59.6%, far exceeding XPeng's overall Q4 gross profit margin of 14.4%.

Notably, this revenue stream generated over 5 billion yuan in revenue for XPeng in 2024 and achieved a gross profit margin of 57.2% (also higher than XPeng's overall 2024 gross profit margin of 14.3%). This served as a pillar supporting XPeng during challenging times in 2024, helping the company emerge from a gross profit margin quagmire of -1.6% in 2023. In this regard, technological differentiation and future imagination have created a valuation gap between new forces and traditional automakers reliant solely on car manufacturing for growth. Consequently, issues common to new-energy automakers, such as large initial investment scales, low input-output ratios, and severe losses, are more easily tolerated by the market.

Despite XPeng's continued losses until 2024, the improvement in its vehicle gross profit margin in 2024 demonstrates that the automaker has operated orderly after adopting a low-price strategy. In Q4 2024, XPeng generated 14.67 billion yuan in revenue from car manufacturing, a 20% year-on-year increase and a 66.8% quarter-on-quarter increase. Furthermore, the Q4 gross profit margin for car manufacturing reached 10.0%, finally surpassing 10% (4.1% in Q4 2023 and 8.6% in Q3 2024). Although XPeng's 10% gross profit margin still lags behind other new-energy automakers like Lixiang and Xiaomi, its improvement also conveys a second key signal. That is, with internal anti-corruption efforts and supply chain cost optimization, He Xiaopeng has personally stepped in, ensuring he is no longer "deceived" by internal cliques. Now, XPeng's cost control and scale effect have significantly improved, and the automaker has undergone fundamental changes.

After the launch of XPeng's MONA M03 and P7+ this year, despite sales climbing, there was considerable market concern about XPeng entering the low-price range and potential gross profit margin declines. However, in Q4 2024, despite the average selling price of XPeng vehicles falling by another 30,000 yuan to 160,000 yuan, the gross profit margin for car manufacturing inversely increased to 10%. This shows that after sharing various manufacturing costs, XPeng's scale effect has become evident, and a virtuous cycle has begun.

In Q4 2024, XPeng's total car manufacturing cost was 13.2 billion yuan, with a cost per vehicle of 144,200 yuan. Compared to Q3, the cost per vehicle continued to decline, able to cover the narrowing of profit per vehicle, with each vehicle still maintaining a gross profit of around 16,000 yuan (gross profit per vehicle in Q3 was also around 16,000 yuan). This means that since the second half of 2024, XPeng has been able to sell vehicles at lower prices, increase sales volume, and achieve controllable and stable gross profit margins. This is fundamentally different from the "price wars" waged by automakers in the past. Even Tesla, with an industry-leading position, saw its gross profit margin significantly affected after initiating a price war in 2023, with the average selling price of vehicles declining and the gross profit margin once falling below 20%.

This also indirectly shows that from a financial perspective, the combination of "intelligent driving subscription" and "low-price, high-volume" sales currently poses almost no harm to XPeng. Notably, in 2024, XPeng's cost control was consistent with public statements by He Xiaopeng and Wang Fengying. XPeng's operating costs in 2024 were 35.02 billion yuan, a 15.9% year-on-year increase, lower than the revenue growth rate. Additionally, XPeng's R&D, sales, and general and administrative expenses in 2024 were 6.46 billion yuan and 6.87 billion yuan, respectively, with year-on-year increases of 22.4% and 4.8%, both lower than the revenue growth rate.

XPeng Begins Its Offensive Phase

After the second half of 2024, XPeng Motors entered its offensive phase. During the financial report conference, He Xiaopeng mentioned that by the end of 2026, XPeng will form a more complete product layout across the price range of 100,000 to 500,000 yuan, covering all mainstream segments from compact to large vehicles. However, at present, in addition to cost control and intelligent subscription, XPeng's core idea in 2024 is to shed the "long robe" of intelligent stitching of the mid-to-high-end price range from earlier years and fully embrace the low-to-mid-price mass market.

For example, in the first half of 2024, XPeng's sales, hampered by a product gap, stagnated at around 10,000 vehicles. In the second half, XPeng abandoned the idea of brand premiumization pursued in recent years and adopted a "price-for-volume" strategy: After August 2024, XPeng launched the MONA M03 with a starting price of only 119,800 yuan, temporarily supporting nearly half of XPeng's sales. In Q4 2024, XPeng delivered a cumulative total of 91,507 vehicles, a 52% year-on-year increase. For the full year 2024, XPeng delivered 190,000 vehicles, a 34% year-on-year increase. The MONA M03 and P7+ models supported XPeng's sales upturn, and the situation began to turn around. In the first week of 2025, XPeng ended Lixiang's 36-week streak as the sales champion among new forces.

