China contributed 22.99 percent of Tesla's revenue in the second quarter, up from 20.97 percent in the first quarter and up from 22.36 percent in the same period last year.
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Gotion's earnings preview implies it will post a net profit of RMB 7,439 to RMB 124.4 million in the second quarter, a year-on-year increase of 129.46 percent to 283.68 percent.
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Gotion's earnings preview implies it will post a net profit of RMB 7,439 to RMB 124.4 million in the second quarter, a year-on-year increase of 129.46 percent to 283.68 percent.
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BYD's earnings preview implies that its net profit for the second quarter will be RMB 6.37 billion to RMB 7.57 billion, up 128.56 percent to 171.62 percent year-on-year.
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NIO reported weak first-quarter underlying results but showed surprising Opex discipline to start the year and also presented a better-than-feared outlook for second-quarter sales, Edison Yu's team said.
NIO (NYSE: NIO) today reported weaker-than-expected first-quarter earnings, but emphasized on the analyst call that more prudent cash management will follow, as well as expressing confidence in delivering 20,000 vehicles per month in the coming months.
As usual, Deutsche Bank analyst Edison Yu's team provided their first impressions of the earnings report.
Here's what the team had to say.
1Q23 Earnings First Look
NIO reported soft underlying 1Q results, largely as previewed but showed surprising opex discipline to start the year, and also initiated a better than feared 2Q volume outlook.
Deliveries for the first quarter were already reported at 31,041 units, leading to revenue of 10.7bn RMB, vs. our/consensus 10.9bn/11.7bn forecasts, hurt by lower ASP.
Gross margin of 1.5% was below our 2.5% forecast (consensus >7%), driven by downside in vehicle margin (5.1% vs. our 6.5%), partially offset by better "other" margin (-21.0% or +870bps QoQ).
Opex of 5.5bn was materially below our expectations, both on R&D and SG&A.
All together, adjusted EPS of (2.51) came in better than our/consensus estimates.
Management provided a stronger than expected outlook for 2Q23, calling for 23,000-25,000 deliveries. This compares to our 23,000 unit forecast and suggests June will be up materially QoQ (~11,000 at mid-point vs. just 6,155 in May) as the new ES6 ramps up quickly.
We suspect there were concerns June may see some supply chain constraints that don't appear to be materializing. This translates into 8.7-9.4bn RMB in revenue, vs. our 9.0bn forecast.
Looking beyond, management is targeting >20,000 deliveries per month in 2H including 10,000 of new ES6 in July. This will likely be difficult to achieve (sustain at least), in our view, given underperformance of the sedans (ET5, ET7) and we don't think management will get credit for this.
On vehicle margin, 2Q will still be under pressure with 3Q recovering back to double digits and 4Q >15%.
R&D is expected to still trend around 3-3.5bn (non-GAAP basis) per quarter and SG&A will step up sequentially in 2Q although the CEO's tone suggested certain incremental spend could potentially get pushed out at least until the performance of core NIO stabilizes.
Lastly, NIO is officially pushing out its operating profit breakeven target by a year (or less), which is long overdue based on our latest modeling.
NIO Q1 earnings miss expectations, gross margin drops to 1.5%
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NIO is holding a first-quarter earnings analyst call and this article will provide key highlights from the call, with the latest being at the top.
NIO is confident that the gross margin will return to double digits in the third quarter and to 15 percent in the fourth quarter.
NIO ES6's locked-in orders have met expectations and the test drive conversion rate is the highest of any model.
NIO is targeting 10,000 units of the new ES6 for both production and delivery in July.
The other models besides ES6 still have a chance to achieve the target of 20,000 units delivered per month, except that the ET5 faces a greater challenge after the withdrawal of national subsidies.
NIO will launch ET5 Touring on June 15.
The sub-brand ALPS is still on track and will start delivering products in the second half of next year. NIO will be managed more carefully in terms of pace and efficiency.
