XPeng Motors Vice President and Chairman Brian Gu spoke with Brian Sozzi, Yahoo Finance, to discuss the company’s latest results in the fourth quarter, how the company continues to grow and to engage with local and foreign companies in the to compete electric car market.
Video transcription
BRIAN SOZZI: China-based EV maker XPeng is unavailable and its latest earnings show a 302.9% increase in fourth-quarter deliveries. Sales increased by 345.5% over a year ago, while losses decreased. The company predicts that deliveries will increase by 450% in the first quarter.
Let’s get the latest information on XPeng from Vice President and President Brian Gu. Brian, always good to talk to you. Thank you for taking the time here. Listen, the market in China is still, I would think many would say, strong. How would you sum up a few months of the year, the state of the market?
BRIAN GU: Yes, I think the overall momentum in the market is still very strong. I mean, I think you saw the end of last quarter, the delivery numbers of all the players picked up. And we recorded our best quarter ever and also a huge increase in the previous year.
And the first quarter is actually a low season for Chinese car sales. Because of the Chinese New Year, most people actually went home on vacation. And many government agencies are not open to vehicle registration. Therefore, you see a decline in February, which is Chinese New Year. But overall, we see great momentum in March and the coming months continue. We therefore hope that 2021 will again be a strong year for EVs.
BRIAN SOZZI: So you see momentum until March?
BRIAN GU: Yes. I think the momentum in terms of both car and delivery is increasing lower from February.
BRIAN SOZZI: Are you surprised at how stock prices have reacted this year?
BRIAN GU: Well, I think that’s quite a significant drop we’ve seen in recent weeks. I think, of course, coupled with the overall market achieving the high growth and high value stocks in other sectors as well. But for EVs, I think a few things come to mind. One is that the first quarter is generally a low season. The delivery rate for Chinese players is therefore low. The other factor is that Tesla has also declined significantly, dragging the other stocks along as well.
BRIAN SOZZI: The focus here in the US was on the scarcity affecting carmakers. Have you seen any impact on your business?
BRIAN GU: Well, we have visibility over the next few months. And we see no problem with our capacity. But of course I think we are watching the development of this situation closely. Luckily for us, we do not really have a large volume like Volkswagen and GM that need a large supplier of the chipsets. Our quantities will therefore be more manageable than them. But still, I think this is a development that we are also watching closely.
BRIAN SOZZI: Do you think it will get worse in the coming years? It’s not just XPeng who’s developing the next generation of cars here, but in fact these cars, EVs are rolling into the computer at this point.
BRIAN GU: Yes, I think the chips on the vehicles are getting more and more popular and more important. There are, of course, different types of chips. Some chips can be replaced by other manufacturers because they do not require high technology manufacturing, while some AI chips are actually more advanced, we will probably see a more difficult replacement.
So I think if it develops, I will see that there are more replacement proposals or options for car manufacturers. And that, I think, will ultimately solve the problem.
BRIAN SOZZI: There are currently some catalysts at XPeng, including your third model. What can you tell us about it?
BRIAN GU: Yes, well, 2021 is very exciting for us because we actually have a number of new products that we are going to introduce to the market. Almost every quarter we announce something new to deliver. The most exciting product is of course our third model, which is actually a brand new sedan model that includes Lidar in its autonomous driving system.
This will probably be the world’s first production level vehicle to have Lidar technology in its system. And we think it will increase our ability to provide our drivers in China with a very autonomous driving experience, because I think Lidar contributes to the safety redundancy required for autonomous driving in more city settings.
BRIAN SOZZI: And also to support your new model, you ended the year with 160 stores. What is your goal to get more stores in the ground this year? And where do you build them?
BRIAN GU: Well, we will continue to expand our sales and services network. By the end of this year, we will probably have more than 300 stores in China covering more than 110 cities. And I think the stores will continue to increase the density of the big Tier One cities, as well as expand Tier Two, Tier Three city networks.
It will therefore be overall growth for our coverage. And more importantly, we are likely to add more stores of our own because we have found that we actually have a much higher efficiency and productivity by using our own stores.
BRIAN SOZZI: And how many propulsion works do you have going on?
BRIAN GU: At the end of last year, we had more than 160 charging stations. And we plan to increase the number to more than 500 by the end of the year.
BRIAN SOZZI: And another, I would say, also catalyst, you are also building another manufacturing plant. What are the details on it?
BRIAN GU: Well, we are currently using our Zhaoqing plant that is currently building our T7. And of course, the new product, the third product, will also be built in Zhaoqing. But the capacity is going to be filled quickly as we increase in vehicle growth.
So we have an agreement with the government in Guangzhou that they actually provided financing and land to give the construction – start building the second plant, which will be operational by next year. This enables us to manufacture our fourth product in the new plant in Guangzhou. So this is a very good way to connect to the capacity needs we need to increase the volume next year.
BRIAN SOZZI: You mentioned Tesla briefly a few minutes ago. Is Tesla still the benchmark in the Chinese EV market? Because I see what XPeng is doing. I see what Li Auto is doing. I see what Nio is doing. And you are all really, I would say, taking the fight to Tesla.
BRIAN GU: Well, I think Tesla is a very powerful brand. And they have products and technologies that are currently the leading part of China. Their delivery last year was obviously very impressive. But I think we all offer something different.
From XPeng, we want our products to have the best technology, more suitable for Chinese drivers. That’s why we also want to differentiate our driving experience, our loading comfort and our autonomous driving ability compared to Tesla because we put so much effort and focus on improving it for Chinese customers and drivers.
BRIAN SOZZI: How far do you think China is ahead of the US in terms of the EV market?
BRIAN GU: I think it depends on how you compare. I think China definitely has a lot more players who have tried very hard to develop a business. And I think you’re starting to emerge from the local leaders. But I think the US still has a lot of the technology. We still have respect for Silicon Valley, which has done a tremendous amount of autonomous driving and propulsion and battery technologies.
So I think in terms of market development, I think China, given the government’s support, as well as so many players trying to develop new products, new policies and faster penetration. But I think the US is still thinking, where we are seeing a lot of cool and best technologies that will help the growth of the industry as well.
BRIAN SOZZI: We look forward to following this industry much more in the months and years ahead. Brian Gu, XPeng Vice President and President, Thank you for joining Yahoo Finance.
BRIAN GU: Thanks, Brian.