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The management teams of XPeng's direct sales channel and its authorized dealer channel have been combined to reduce unnecessary competition for interest from within, according to local media.
XPeng US | XPeng HK
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XPeng's (NYSE: XPEV) organizational restructuring appears to be continuing, with the latest move completing a major reorganization of its sales system, according to a new report.
XPeng's sales system has recently completed changes in its internal management structure, with the management teams of its direct sales channel as well as its authorized dealer channel being merged, according to a report by local media outlet Jiemian.
The company is one of the rare new Chinese carmakers to have both a direct and dealership system. This approach helped XPeng rapidly expand its number of stores and reduce the cost of building them in the early stages of its development, Jiemian's report noted.
As of the third quarter of last year, XPeng had more than 400 stores, of which about 70 percent were directly operated by the company and 30 percent were authorized dealers. As a comparison, Li Auto and NIO's latest store counts were 296 and 387, respectively, according to the report.
However, these two sales channels of XPeng are managed by different teams and thus have the problem of competing for each other's interests.
XPeng's directly managed stores are under XPeng Auto Trading, headed by co-founder He Tao. Its authorized dealers are managed by the UDS (User Development Service Center) team, headed by chief talent officer and vice president of sales Liao Qinghong.
A previous report by local media 36kr mentioned that at the height of competition between these two teams, XPeng's direct system received a fund, one of the invisible uses of which was to find problems with the authorized dealer system.
Disruptions in the sales network were one of the reasons for XPeng's poor sales performance last year, Jiemian's report noted.
XPeng sold 120,757 vehicles in 2022, meeting only 48.3 percent of its full-year sales target, according to the report.
Starting in January, XPeng began integrating the two different sales systems, a process that was recently completed, Jiemian's report said, citing a source familiar with the matter.
On January 30, XPeng announced that Wang Fengying, formerly president of Great Wall Motor, has been named president of the company.
Ms. Wang will be responsible for XPeng's product planning, portfolio management and sales operations, reporting to the company's chairman and chief executive officer, He Xiaopeng, XPeng said at the time.
After heading sales, Ms. Wang removed XPeng's original big region system and redefined more than 20 sales districts, with direct stores and authorized dealers in each district managed by a single head, according to Jiemian.
The unified management of Xpen'sg directly managed stores and authorized dealers will be able to avoid competition between the two and help reduce the impact on consumers, the source said.
XPeng earnings preview: Q4 to be soft with promotions hitting margins
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The funds will be provided over five years to eligible applicants including states, cities, local agencies, and tribes.
The funds will be provided over five years to eligible applicants including states, cities, local agencies, and tribes.
The price of lithium, a raw material for batteries, has accelerated its decline, with industrial-grade lithium carbonate falling RMB 7,500 per ton to RMB 302,500 per ton today.
New price agreements between Chinese power battery giant CATL and some local automakers are expected to be reached this month, at a time when battery raw material prices continue to fall.
CATL's lithium rebate policy is progressing steadily, and it is now at the practical stage of signing agreements with some car companies, local media Cailian said today, citing sources close to the battery maker.
These agreements are expected to be reached by the end of this month at the earliest, the source said.
CATL's plan was first reported on February 17 by local media outlet 36kr, which said it is not aimed at all customers, but rather at several strategic customers, including NIO (NYSE: NIO), Li Auto (NASDAQ: LI), Huawei and Zeekr.
The core terms of the partnership include that CATL will settle a portion of the price of power battery supply with car companies at a rate of RMB 200,000 ($28,970) per ton of lithium carbonate for the next three years.
At the same time, car companies signing the partnership will be required to commit about 80 percent of their battery purchases to CATL, according to the report.
CATL management first acknowledged the move during the company's earnings call on March 9.
CATL's lithium sharing plan is not for the purpose of lowering prices, but rather the company already has some mineral resources and does not want to reap windfall profits, its management said.
CATL wants to be able to share with long-term strategic customers and is moving forward with communications to that end, the company said.
Prior to that, Li Auto and NIO both said that they had ongoing discussions with CATL when asked about the topic in their respective earnings calls.
CATL's move comes as lithium carbonate has been falling for months.
Today's quotes for industrial-grade lithium carbonate and battery-grade lithium carbonate in China were both down RMB 7,500 per ton, with the latest average prices at RMB302,500 per ton and RMB 340,000 per ton, respectively, according to My Steel.