The development of models for NIO's second-generation platform has been completed, and now we need to think about how the marketing team can better sell the cars.
NIO's goal is to obtain a fair share of the current eight vehicles in their segments.
NIO Q1 earnings miss expectations, gross margin drops to 1.5%
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NIO and XPeng both saw net losses in the first quarter, while Li Auto posted net income.
With the release of NIO's (NYSE: NIO) financial results, the trio of US-listed Chinese electric vehicles all reported first-quarter earnings.
With this article, we try to give readers a quick look at how the financials of NIO, XPeng (NYSE: XPEV), and Li Auto (NASDAQ: LI) compare in a few charts.
It should be noted that NIO and XPeng currently offer only battery electric vehicles (BEVs), a fast-growing but small market in China that currently accounts for about 30 percent of all passenger car sales.
Li Auto's full range of vehicles are extended-range electric vehicles (EREVs), essentially plug-in hybrids, targeting a much larger market.
In terms of quarterly deliveries, all three companies are essentially continuing to grow in 2020-2021.
In the first quarter of 2022 so far, NIO and XPeng have had a weak delivery performance, while Li Auto's has continued to grow, especially in the last two quarters.
In the first quarter of the year, Li Auto delivered 52,584 vehicles, while NIO and XPeng delivered 31,041 and 18,230, respectively.
Since all three companies derive their revenue primarily from car sales, the change in deliveries essentially corresponds to the change in revenue.
In the first quarter, Li Auto's revenue was RMB 18.8 billion, NIO was RMB 10.7 billion and XPeng was RMB 4.03 billion.
Their gross margins have been relatively stable over the past two years, with NIO and XPeng declining significantly over the past two quarters due to promotional activities.
Li Auto's gross margin has rebounded over the past two quarters after seeing a decline in the third quarter of last year.
NIO and XPeng has been continuing to face net losses while Li Auto has been profitable for multiple quarters.
In the first quarter, NIO had a net loss of RMB 4.74 billion, XPeng had a net loss of RMB 2.34 billion, and Li Auto achieved net income of RMB 934 million.
NIO Q1 earnings miss expectations, gross margin drops to 1.5%
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NIO reported revenue of RMB 10.68 billion in the first quarter, below market expectations of RMB 12.275 billion, compared to RMB 9.911 billion in the same period last year.
Previous data showed that NIO delivered 31,041 vehicles in the first quarter, slightly above the lower end of the guidance range of 31,000 to 33,000 vehicles.
NIO's previous revenue guidance for the first quarter was between RMB 10.93 billion and RMB 11.54 billion.
Below is its press release, as the CnEVPost article is being updated.
otal revenues in the first quarter of 2023 were RMB10,676.5 million (US$1,554.6 million), representing an increase of 7.7% from the first quarter of 2022 and a decrease of 33.5% from the fourth quarter of 2022.
Vehicle sales in the first quarter of 2023 were RMB9,224.5 million (US$1,343.2 million), representing a decrease of 0.2% from the first quarter of 2022 and a decrease of 37.5% from the fourth quarter of 2022. The decrease in vehicle sales over the first quarter of 2022 was mainly due to lower average selling price as a result of higher proportion of ET5 and 75 kWh standard-range battery pack deliveries, partially offset by an increase in delivery volume.
The decrease in vehicle sales over the fourth quarter of 2022 was mainly due to a decrease in delivery volume, and lower average selling price as a result of higher proportion of ET5 and 75 kWh standard-range battery pack deliveries.
Other sales in the first quarter of 2023 were RMB1,452.0 million (US$211.4 million), representing an increase of 117.8% from the first quarter of 2022 and an increase of 11.3% from the fourth quarter of 2022.
The increase in other sales over the first quarter of 2022 was mainly due to the increase in sales of accessories, provision of repair and maintenance services, provision of auto financing services, sales of used cars and provision of power solutions, as a result of continued growth of our users.
