Can Xiaopeng (09868) survive the second half of the knockout stage?

According to the Zhittong Finance APP, Xiaopeng did not perform well this year, with an average monthly sales volume of less than 10,000 units in the first five months, and was kicked out of the first-tier new energy brand. In the past few weeks, sales have been sluggish, and according to the weekly sales volume released by Ideal, the sales volume from June 3rd to 9th and from June 10th to 16th were 1,800 and 2,100 units, respectively, both ranking ninth among new energy brands. In the first five months, the company achieved 14.6% of the annual sales target, which is extremely difficult to complete.

Elimination matches are inevitably multidimensional and include "marketing", such as the corporate boss IP launched by Zhou Hongyi, "price cutting", in which major car companies participate, and "value", which Huawei represents and values the value experience. No matter what kind of marketing, the most important thing is to capture customers and get orders. Xiaopeng insists on taking the intelligent route. However, under the trend of homogenization, its competitive advantages have become weaker, and its sales volume has gradually fallen behind brands in the same group.

In addition, the company has recently experienced a series of mysterious personnel changes. There were rumors on the internet that President Wang Fengying had submitted her resignation, and the company denied it on June 17. The following day, Weibo announced that the person in charge of Smart Driving had been replaced, and Yuan Tingting had been appointed as the director of autonomous driving products. Frequent changes in senior management may mean that the company's operation is undergoing major adjustments.

However, compared to the same period last year, Xiaopeng's sales performance in the first five months of this year was still good, with a year-on-year growth rate of 35%, and there was significant improvement in profitability in the first quarter of 2024 as it reported.

Lack of sustainability for popular models

According to the Zhittong Finance APP, Xiaopeng's product matrix is rich, and the currently available models include the G series (G3, G6, and G9), the P series (P7 and P5), and the X series (X9), with price ranges from 100,000 to 300,000 yuan, covering sports cars, sedan cars, SUVs, and MPVs. In May 2024, the monthly sales of all three series of vehicles totaled 10,146 units, of which G6/G9/X9 and P7 had sales shares of 33%, 30%, 16%, and 15%, respectively. The total sales volume for the first five months was 41,360 units, with an average monthly sales volume of less than 10,000 units.

In fact, the company doesn't lack popular models, such as the first sports car P7 launched in May 2020, which once sold more than 7,000 units in a month. G6 was launched in June 2023, and as the image spokesperson, Lin Zhiying attracted a group of young people, with the highest monthly sales of nearly 9,000 units. However, the popularity cycle was very short. In October 2023, the company launched the G9 refurbished version, but the sales volume dropped after only two or three months.

Looking at the model launch schedule, Xiaopeng's contribution to sales through model stacking is limited, with strong explosive power but insufficient sustainability. Is the company's product strength really not enough?

In fact, Xiaopeng's popular models have a lack of sustainability due to three main factors: First, there are many competitors, including BYD, NIO, Jijik, Zeros, Zhiji, and Tesla, who are introducing new models, some of which are more competitively priced; Second, intelligence has a homogenizing trend, and the company's advantages are becoming increasingly narrow; Third, customer demand research is insufficient, and experiential enjoyment is far more important than technological experience. Other models with features such as refrigerators, TVs, and large sofas can better meet current customer needs.

This year, the company pins its hopes on the upcoming MONA model, which is the model it has cooperated with Didi on and is expected to be the mainstream demand group for online car-hailing services. The first A-class pure electric sedan in the Mona product series is priced at less than 150,000 yuan and is expected to be officially launched and delivered on a large scale in the third quarter. The management said that it plans to launch multiple different products on the A-class vehicle platform and apply XNGP autonomous driving technology to models in this price range.

In addition, the company will deliver the all-new B-class electric sedan F57 in the fourth quarter, and some brokerage firms have stated that the model is expected to achieve its previous goal of reducing costs by 25%. Can MONA and F57 save its current sluggish sales and return to the threshold of 20,000 units, or will they replicate the historical pattern of only short-term gains?

Hoping for MONA

Xiaopeng entered the new energy vehicle sector through the intelligent route. It released the first-generation Smart Driving System in 2018 and entered the self-developed full-stack era in April 2020. Huawei officially launched its Smart Driving System in April 2021 and is the industry leader in high-speed NGP. The once flourishing company faced pressure after NOA became widespread and NGP was no longer leading. In March 2023, the company plans to launch the imageless XNGP, while Huawei began to push the imageless NCA in February this year. In Q1 2024, the company's R&D expenses were 1.35 billion yuan, far lower than Ideal and NIO; however, the R&D expense ratio was 20.52%, which was higher than the industry average.

