In 2017, before He Xiaopeng resigned from Alibaba, Xiaoyaozi Zhang Yong asked He Xiaopeng, "How long are you willing to dedicate yourself wholeheartedly to this car building?" He Xiaopeng replied, "I am willing to stay for ten years

　　Now, it has only been five and a half years since He Xiaopeng devoted himself wholeheartedly to making cars. Just halfway through the journey, the victory or defeat is far from certain.

　　Recently, Xiaopeng Motors released its financial report for the first quarter of 2023, which was not as expected. However, some of the data showed some joyful changes for Xiaopeng Motors.

　　Is the dormant new force of car making, the sales champion, about to awaken?

　　Three years ago, Xiaopeng Motors, with monthly sales of less than 1000 units, soared with the help of the Xiaopeng P7 and won the top spot in sales for the new car making force in 2021 with a sales volume of 98000 units. In Q1 2022, the sales reached 35000 units, ranking first among the new car making forces and achieving unparalleled success.

　　Three years later, Xiaopeng Automobile, which had lost its sales crown, learned from the pain and made bold reforms. After six months of pain, Xiaopeng Automobile lost its burden and embarked on the road back to the sales crown.

　　Nirvana is the key to rebirth

　　Xiaopeng Automobile adopts a ruthless method of scraping bones to heal wounds. Although it greatly damages its vitality, it thoroughly eliminates the root causes of its drawbacks.

　　The blade of bone scraping first points to the organizational structure.

　　The chaotic internal management and low efficiency were the most criticized points of Xiaopeng Automobile in the past, reflected in the high sales, general, and administrative expenses in its financial reports. This expense accounted for 24.9% of the revenue in 2022, ranking first among the three companies of Weixiaoli.

　　Xiaopeng Automobile is well versed in the Xiao Wall, and chaos has already arisen. It is necessary to eradicate bad customs from within and clean up the team. Xiaopeng Auto has invited Wang Fengying, the former president of Great Wall Motor, known as the "Iron Lady of Automobiles". Great Wall Motor has always pursued militarized management. Wang Fengying has been president of Great Wall Motor for nearly 20 years. Together with Wei Jianjun, chairman of Great Wall Motor, Great Wall Motor has been promoted to be one of the top three private auto enterprises in China (as famous as BYD and Geely).

　　The addition of Wang Fengying has significantly improved the financial report data of Xiaopeng Automobile.

　　Xiaopeng Automobile's sales, general and administrative expenses in Q1 2023 were 1.39 billion yuan, a year-on-year decrease of 15.5% and a month on month decrease of 21%. This was due to a decrease in franchise store commissions and marketing advertising expenses. Xiaopeng Automobile has reduced its expenses by 21% in three months, which is not difficult to see the strong and rapid reform efforts within Xiaopeng Automobile.

　　The immediate results and decisive reforms are all related to the personal experience of He Xiaopeng, Chairman and CEO of Xiaopeng Automobile. During the entrepreneurial process of UC, He Xiaopeng used two months to shift UC's main business from UCmail to UCWEB. This decision enabled UC to avoid competition with NetEase email and catch up with the trend of browsers, with over 1 million users in one year.

　　At the first quarter financial report conference call, He Xiaopeng stated that Xiaopeng Automobile has completed channel flattening management, established a more efficient middle platform, and plans to improve the overall combat capability of the channel by eliminating the fittest from existing channels.

　　In the 2022 financial report, another notable feature of Xiaopeng Automobile is that its debt growth rate (47.1%)/asset growth rate (8.9%) reached 529.4%, far exceeding NIO's 328.9% and ideal 247.9%, indicating the low efficiency of Xiaopeng Automobile's debt to asset conversion.

　　However, in this year's Q1 financial report, although both Xiaopeng Automobile's total assets and total liabilities have slightly decreased, the decline is controlled at around 5%, and the speed of asset shrinkage is comparable to the decrease in liabilities. Compared to last year, Xiaopeng Automobile's financial performance has gradually improved.

　　Look forward, don't turn back

　　If Wang Fengying is the ace in the organizational structure reform of Xiaopeng Automobile, then the ace in its reform products is Xiaopeng G6.