The increase in other sales over the fourth quarter of 2022 was mainly due to the increase in provision of auto financing services, sales of accessories, provision of repair and maintenance services, provision of power solutions and sales of used cars, as a result of continued growth of our users, and partially offset by a decrease in revenue from rendering of research and development services.
Cost of Sales and Gross Margin
Cost of sales in the first quarter of 2023 was RMB10,514.2 million (US$1,531.0 million), representing an increase of 24.2% from the first quarter of 2022 and a decrease of 31.9% from the fourth quarter of 2022.
The increase in cost of sales over the first quarter of 2022 was mainly driven by the increase in (i) delivery volume, and (ii) cost from the sales of accessories, provision of repair and maintenance services, sales of used cars and provision of power solutions, associated with increased vehicle sales and expanded power and service network. The decrease in cost of sales over the fourth quarter of 2022 was mainly attributed to (i) the decrease in delivery volume, (ii) the decrease in average material cost per vehicle as a result of higher proportion of ET5 and 75 kWh standard-range battery pack deliveries, and (iii) the inventory provisions, accelerated depreciation on production facilities, and losses on purchase commitments related to the previous generation of ES8, ES6 and EC6 in the fourth quarter of 2022.
Gross profit in the first quarter of 2023 was RMB162.3 million (US$23.6 million), representing a decrease of 88.8% from the first quarter of 2022 and a decrease of 73.9% from the fourth quarter of 2022.
Gross margin in the first quarter of 2023 was 1.5%, compared with 14.6% in the first quarter of 2022 and 3.9% in the fourth quarter of 2022. The decrease of gross margin from the first quarter of 2022 and the fourth quarter of 2022 was mainly attributed to the decreased vehicle margin.
Vehicle margin in the first quarter of 2023 was 5.1%, compared with 18.1% in the first quarter of 2022 and 6.8% in the fourth quarter of 2022. The decrease in vehicle margin from the first quarter of 2022 was mainly attributed to changes in product mix and increased battery cost per unit.
The decrease in vehicle margin from the fourth quarter of 2022 was mainly due to (i) changes in product mix, and (ii) increased promotion discount for the previous generation of ES8, ES6 and EC6, which were partially offset by (iii) the inventory provisions, accelerated depreciation on production facilities, and losses on purchase commitments for the previous generation of ES8, ES6 and EC6 in the fourth quarter of 2022.
Operating Expenses
Research and development expenses in the first quarter of 2023 were RMB3,075.6 million (US$447.8 million), representing an increase of 74.6% from the first quarter of 2022 and a decrease of 22.7% from the fourth quarter of 2022.
Excluding share-based compensation expenses, research and development expenses (non-GAAP) were RMB2,711.6 million (US$394.8 million), representing an increase of 79.1% from the first quarter of 2022 and a decrease of 23.7% from the fourth quarter of 2022. The increase in research and development expenses over the first quarter of 2022 was mainly attributed to the increased personnel costs in research and development functions and the increased share-based compensation expenses recognized in the first quarter of 2023.
The decrease in research and development expenses over the fourth quarter of 2022 reflected fluctuations due to different design and development stages of new products and technologies.
Selling, general and administrative expenses in the first quarter of 2023 were RMB2,445.9 million (US$356.2 million), representing an increase of 21.4% from the first quarter of 2022 and a decrease of 30.7% from the fourth quarter of 2022.
Excluding share-based compensation expenses, selling, general and administrative expenses (non-GAAP) were RMB2,239.3 million (US$326.1 million), representing an increase of 24.3% from the first quarter of 2022 and a decrease of 31.2% from the fourth quarter of 2022.
The increase in selling, general and administrative expenses over the first quarter of 2022 was mainly attributed to (i) the increase in personnel costs related to sales and general corporate functions, and (ii) the increase in expenses related to the Company's sales and service network expansion. The decrease in selling, general and administrative expenses over the fourth quarter of 2022 was mainly due to the decrease in sales and marketing activities and professional services.