From January to February 2025, XPeng delivered over 30,000 vehicles, and the title of sales champion among new forces changed hands again. However, for XPeng to continue sustained growth, the problem is straightforward: relying solely on past products is insufficient. In fact, apart from the MONA M03 and P7+, XPeng's older models, the G6 and G9, which He Xiaopeng had high hopes for and positioned above 200,000 yuan, have not performed well in sales, further limiting XPeng's growth space.

In this financial report, XPeng's sales guidance for Q1 2025 is set at 91,000 to 93,000 vehicles, representing a year-on-year increase of 317.0% to 326.2%. Revenue is expected to be between 15 billion yuan and 15.7 billion yuan, a year-on-year increase of 129.1% to 139.8%. The average selling price guidance is higher than the 160,000 yuan in 2024.

Therefore, this spring, XPeng's comprehensive renovation and significant price reductions for the G6 and G9 models became the first card played to boost overall sales after the beginning of the year. Compared to the older models, the new G6 and G9 feature comprehensive upgrades in exterior design, interior, intelligent driving, and performance. The starting price of the new G6 has been reduced from 199,900 yuan for the older model to 176,800 yuan, and the starting price of the G9 has been reduced from 264,900 yuan to 248,800 yuan. After the significant price reductions, on the first day of launch, the G6 received over 5,000 large orders within 7 minutes, and the G9 received over 3,000 large orders within 45 minutes.

As a result, in just two and a half years, the highest selling price of XPeng's flagship SUV model, the G9, has been directly reduced by nearly 200,000 yuan. Such intense product definition corrections and internal scrutiny may also embarrass older car owners.

During XPeng's spring press conference, when He Xiaopeng announced the prices of the new G9 models, he did not express concern about the potential impact on the brand due to the lower prices but instead appeared excited and enthusiastic. Regarding this, He Xiaopeng said that the impact of "prices so aggressive that they are almost embarrassing for the launch event" is precisely the user mindset anchor they pursue: on the one hand, it must support sales targets, and on the other hand, it creates an impulse in users that "they will lose out if they don't buy now." However, continuously lowering product prices and focusing on low-to-mid-price products are not without drawbacks.

In fact, as XPeng pursues its low-price strategy, the average selling price of XPeng vehicles has dropped from 254,000 yuan in Q1 2024 to 160,000 yuan in Q4. Although the "price-for-volume" strategy has achieved phased success, it may have an irreversible impact on XPeng's brand tone.

It is worth noting that the issue of losses at XPeng cannot be ignored: In 2024, XPeng incurred a net loss of 5.79 billion yuan, a significant narrowing compared to the loss of 10.38 billion yuan in the previous year. However, from 2018 to 2024, XPeng has accumulated losses of nearly 40 billion yuan and has never achieved profitability.

The Happy Dilemma of XPeng Motors?

After the beginning of 2025, XPeng has launched new products and upgrades almost every quarter, and its battlefield has further expanded from pure electric vehicles to extended-range vehicles. Competitive challenges are just one aspect. The other challenge is how to achieve orderly and respectable deliveries. In fact, between 2023 and 2024, XPeng experienced delivery delays due to insufficient production capacity at least four times, affecting multiple mainstay models such as the G6, X9, and MONA M03. Moreover, these delays have, to varying degrees, impacted the subsequent sales of these models. There is a large backlog of orders for the MONA M03 and XPeng P7+ models, with many orders extending into the first quarter of this year.

At the XPeng spring press conference, He Xiaopeng said, "At the end of last year, when we were making this year's budget, we did not expect things to progress so quickly this year. We originally thought that sales of the XPeng G6 and G9 would not be this high, and we were relatively conservative in our production capacity preparations. Therefore, there may be a long waiting period afterward... We will gradually increase the production capacity of the G6 and G9 after May and June." Nowadays, with the launch of four models, the MONA M03, P7+, G6, and G9, as well as subsequent models, XPeng's existing production capacity may become a major constraint affecting its growth space.

However, these may all be considered happy dilemmas: issues of how much one can grow and how strong one can become. The good news is that XPeng is already on the right path. Additionally, for XPeng in 2024, a greater harvest may stem from the hands-on and increasingly assertive approach of the honest He Xiaopeng, who quickly completed his own transformation and upgrading. This also underscores that whether it's an ordinary person or a CEO, one can continually grow. Identifying and utilizing talent is just one aspect. Perhaps the most important is self-reflection and the integration of knowledge and action.