　　Xiaopeng Automobile has been declining in market performance due to its long-term unclear product positioning.

　　From G3 and P7 to P5 and G9, the design language and positioning of Xiaopeng's several models have repeatedly changed, not to mention the familial design. This has led to the inability to continue the success of Xiaopeng's P7. In addition, the confusion of SKUs has caused confusion among consumers, and Xiaopeng's brand positioning has not been established.

　　After learning from the lessons learned, Xiaopeng Motors developed the SEPA2.0 Fuyao architecture and released the first mass-produced Xiaopeng G6 based on the Fuyao architecture. What Xiaopeng Automobile needs to do now is to look forward, G6 is the new ace, don't look back, the heyday of P7 is over.

　　He Xiaopeng stated that currently, several new models of 150000 to 300000 yuan under research by Xiaopeng Automobile will be built based on the rotary architecture. In addition to shortening the research and development cycle of new models by 20%, the generalization rate of components in the architecture can reach up to 80%, and the research and development expenses and BOM costs of new models will be greatly reduced.

　　After 8 years of confusion, Xiaopeng Automobile can finally answer the question of "who am I" with its platform based products.

　　In terms of SKU, Xiaopeng Motors has also streamlined its new P7i, bringing immediate results. Sales of the Xiaopeng P7 series have rapidly rebounded since February. Without the complex and chaotic SKU, the upcoming G6 has to some extent avoided the thunder that G9 once stepped on.

　　Xiaopeng Automobile has finally understood a truth that the "customer first" approach may not necessarily be to provide users with more car models to choose from, but can also be to come up with clearly differentiated car models for users to purchase according to their needs. Xiaopeng Automobile's previous approach not only increased costs, but also increased the selection threshold for customers. Although it seemed thoughtful, it actually left the job that product managers should do to customers.

　　After figuring out how to effectively improve customer experience, Xiaopeng Motors, under the leadership of President Wang Fengying, is transitioning towards a "customer-centric" direction. According to Xiaopeng Motors, the NPS value (the likelihood index of customers recommending a certain enterprise to others) has been continuously increasing since the beginning of the year and returned to the forefront of the industry in April.

　　Another reason for the decline in sales of Xiaopeng Automobile is that under the impact of the wave of intelligence, the intelligent selling points that Xiaopeng Automobile is proud of are becoming increasingly homogeneous.

　　After nearly a year of declining sales, Xiaopeng Automobile still hasn't given up its commitment to intelligence. Despite a revenue of only 4.03 billion yuan and a loss of 2.34 billion yuan in Q1, it still allocated 1.3 billion yuan as research and development expenses, a year-on-year increase of 6.1%. Research and development expenses accounted for 34.4% of the total revenue, truly making a profit.

　　It is precisely under this crazy pursuit that Xiaopeng Automobile has created the high-speed NGP2.0 version and plans to officially launch it in June. In Xiaopeng Automobile's own words, this update can reach an almost L4 level experience level.

　　At the end of March this year, Xiaopeng Motors fully promoted the Urban NGP to the Max version of some car models in Shanghai, Guangzhou, and Shenzhen, which can use intelligent navigation assisted driving systems in cities. For the vast majority of car owners, it is a timely help. According to Xiaopeng Motors' data, the mileage penetration rate of urban NGP in the first month after promotion exceeded 60%. In Xiaopeng stores in Guangzhou, Shenzhen, and Shanghai, in April, P7i and G9 orders, The proportion of the Max version (with urban NGP capabilities) has significantly increased to over 50%.

　　After falling to a low point, Xiaopeng Automobile finally came up with a product with highlights in intelligence, which also proves its previous persistence.

　　In 2014, when Tesla announced its patents, He Xiaopeng regarded Tesla as a teacher, carefully studied all of Tesla's patents, and invited Tesla's core technical personnel and Autopilot machine learning business supervisor. Six years later, Xiaopeng Motors released the Xiaopeng P7, directly targeting Model 3. The upcoming Xiaopeng G6 is also a benchmark for Model Y. It is not difficult to see that the idea of challenging the former "special teacher" has always been engraved in Xiaopeng Motors' genes.