Loss from Operations
Loss from operations in the first quarter of 2023 was RMB5,111.8 million (US$744.3 million), representing an increase of 133.6% from the first quarter of 2022 and a decrease of 24.1% from the fourth quarter of 2022. Excluding share-based compensation expenses, adjusted loss from operations (non-GAAP) was RMB4,522.4 million (US$658.5 million) in the first quarter of 2023, representing an increase of 163.6% from the first quarter of 2022 and a decrease of 24.8% from the fourth quarter of 2022.
Net Loss and Earnings Per Share/ADS
Net loss in the first quarter of 2023 was RMB4,739.5 million (US690.1 million), representing an increase of 165.9% from the first quarter of 2022 and a decrease of 18.1% from the fourth quarter of 2022. Excluding share-based compensation expenses, adjusted net loss (non-GAAP) was RMB4,150.1 million (US604.3 million) in the first quarter of 2023, representing an increase of 216.9% from the first quarter of 2022 and a decrease of 18.1% from the fourth quarter of 2022.
Net loss attributable to NIO's ordinary shareholders in the first quarter of 2023 was RMB 4,803.6 million (US$699.5 million), representing an increase of 163.2% from the first quarter of 2022 and a decrease of 17.8% from the fourth quarter of 2022. Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, adjusted net loss attributable to NIO's ordinary shareholders (non-GAAP) was RMB 4,141.8 million (US$603.1 million) in the first quarter of 2023.
Basic and diluted net loss per ordinary share/ADS in the first quarter of 2023 were both RMB2.91 (US$0.42), compared with RMB1.12 in the first quarter of 2022 and RMB3.55 in the fourth quarter of 2022. Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, adjusted basic and diluted net loss per share/ADS (non-GAAP) were both RMB2.51 (US$0.36), compared with RMB0.79 in the first quarter of 2022 and RMB3.07 in the fourth quarter of 2022.
Balance Sheet
Balance of cash and cash equivalents, restricted cash, short-term investment and long-term time deposits was RMB37.8 billion (US$5.5 billion) as of March 31, 2023.
Business Outlook
For the second quarter of 2023, the Company expects:
Deliveries of vehicles to be between 23,000 and 25,000 vehicles, representing a decrease of approximately 8.2% to 0.2% from the same quarter of 2022.
Total revenues to be between RMB8,742 million (US$1,273 million) and RMB9,370 million (US$1,364 million), representing a decrease of approximately 15.1% to 9.0% from the same quarter of 2022.
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Deutsche Bank expects NIO to report soft results for the first quarter, with downside risk to margins, though some relief in on the way.
NIO (NYSE: NIO) will report first-quarter unaudited financial results on Friday, June 9, before the US markets open. As usual, Deutsche Bank analyst Edison Yu's team provided their preview.
"NIO is suffering from weaker-than-expected demand and is facing its greatest adversity since nearly going bankrupt in 2020," the team said in a research note sent to investors today titled "Struggling along for another quarter."
The team expects NIO to report soft results in the first quarter, with downside risk to margins, and a very weak outlook for sales, and margins in the second quarter.
Previous data showed that NIO delivered 31,041 vehicles in the first quarter, slightly above the lower end of the guidance range of 31,000 to 33,000 vehicles.
NIO's previous revenue guidance for the first quarter was between RMB 10.93 billion and RMB 11.54 billion, implying year-on-year growth of about 10.2 percent to 16.5 percent.
Yu's team expects NIO to report revenue of RMB 10.9 billion in the first quarter, with a gross margin of 2.5 percent and adjusted earnings per share of RMB -3.07.
This compares to the current analyst consensus estimates of RMB 11.7 billion, 7.4 percent, and RMB -2.66, respectively, in a Bloomberg survey.
Looking ahead, Yu's team expects NIO to deliver 21,000-23,000 units in the second quarter.
