After the successive disclosure of the third quarter report, the competitive relationship among the representatives of the new car-making forces, "Weilai, Xiaopeng, and Li Auto," has become more subtle.

The third quarter shows, $Li Auto (LI.US)$ Both revenue and delivery volume reached historical highs, leading competitors in several indicators such as gross margin and net income; $XPeng (XPEV.US)$ In the third quarter, there was a "comeback against the wind," returning to the "billion-dollar club" in revenue, with a gross margin reaching 15.3%; $NIO Inc (NIO.US)$ In the third quarter, revenue reached 18.674 billion yuan, while achieving positive free cash flow, with cash reserves growing to 42.2 billion yuan.

However, behind the bright financial report data are individual concerns. Due to the increasing proportion of low stock price products, Ideal Auto's vehicle gross margin in the third quarter fell year-on-year; Xpeng Motors and NIO still face pressure for profitability. Facing different stages of development, Xpeng chose range extension, Ideal reinforced ai, and NIO explored the market, with "Weilai, Xiaopeng, and Ideal" delving into areas where competitors excel to find release solutions.

NIO spends the most, Xpeng monetizes the mass market.

In the third quarter of 2024, Ideal Auto delivered 152,831 vehicles, a year-on-year increase of 45.4%, with third-quarter revenue reaching 42.87 billion yuan, a year-on-year increase of 23.6%. The third-quarter financial report showed that Ideal Auto's operating cash flow in the third quarter was 11 billion yuan, with cash reserves as high as 106.5 billion yuan. With a cash position of over a billion and self-generated funding capacity, Ideal Auto can maintain stable investment - its R&D expenses in the third quarter were 2.59 billion yuan, and cumulative R&D expenses in the first three quarters of 2024 reached 8.66 billion yuan, a year-on-year increase of 22.1%.

However, as the only profitable company within the new car-making forces that has achieved profitability for eight consecutive quarters, Ideal Auto still faces uncertainties. The third-quarter financial report showed that its net income saw only a slight increase of 0.3%. In terms of sales, Ideal's average monthly delivery volume in the third quarter exceeded 0.05 million vehicles, but the delivery volume of the entry-level Ideal L6 has gradually increased. For example, in October, the delivery volume of Ideal L6 was 23,917 vehicles, accounting for 46% of total sales. This directly reflects a decline in the average revenue per vehicle in the third quarter from about 0.33 million yuan in the same period last year to about 0.28 million yuan this year; at the same time, the vehicle gross margin in the third quarter also fell by 0.3 percentage points year-on-year.

In contrast, Xpeng Motors showed a more resilient performance in the third quarter - achieving revenue of 10.1 billion yuan, a year-on-year increase of 18.4%; total vehicle deliveries were 46,533, a year-on-year increase of 16.3%; gross margin was 15.3%, achieving positive growth for five consecutive quarters.

From the revenue structure, 8.8 billion yuan of Xiaopeng Motors' revenue of 10.1 billion yuan comes from its automotive business, while the remaining 1.3 billion yuan comes from non-core business. The financial report shows that this is mainly due to the increase in revenue from technology research and development services related to the platform and software strategy as well as the electronic and electrical architecture technology strategic cooperation with the Volkswagen Group. This part of the business has a gross margin of as high as 54.3%, significantly boosting the company's profitability.

However, Xiaopeng Motors still failed to achieve profitability in the quarter. In the third quarter, Xiaopeng Motors recorded a net loss of 1.81 billion yuan, which was a significant reduction compared to 3.89 billion yuan in the same period of 2023, but higher than the 1.28 billion yuan in the second quarter. Additionally, cash and cash equivalents amounted to 35.75 billion yuan, a decrease of 1.58 billion yuan from 37.33 billion yuan in the second quarter.

NIO is also facing pressure to achieve profitability. Although the combined quarterly delivery volume of the two major brands reached 61,855 units, NIO's revenue in the third quarter was 18.67 billion yuan, a year-on-year decrease of 2.1%, while its net loss further expanded to 5.06 billion yuan. In addition, NIO continues to maintain a high level of investment, with research and development expenses in the third quarter being 3.32 billion yuan and marketing expenses being 4.109 billion yuan, remaining the "highest spender" among "Wei Xiaoli."

