Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- XPeng Inc (XPEV, Financial) delivered 30,207 smart EVs in Q2 2024, marking a 38% increase quarter-over-quarter and a 30% increase year-over-year.
- Gross margin improved to 14%, placing XPeng Inc (XPEV) at the forefront of Chinese EV makers.
- XPeng Inc (XPEV) completed a new round of organizational upgrades and internal restructuring, bringing on top talent in key areas.
- The company is entering an intense product launch cycle with competitive new products and models through the end of 2026.
- XPeng Inc (XPEV) ranked first in export sales of mid to high-end all-electric vehicles among Chinese BEV brands in Q2 2024.
Negative Points
- Despite improvements, XPeng Inc (XPEV) reported a net loss of RMB1.28 billion for Q2 2024.
- R&D expenses increased by 7.3% year-over-year and 8.6% quarter-over-quarter, driven by higher expenses related to new vehicle model development.
- SG&A expenses rose by 1.9% year-over-year and 13.3% quarter-over-quarter, due to higher commissions and marketing expenses.
- The company faces significant challenges in maintaining steady growth in a highly competitive market.
- XPeng Inc (XPEV) anticipates more brutal market competition in the coming year, which could impact future performance.
Q & A Highlights
Q: What is XPeng's strategy to maintain sales momentum for new models like M03 and P7+?
A: (Xiaopeng He, Chairman and CEO) XPeng has implemented significant organizational changes, including supply chain management and platform-based manufacturing. The company is confident in its quarterly forecasts and has overhauled its sales and marketing systems to ensure steady growth despite the competitive environment.
Q: How does XPeng plan to achieve cost reductions, and what is the expected gross margin trend for Q3?
A: (Xiaopeng He, Chairman and CEO) XPeng is focusing on technology-driven cost reductions, supply chain reforms, and strategic partnerships like the one with Volkswagen. The company expects to see quarter-over-quarter improvements and aims to achieve superior gross profit margins compared to peers. (James Wu, VP of Finance) Gross margins are expected to remain stable in the mid to low teens, with vehicle margins showing moderate growth.
Q: What is the expected impact of XPeng's high-level ADAS (XNGP) on future sales and ROI?
A: (Xiaopeng He, Chairman and CEO) The adoption rate of XPeng's high-level ADAS has increased by 20% since the rollout of version 5.0. The company is the only one in China implementing end-to-end AI models for ADAS, which will significantly enhance driving capabilities and reduce costs. The P7+ model will be the first to benefit from these advancements, making high-end ADAS more affordable.
Q: How is XPeng preparing for the production and delivery of the MONA M03?
A: (James Wu, VP of Finance) XPeng has learned from past experiences and started preparing for MONA's production well in advance. The company has anticipated supply constraints and set plans to address them, ensuring that production and delivery targets are met.
Q: What is XPeng's approach to international markets amid rising protectionism and competition?
A: (Hongdi Gu, President) XPeng is positioning its products as premium EVs in global markets, achieving better pricing compared to competitors. The company is also expanding into markets like the Middle East and Southeast Asia, leveraging local partnerships to maintain profitability despite challenges like tariffs.
Q: Why is XPeng not focusing on robotaxi operations despite its advancements in autonomous driving?
A: (Xiaopeng He, Chairman and CEO) XPeng's focus is on providing a full-domain, human-like driving experience rather than operating robotaxis. The company aims to produce high-quality robotaxi vehicles in partnership with mobility operators, rather than getting involved in the operation itself.
Q: How does XPeng plan to enhance its sales and marketing capabilities?
A: (Xiaopeng He, Chairman and CEO) XPeng has implemented comprehensive reforms in its sales and marketing systems, including store management and customer service improvements. The company is confident in its ability to become a top player in the Chinese auto industry and is also focusing on global expansion.
Q: What are the expected R&D expenses for the second half of the year?
A: (James Wu, VP of Finance) XPeng expects R&D expenses to ramp up in the second half of the year due to the heavy product cycle. The company maintains its full-year guidance of around RMB7 billion for engineering expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