NIO delivered only 12,813 units in April and May combined due to very low demand for the ET7 and ES7, the team noted.
The EV maker delivered 6,155 vehicles in May, down 7.55 percent from 6,658 in April, according to data released on June 1.
While production and supply chain issues appear to be resolved, underlying demand for NIO's premium BEVs has been disappointing as customers opt for gasoline models from German luxury carmakers BMW, Mercedes-Benz, Audi and Li Auto EREVs, Yu's team said.
The team attributed NIO's recent weak sales to 3 main factors. The following is from their research note:
1. NIO's pricing is the highest amongst the start-ups and premium BEV demand has been generally weak across the board.
2. The premium segment appears to be electrifying more slowly which may be counter-intuitive to those outside China. Based on our analysis of the premium SUV market (>300k RMB), the BEV mix is only 12% YTD, compared with PHEV (includes EREV) at 18%, leaving 70% for ICE.
This compares with the overall market that is 21% BEV and 10% PHEV, showing customer preferences are quite different depending on the sub-segment.
Our read is the EREV value position is resonating with a much broader audience than anticipated which Li Auto has done a very effective job at maximizing.
3. We believe NIO's brand appeal has hit a wall of sorts as it is struggling to get momentum outside of Shanghai (and surrounding provinces) and also beyond finance/tech social circles.
To illustrate this, we look at the performance of NIO's best-selling ET5. Nearly 40% of sales mix comes from this region and ET5 sells quite poorly in the south despite in theory having the broadest appeal amongst NIO's offerings.
Moreover, based on our channel checks, affluent older customers simply are not buying into the brand (yet) and still prefer traditional BBA cars.
Management will need to figure out ways to augment the appeal of its unique services such as battery swapping. For existing customers, the usage is actually quite high, having set records during recent holiday (69k swaps in one day or ~20% of car parc).
NIO officially launched the new ES6 -- the best-selling NIO SUV in history -- in China on May 24, and deliveries began the same night.
In addition to the new ES6, NIO will also begin deliveries of the new ES8 and the ET5 Touring, a derivative of the ET5 sedan, this month.
NIO's deliveries in June will get a boost from a full month of new ES6 deliveries and partial contributions from the ET5 Touring, Yu's team said.
The new ES6 starts at RMB 368,000, higher than expected, as many potential buyers are comparing it to the Li Auto Li L7, which starts at RMB 319,800, the team said.
(Image credit: CnEVPost)
For the ET5 Touring, the team expects pricing to be at RMB 335,000 - RMB 345,000, slightly higher than the regular ET5.
NIO management aims to capitalize on the success of the Zeekr 001, which proves there is a sizable local market for luxury sport EV wagons, the team said.
Yu's team expects NIO to see only a minimal improvement on vehicle margins in the second quarter.
"While lower battery input costs should help by at least 1-2% sequentially along with phasing out of aggressive promotional activity on first-gen 866 models, this will be partially offset by lack of overhead absorption/higher D&A as overall volume in 2Q will be down materially compared with 1Q," the team wrote .
As sales improve in the second half of the year, auto margins should return to double digits, the team said.
On the operating cost side, with sales under so much pressure, Yu's team suspects NIO management may be forced to show some level of restraint.
"We are skeptical NIO can achieve 'core' breakeven in 4Q23 and overall breakeven in 2024," the team wrote.
Also, cash burn will intensify due to declining deliveries, similar to what XPeng is experiencing, the team said, adding that they suspect NIO management will roll back its previous RMB 10 billion capex outlook.
Notably, the team remains bullish on the company's prospects, despite many investors have lost patience after multiple sales and margin disappointments.
"We think the stock is already embedding in a very negative path forward and we reiterate NIO's longer-term strategy of having multiple brands, holistic charging infrastructure, and an aspirational ecosystem can still ultimately win out once the dust settles on the EV wars," The team wrote.