($1 = RMB 6.9040)
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The XPeng P7i can cover up to 436 miles of range on China's CLTC test cycle, DC fast charge from 10 to 80% in under 30 minutes.
The German brand appears to be testing a version with fewer than four electric motors.
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"We expect generally soft results and a weak 1Q23 outlook due to challenging demand and pricing dynamics," Edison Yu's team said.
XPeng US | XPeng HK
XPeng (NYSE: XPEV) will report fourth-quarter earnings on Friday, and as usual, Deutsche Bank analyst Edison Yu's team provided their preview.
"We expect generally soft results and a weak 1Q23 outlook due to challenging demand and pricing dynamics," the team said in a research report sent to investors yesterday.
Soft fourth-quarter
XPeng will report its unaudited financial results for the fourth quarter and fiscal 2022 on Friday, March 17, before the US markets open.
It delivered 22,204 vehicles in the fourth quarter, above the upper end of the guidance range of 20,000 to 21,000, but down 46.82 percent year-on-year and down 24.91 percent from the third quarter.
XPeng's previous revenue guidance for the fourth quarter was RMB 4.8 billion to RMB 5.1 billion, representing a year-on-year decrease of about 40.4 percent to 43.9 percent.
"We expect a soft quarter with deliveries already reported at 22,204, above management's guidance range (20,000-21,000), but with promotional activity hitting margins," Yu's team wrote.
The team expects XPeng to post revenue of RMB 5.4 billion yuan and a gross margin of 11.5 percent in the fourth quarter.
They expect XPeng's vehicle margin to be 8.5 percent in the fourth quarter, down 3.1 percentage points from the third quarter, and adjusted earnings per share of RMB -2.33.
The current analyst consensus in the Bloomberg survey is for revenue of RMB 5.7 billion, gross margin of 12.1 percent and adjusted EPS of RMB -2.25.
For the first quarter, Yu's team expects deliveries to be around 19,000-20,000 units and for gross margin to drop to single digits as price cuts take hold.
XPeng deliveries in January and February were 5,218 and 6,010 units respectively, for a cumulative total of 11,228 units. Insurance registration figures for the past two weeks suggest that the company did not see a significant improvement in deliveries in March.
Uncertainty in 2023
The key to XPeng's relevance going forward is to win back market share, and that could take several quarters to achieve, which has created significant uncertainty this year, Yu's team said.
Demand for the company's flagship SUV, the G9, has clearly been disappointing, despite mostly positive reviews, the team said, adding that they expect XPeng to potentially make pricing or SKU adjustments to the SUV in the coming months.
XPeng's new P7i sedan should help with order volume, but there won't be materially beneficial until the second quarter, the team said.
Most importantly, XPeng's upcoming Tesla Model Y competitor, the G6, needs to reach at least 5,000 units per month by the end of the year to be considered a success, the team said.
The team now expects XPeng to be on track to deliver 145,000 vehicles in 2023, a 10,000-unit downward revision from earlier, taking into account the decline in G9 sales.
How can capacity utilization be improved?
If XPeng's sales continue to be weak, its management may need to get creative to improve its capacity utilization, Yu's team said, adding that the easiest way to do that would be to sign some large fleet deals.
That may be hard in China, considering BYD and GAC have stronger positions in the taxi and ride-sharing segment, but XPeng recently signed deals with some local car rental companies to buy its P7 sedan, the team noted.
XPeng entered into a strategic partnership with local car rental company eHi Car Services on July 19, 2022, and delivered the first few hundred cars to the latter.
On January 9 this year, XPeng signed agreements with car rental company China Auto Rental and Geely's travel service platform Xiaolinggou Travel Technology, and completed the delivery of the first XPeng P7 vehicles in Ningbo, Zhejiang province.
In addition, XPeng has restarted its expansion efforts in Europe, where large fleet deals could make sense due to the region's high percentage of corporate fleets and low availability of cheap BEV options, Yu's team said.
"We note BYD has an agreement with SIXT for 100,000 EVs and XPeng's vehicles fall into a similar price point. BYD also just announced a 5,000 unit agreement with UK's Octopus EV," the team wrote.
Another option is to partner more deeply with traditional OEMs on EVs and robotaxis, which could come in the form of equity investments or strategic alliances, according to the team.
XPeng offering discounts to clear P7 inventory, facelift to launch next week, report says
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