Obviously, Xiaopeng's research and development achievements are lower than the industry average. For example, the research and development expense ratio of Ideal was 11.9%, but the sales volume of a single model exceeded that of Xiaopeng's entire product line. In order to gain a greater competitive advantage, Xiaopeng has increased its investment in AI research and development this year, and has focused on promoting the use of AI big models in intelligent vehicles. In April, it released a brand new brand MONA (Made Of New AI), positioning itself as a global AI intelligent driving car propagator. Although many car companies are promoting intelligent driving, this company is one of the few to use the AI intelligent driving label.

Brokerage firms have stated that Xiaopeng's R&D expenses were lower than those of Ideal and NIO, and although its R&D expense ratio was higher than the industry average, its R&D achievements were lower than those of the industry. In order to gain a greater competitive advantage, Xiaopeng has increased its investment in AI research and development this year and has focused on introducing AI big models in intelligent vehicles to promote mass adoption of AI in the sector.

There aren't many competitive advantages left for xpeng. Currently, there are two possibilities for the company's performance: one is cooperation with Volkswagen to obtain technical service income, but the models developed jointly with Volkswagen will not go to the market until 2026, and the technical income is a bit elusive as a growth point. The second is cooperation with Didi, and MONA is a visible growth point. With Didi's volume, if online car-hailing chooses MONA, it will bring good sales.

However, there are many car models cooperating with Didi in the market, and the main thing is to look at user acceptance, just like BYD, under the price advantage, the acceptance of online car-hailing users is high. However, MONA in the 100-150 thousand range is slightly less competitive in terms of price, and if intelligent driving fails to meet expectations, sales may be difficult. In the first five months of 2024, xpeng's sales target completion rate was less than 15%, relying solely on MONA to turn the tide this year will be very difficult.

Future risks are relatively high.

Sales volume is the king in the automobile industry. Only when the sales volume goes up can we talk about profits and long-term development. The current industry pattern shows a situation of one dominant and many strong, with fierce competition in the tail market. The dominant one is BYD, which has a far-leading market share. The many strong ones are traditional car companies represented by Geely and SAIC, which quickly transformed relying on their manufacturing advantages. The tail market is the concentration of new forces in car making, and Xiaomi's entry has reshaped the competitive landscape.

Although the sales volume of xpeng in the past three years has maintained double-digit growth, it lags behind the industry level, and its market share is declining. Its position in the new forces of car making is also declining, gradually moving from the leadership echelon of Wei Xiaoli to beyond the fifth place. Especially with Xiaomi's entry, the competition in the industry has intensified, and market share is becoming harder to grab. Loss is normal, but only by sticking to it can we become the king. How long can xpeng's cash continue to burn?

Last year, the company took the lead in proposing cost reduction and efficiency enhancement, reduced cost through heavy die casting, self-developed technology, and supply chain management. Therefore, it also cleaned up the purchasing department, introduced former Great Wall executive Wang Fengying in marketing, and reduced costs through channel expansion, sinking, and optimization. Due to price war marketing, the gross margin in 2023 was only 1.5%, down 10 percentage points. But in Q1 2024, it rebounded significantly to 13%.

In Q1 2024, xpeng's net loss was ¥1.368 billion, and it has accumulated losses of more than ¥24 billion in the past three years (2021-2023). This part was supplemented by financing, and net assets evaporated by only ¥5.8 billion. As of March 2024, the company had cash equivalents of ¥14.543 billion and short-term deposits of ¥11.64 billion, totaling ¥26.13 billion. If the ideal state of 13% gross margin is maintained, it can burn cash for another 3-5 years.

At present, xpeng's most important task is to scale up, and only by doing so, even with thin gross margins, can it achieve net profits. However, under the current competitive environment, relying on the current three major series, there is a high probability that there will not be outstanding performance in the second half of the year, and multiple products have been crushed by competitors in terms of sales volume. The company is betting on MONA in the domestic market and accelerating its entry into overseas markets in an attempt to digest domestic competition risks.

Overall, xpeng's situation is still quite dangerous. The sharp edges of intelligentization have been dulled by competitors, sales are falling behind, lack of explosive models, and there is a high degree of uncertainty in the sales of MONA with the AI ​​driving label. Loss is consuming the cash on the books, and the future is not optimistic. The company's market value is still bottoming out, and institutions such as BlackRock and Morgan Stanley continue to reduce their positions. The market value has shrunk by nearly 50% this year, and the risk is high. We can only wait for the opportunity of sales reversal in Q3.