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XPeng aims to reach 15,000 monthly deliveries in the third quarter and 20,000 monthly deliveries in the fourth quarter, its management said. | XPeng US | XPeng HK
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XPeng (NYSE: XPEV) reported first-quarter earnings on May 24 and held a conference call with analysts afterward.
Below are the key points compiled by CnEVPost based on the call.
XPeng management presentation
Over the past four months, XPeng orders have grown in each month compared to the previous month, despite macroeconomic challenges and fiercer industry competition.
The high-end version of the P7i, the ternary lithium battery version, has exceeded expectations to the extent that the originally prepared capacity could not meet consumer demand.
Compared to previous versions, the P7i has a more streamlined SKU and a tighter rhythm of launch.
Starting in June, XPeng will work with its supplier partners to increase the capacity of P7i components and accelerate its delivery.
XPeng's first new model based on SEPA 2.0 architecture, the G6, is equipped with the industry's most advanced 800-volt high-voltage system and 3C fast-charging battery with a range of up to 755 km.
The G6 will be delivered with industry-leading XNGP technology, and media test drives of the model began last week, with feedback that the model is significantly different from other electric vehicles on the market in terms of smart driving and energy consumption with 800-volt high-voltage fast charging.
The G6 will be officially launched in June, with volume deliveries starting in July, and production capacity will climb rapidly.
The G6 will be a hot seller in the Chinese new energy SUV market in the price range of RMB 200,000 ($28,325) to 300,000.
Deliveries of the G6 will enable XPeng's total deliveries to grow well above the industry's pace in the third quarter, and the company will see the first sales inflection point following its strategic and organizational realignment.
XPeng will launch a 7-seat all-electric MPV, internally codenamed X9, in the fourth quarter of this year.
XPeng will introduce more clearly defined and better equipped versions of its existing models this year, allowing sales to rise another notch.
XPeng is confident that 2023 will be the inflection point for its smart technology, with the majority of potential customers recognizing its value in 2024 to 2025.
At the end of March, XPeng pushed out City NGP and XNGP features to Max versions of several models in Guangzhou, Shenzhen and Shanghai.
Customer feedback on these assisted driving features has been positive, with mileage penetration exceeding 60 percent in the first month of rollout.
Following XPeng's test drives of XNGP in Guangzhou, Shenzhen and Shanghai, orders for the Max versions of the P7i and G9 in those cities increased significantly in April, by more than 50 percent.
The company plans to officially launch Highway NGP 2.0 in June, and XPeng has rewritten the system based on the XNGP framework with five times more code than the original.
XPeng expects to make Highway NGP 2.0 a near-L4 autonomous driving experience, with virtually zero takeover.
This year, XPeng expects to achieve less than 1 takeover per 1,000 km in highway scenarios.
By the end of the third quarter of this year, XPeng will roll out XNGP without relying on high precision maps in cities in China that do not have high precision maps.
In terms of the difficulty of mass production, XNGP without relying on high precision maps is nearly 100 times more than highway NGP with high precision maps, which is an important watershed to test the team's technical and data capabilities.
The actual user experience will be greatly improved after this feature is implemented. Currently XNGP has reached the driving level of novice drivers.
XPeng hopes to release an OTA update every quarter thereafter to improve the XNGP experience.
As the XNGP continues to break through in experience and cost, XPeng's Max version vehicles with XNGP are expected to see a big increase in sales in the fourth quarter of this year.
XPeng has recently brought in several new designers and will also bring in outside teams to compete creatively with in-house in the design process of new models.
These adjustments will bring XPeng's future new models and facelifts to the top of the industry in terms of interior and exterior styling.
Since the first quarter, XPeng's marketing and service system has changed significantly thanks to the efforts of new president Wang Fengying and the team. The user experience throughout the sales and service process has improved, speeding up the response time to user needs.
One of the core indicators XPeng focuses on, NPS, has been steadily improving every month from the beginning of this year to April, and has returned to the top level in the industry in April.