"We realize that there is significant pressure on gross margin, and continuously improving NIO brand gross margin is a core goal. Therefore, we reduced some promotional expenses in October, which will have some impact on sales, but it is all within expectations," said NIO Chairman Li Bin, indicating that NIO brand's sales did indeed decline in October, but overall it is a proactive adjustment. The financial report shows that NIO's overall vehicle gross margin in the third quarter was 13.1%.

Swapping tracks, competitors engaging directly in core areas.

Faced with different financial situations, "Wei Xiaoli" coincidentally stepped into the tracks that competitors excel in, in an attempt to find solutions.

Among them, Xiaopeng Motors announced its entry into the extended-range track, and one of the representative companies in this track is Li Auto.

"Next year, Xiaopeng Motors will enter a strong product cycle and will launch multiple models with strong AI capabilities and strong autonomous driving capabilities," Xiaopeng Motors Chairman He Xiaopeng stated at the third-quarter financial report conference call. In 2025, Xiaopeng Motors plans to launch at least four new models, including the first super electric version, as well as several updated existing models.

He Xiaopeng mentioned the super electric version model, which refers to the extended range model. "It's meaningless for Xiaopeng Motors to make an ordinary extended range vehicle," while the "Kunpeng super electric system" is one of Xiaopeng's scenarios for "AI integration." He Xiaopeng stated that the super electric will become the second largest growth engine for Xiaopeng Motors. In the future, Xiaopeng Motors will launch a batch of new cars to meet global demand, supporting both pure electric and Kunpeng super electric.

It's not just Xiaopeng Motors that emphasizes "AI." "The extended range is just a relatively important technology, but it's definitely not everything. In the next three to five years, I believe the biggest variable will come from artificial intelligence (AI), including AI-based intelligent driving and AI-based intelligent assistants, which will provide consumers with a completely different experience from today, marking the true beginning of a qualitative change." Li Xiang, chairman of Ideal Motors, provided a judgment that is very similar to that of He Xiaopeng.

The management of Ideal Motors stated that the company is increasing its investment in AI large model technology foundations. In areas such as intelligent driving, intelligent space, smart electrical systems, and high-end chassis, Ideal Motors insists on self-research of core technologies and maximizes the application of technological achievements through platform-based R&D, "promoting equal rights for luxury car technology."

At this year's Guangzhou auto show, Ideal Motors released the latest progress of its new generation intelligent driving technology architecture—end-to-end + VLM dual system, with its version 6.5 vehicle system scheduled for push at the end of November, adding functionalities such as smart driving from parking space to parking space.

NIO, which urgently needs to boost sales, is strengthening its AI capabilities while also choosing to explore the brand down-market. As a brand focusing on family vehicles like Ideal, the LeDao brand is currently in the capacity ramp-up stage. "In 2025, LeDao will have two family SUVs launching. One will be a large six or seven-seater SUV, and the other will be a large five-seater SUV, equivalent to Ideal's L8 and L7," stated NIO Chairman Li Bin, adding that compared to Ideal L7 and L8, LeDao's two new SUVs will be very competitively priced.

During the earnings call, Li Bin also announced that NIO's third brand has officially been named "Firefly," and the first product will share the same name. The Firefly brand and its first product will be unveiled at NIO Day 2024 on December 21, similar to BMW's MINI brand. Li Bin disclosed that the first model under Firefly will begin deliveries in the first half of 2025. It was reported that the price for Firefly products will be in the range of 0.1 million to -0.2 million yuan, which is also the price range for Xiaopeng Motors' recent two popular products, Xiaopeng MONA M03 and Xiaopeng P7+.

In Li Bin's view, addressing different users with two to three brands is a relatively successful strategy. "Overall, next year the whole group will enter a new high-speed growth cycle. We are very confident in achieving 100% sales growth."

While pursuing sales, NIO has also set requirements for gross margin. "NIO will have a gross margin of 15% as a baseline in 2025, with a target to increase to 20%. Among them, the gross margin for the LeDao brand will gradually reach 15% from the current 10% by 2025," stated NIO's management, adding, "As sales double next year, overall operations will continue to achieve positive growth, and losses are expected to narrow in 2025, with the goal of achieving profitability in 2026."

Editor/rice