　　In the current situation where the entire autonomous driving industry is facing a downturn, Xiaopeng Automobile still insists on increasing investment. From this perspective, Xiaopeng Automobile not only engraves its technological genes in its bones like Tesla, but also has a tenacity like Tesla that is not willing to give up and not afraid of losing.

　　If you don't succeed, you will succeed

　　Although Xiaopeng Automobile has undergone dual reforms in organizational structure and product structure, it has not reached a breathing point.

　　According to the financial report, Xiaopeng Automobile's total revenue in the first quarter of this year was 4.03 billion yuan, a year-on-year decrease of 45.9%; The net loss was 2.34 billion yuan, a year-on-year increase of 37.4%; The quarterly gross profit margin was 1.7%, much lower than the 12.2% in the same period last year; The gross profit margin of automobiles has dropped from 5.7% in the fourth quarter of last year to -2.5%, far from the 10.4% in the same period last year. According to calculations by Yiou Automobile, Xiaopeng currently incurs a cost loss of about 5000 yuan for every car sold.

　　Losing money and earning a shout "is not a long-term solution. But the fundamental reason is its sluggish sales. In 2023, Xiaopeng delivered 18230 vehicles in the first quarter, a decrease of 17.9% compared to the worst performing fourth quarter of 2022.

　　Due to factors such as declining sales, the launch of new models, and the end of subsidies, the average cost of selling a single car for Xiaopeng Motors has increased from 181500 in Q1 2022 to 198000 in Q1 2023. Under the influence of price reduction promotions, the average selling price of Xiaopeng Motors has decreased from 203000 yuan in Q1 2022 to 193000 yuan.

　　On the one hand, there is an increase in costs, and on the other hand, there is a decrease in selling prices. Xiaopeng Motors, which has already low profit margins, is struggling. From earning 21000 yuan from selling one car last year, it has now lost 5000 yuan from selling one car.

　　Although Xiaopeng Automobile still has 34.12 billion yuan in cash flow (including cash and cash equivalents, restricted cash, short-term investments, and term deposits), its total current assets are 38.06 billion yuan, while its total current liabilities are 22.63 billion yuan, with a difference of only 15.43 billion yuan. Based on Xiaopeng Automobile's loss situation in the first quarter, it can only support its loss for another year and a half. It is of utmost importance to bring the automobile gross profit margin back to normal in the short term.

　　At present, the average cost of sales of a single car of Xiaopeng Automobile is about 198000. In order to sell, Xiaopeng Automobile probably won't set the price of G6 too high, which will lead to the difficulty in improving the profitability of the automobile business qualitatively. In the case of market loss of confidence, short-term operation cash flow is particularly important for Xiaopeng Automobile.

　　In the long run, Xiaopeng Automobile not only loses the burden of chaotic management, but also has 425 sales stores, 1016 charging stations, and a supporting structure, which is a far cry from the situation when Xiaopeng P7 was launched three years ago. It has to be said that Xiaopeng Automobile still holds a good deck of cards.

　　As long as the product strength of Xiaopeng G6 is strong, the speed of sales growth will naturally not be too slow. If it can reach the monthly sales volume of 20000 expected by He Xiaopeng in the fourth quarter, then the current cash flow pressure will be easily solved.

　　Although intelligent driving has temporarily fallen short, with the increasing pursuit of automotive intelligence by users, it will definitely become one of the core considerations for users when purchasing cars. The Yiou Think Tank predicts that the market size of NOA front end in Chinese cities will reach 11 billion yuan by 2025.

　　When other car companies focus on polishing faster monetization products, Xiaopeng Automobile's investment in intelligent driving, although slow to achieve results, can support it to go further. This is also what He Xiaopeng has always emphasized as "slow is fast". Only by solidifying the foundation in the early stage can the later stage be faster.

　　epilogue

　　In 2017, before He Xiaopeng resigned from Alibaba, Xiaoyaozi Zhang Yong once asked He Xiaopeng, "How long are you willing to devote yourself wholeheartedly to this car building?" He Xiaopeng's answer at the time was, "I am willing to stay for ten years

　　Now, it has been only five and a half years since He Xiaopeng devoted himself wholeheartedly to car building. The current low point can only be called a midfield battle, and before the ten-year period, the story of Xiaopeng Motors will definitely continue.