In the coming quarters, XPeng's primary goal will be to rapidly expand sales to capture a larger share of the electric vehicle market.
XPeng has completed the flattening of the channel management and will optimize the current sales network to improve the overall capacity of the channel.
While improving the efficiency of the sales network in Tier 1 and Tier 2 cities, XPeng will also bring in more dealer partners in Tier 3 and Tier 4 cities to support its product layout and sales targets in the RMB 150,000 to 350,000 price range in the coming years.
Technological changes and fierce competition will reshape the landscape of China's auto industry in the next three years. In addition to excellent product definition and technological innovation, extreme cost reduction and high efficiency will be the key to win.
XPeng's SEPA 2.0 architecture is highly competitive in R&D efficiency innovation, and the mass production of G6 marks that the architecture and XPeng's intense technology development over the past five years have allowed it to build up its technology platform capability.
This will keep XPeng at the forefront of technology for the next three years, while the company is launching more new models based on the SEPA 2.0 architecture that are more cost competitive and have a consistent usage and operating experience.
XPeng is working on several new models that will cover the RMB 150,000 to 350,000 price range, sharing power, electronics, smart cabin and smart driving platforms.
XPeng expects to further reduce the development cycle of new models by 20 percent, and expects to achieve a component sharing rate of up to 80 percent for the architecture part, thus allowing the development cost and BOM cost of future models to be significantly reduced.
XPeng is working on a clear and feasible technical solution to reduce the cost of the Max version by 25 percent by the end of next year.
Competition currently revolves around volume, but after 2025, the focus will be on a combination of innovation at scale, design cost, efficiency, quality, and globalization.
XPeng had over RMB 34 billion in cash at the end of the first quarter, and will allow R&D investment to focus on customer-approved areas in the future.
XPeng will optimize the organization and process management to further improve the efficiency of company-wide operations.
Starting in July, the delivery of G6 and other new products will allow XPeng sales to grow rapidly, and monthly deliveries in the third quarter are expected to be substantially higher than in the second quarter.
XPeng's target for monthly deliveries in the fourth quarter is above 20,000 units, at which time operating cash flow is expected to turn positive.
XPeng expects total deliveries in the second quarter to be about 21,000 to 22,000 units, up 15 percent to 21 percent from the first quarter, and revenue is expected to be RMB 4.5 to 4.7 billion.
Below are the key points of the Q&A session.
Q1: What pricing strategy will XPeng use for the G6 and future models?
A: Currently, XPeng's overall strategy is a balanced pricing approach with scale first.
Pricing for the XPeng G6 and subsequent models will take into account the cost fluctuations of raw materials, including lithium carbonate, and will allow for relatively manageable costs. Ultimately, we expect to achieve competitive pricing and maintain it over time, while prioritizing scale.
Q2: Has the supply chain bottleneck of P7i been solved and how long will the capacity creep time of G6 be?
A: The G6 has been set aside for about two months from SOP to delivery. The model will be released in June and deliveries will start in July. With a two-month cushion, monthly deliveries of the G6 are expected to climb much faster than the G9 and P7i in the third quarter.
Compared to the P7i, the G6 has a well-prepared supply chain and we expect the model to achieve a rapid sales creep.
For the problem of low yield rate of integrated die casting, we have been experimenting for more than a year and it is progressing smoothly and the yield rate is as expected, which will not be a problem for G6.
Q3: What impact do you think the drop in battery raw material prices will have on battery costs, and on gross profit in the second quarter?
A: In the first quarter, XPeng's battery cost decreased by 5 percent compared with the fourth quarter of last year, benefiting from the decrease in the price of battery raw materials, and the battery cost in the second quarter is expected to decrease by 10 to 12 percent compared with the fourth quarter of last year.
Battery costs account for about 40 percent of total costs, so a 7 percent drop in battery costs in the second quarter would mean about a 3-4 percent improvement in gross margin.
This is just a judgment from the raw material perspective, the revenue side also has a very important impact on the gross margin.
Q4: Will you adjust your full-year delivery forecast?
A: G6 will start volume delivery in July, XPeng delivery growth in the third and fourth quarters will be expected to be higher than the market growth rate.
XPeng is expected to reach the target of 15,000 monthly deliveries in the third quarter and 20,000 monthly deliveries in the fourth quarter.
Q5: What is the order and capacity situation of P7i? How do you anticipate the demand for new models?
A: The supply chain bottleneck of P7i is mainly the lack of preparation of battery and battery-related parts. The production capacity of the ternary lithium battery will be improved in May and June, which will be able to meet the delivery demand of P7i ternary lithium battery version.
Regarding the estimation of industry demand and new model demand, the industry is not very stable recently, XPeng's estimation of demand will remain robust and work with suppliers based on this.
Q6: What is the positioning of your MPV model? Does it differ more from the more youthful image of previous products, and how do you make the model relate to XPeng's youthful and technological positioning?
A: XPeng's current main user group is between 25 and 35 years old, and the unemployment rate of young people has no significant impact on sales.
XPeng is thinking about how young people can be associated with MPV when defining 7-seater MPV, and will introduce the logic of young people buying MPV in detail at the end of the year launch.
Q7: What are your expectations for gross margin in 2023?
A: XPeng still has some sales volume pressure in the second quarter, but continued cost reduction will have a positive impact.
In the second half of the year, gross margin levels will improve steadily throughout the year with the delivery of the G6, P7i and MPV.
Significant improvement in XPeng gross margin will come after cost reduction measures start to be implemented and sales volumes improve, which will be reflected in 2024.
Q8: What are your expectations for lithium prices? What is the proportion of lithium iron phosphate and lithium ternary batteries used in the vehicle models? How does this affect costs?
The current short-term lithium price rebound is temporary, and prices will go down in the second half of the year and are expected to fall to within RMB 200,000.
Today XPeng and its peers are pricing batteries flexibly based on market prices.
XPeng's most important innovation goal is to achieve the longest range with the fewest batteries, so the use of lithium iron phosphate or lithium iron phosphate-like batteries will increase significantly in proportion.
This will bring down the cost of the vehicle, safety will be improved, and the range will satisfy the customer.
Q9: What is the contribution of XNGP to orders after its launch?
XPeng launched XNGP in Shenzhen, Shanghai and Guangzhou in March, and customers in these three cities can experience the XNGP features. In April, there was a 50 percent increase in sales of P7i and G9 in these three cities.
XPeng believes that as more cities see XNGP available in the second half of the year, and as the XNGP user experience continues to be optimized, it will help further improve orders.
XNGP will be free of its reliance on high-precision maps by the end of the third quarter when the launch of the feature will not require approval, and it will cover more cities this year and next.
Q10: How does XPeng compare to its peers in terms of assisted driving? Will the short-term decline in sales affect data collection to the extent that it will limit the progress of assisted driving development?
Currently, no other company has reached XPeng's level in cities without high-precision maps, and the company is 12 months ahead of its peers in terms of volume production for autonomous driving.
Current volumes are sufficient for the generalization of vision or language models. It needs to be seen in the future whether more vehicles on the road can improve the accuracy and reliability of assisted driving.
Q11: What are XPeng's breakdown sales targets for different models for the second half of the year?
XPeng wants the G6 to reach more than twice the sales of the P7i, and wants G9 sales to increase from current levels, but cannot provide a breakdown at this time.
Q12: What is XPeng's product plan for 2023-2025? Will a lower-priced model be launched?
XPeng will launch about 10 models on the same platform while controlling costs.
The company's main price range will remain RMB 200,000 to 300,000, while it will also offer products in the sub-RMB 200,000 and over RMB 300,000 price ranges, but not as a primary target.
($1 = RMB7.0609)
XPeng Q1 earnings miss expectations, gross margin falls to 1.7%
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