Xpeng Motors To Offer Driver-Assist Tech in Europe Next Year

Chinese electric vehicle (EV) company Xpeng Motors has said that it would roll out its driver-assist technology to Europe by the end of 2024.

The company offers its advanced XNGP technology in five Chinese cities including the capital Beijing and intends to roll out the service to 20 more Chinese cities in November. By the end of 2023, it plans to make the service available in 50 Chinese cities.

Notably, Xpeng Motors has been advancing its autonomous driving capabilities and in August it also acquired the self-driving assets of Chinese ride-hailing app Didi. As part of the $744 million deal, Didi took a 3.25% stake in Xpeng in exchange for its EV and autonomous driving assets.

Xpeng Motors expands its driver-assist tech

Also, Xpeng would launch a new EV brand developed under the project name “MONA” and would produce vehicles in the mass market RMB150,000 price range.

In July, Volkswagen partnered with Xpeng Motors to build two EVs on its platform and also buy a stake in the company for a total consideration of $700 million. The deal was a pathbreaker for not only XPEV but also the Chinese EV ecosystem as it reflected the confidence of the German auto giant in a startup EV company. It was also a testimony to Xpeng Motor’s self-driving capabilities.

XPEV’s partnership with Volkswagen

Xpeng Motors expects the deal with Volkswagen to also help improve its margins. It reported a gross margin of -3.9% in the second quarter as compared to 1.7% in Q1 2023 and 10.9% in Q2 2022. The company’s vehicle margin was -8.6% in Q2 2023 as compared to -2.5% in Q1 2023 and 9.1% in Q2 2022.

The company expects its gross margins to improve over time and said that increasing volumes would help its margins to improve in Q4. It added that “as we sell a better mix of products in the second half, we do expect our gross margin to become positive in the fourth quarter of this year.”

Xpeng Motors’ deliveries continue to improve

Xpeng Motors delivered 15,310 cars in September which was 12% higher than August and the sixth consecutive month where deliveries rose on a monthly basis. It delivered 40,008 vehicles in the third quarter which helped lift its cumulative deliveries to 332,521. Its Q3 deliveries were within the range of 39,000-41,000 that it previously provided. The company expects peak monthly deliveries of 20,000 in the fourth quarter.

Notably, in July, Xpeng Motors began the deliveries of its G6 SUV. The car is based on Xpeng Motors’ new production platform called SEPA2.0 (Smart Electric Platform Architecture) which the company unveiled in April. The company priced the model 20% below Tesla’s Model Y. However, Tesla has since lowered its car prices in China and intensified the price war.

XPEV Tech Day

Earlier this week, Xpeng Motors held its Tech Day 2023 where it touted its autonomous capabilities like the AI Valet Driver that can learn specific routes that the car driver manually drives.

At the event, He Xiaopeng, Xpeng Motors’ CEO said, “Our comprehensive, integrated full-stack, in-house R&D capabilities and robust mobility ecosystem continue to make XPENG a standout choice for consumers looking for EVs with cutting-edge technology at [accessible] price points. Domestic customer demand for EVs remains robust [and we continue to gain traction in European markets] as the global transition from traditional vehicles to EVs accelerates.”

It also presented the ultimate architecture for full-scenario ADAS – XBrain, “which is supported by XNet2.0, the next-gen perception architecture with spatiotemporal understanding, and XPlanner, the neural network-based planning and control system, to enable more human-like learning, thinking and actions.”

Tesla FSD

Rival Tesla also offers autonomous driving and its advanced version called full self-driving or FSD. However, the company does not offer FSD in China apparently due to spying concerns. The software is also facing multiple investigations in the US and regulators are not too pleased with the name FSD also as the software is not fully autonomous as the name might suggest.

The company currently charges $12,000 for its FSD subscription and Musk believes the price would eventually rise to as high as $100,000. Notably, Tesla raised FSD prices by $5,000 in 2022 but cut prices by $3,000 this year which Musk says is intended to increase adoption.

Musk on Tesla’s valuation

Musk has said multiple times that Tesla’s valuation is linked to its autonomous driving business. Speaking at the Paris VivaTech innovation conference in June, Musk emphasized that Tesla’s valuation is linked to its autonomous driving business and said, “The potential for autonomy is that the value of autonomy is so high, that even if you have a discount, a percentage probability of autonomy happening, that is so incredibly valuable.”

He pointed to Tesla’s low share of the global auto market and said, “If you look at our total vehicle output, it’s almost 2 million vehicles this year or something like that. But that’s still only 2% of total vehicle production.”

Notably, despite selling far fewer cars than legacy automakers, Tesla is the most valued automaker and its market cap is more than the combined market caps of all leading automakers which tend to trade at single-digit PE multiples while Tesla commands much higher multiples amid its perception as a tech company and not merely an automaker.

Xpeng Motors stock has pared gains

Meanwhile, after the sharp rally earlier this year, Xpeng Motors stock has pared gains even as it is still in the green for the year. We’ll next hear from the company next month when it reports its Q3 earnings.

Tesla incidentally crashed last week after missing both topline and bottomline estimates. Also, its operating margins fell below 8% as the EV price war that it only started has started to take a toll on its margins.

Xpeng Motors also lowered car prices following Tesla’s price cuts and its gross margins fell into the negative territory. When the company reports its Q3 earnings next month we’ll get to know whether its margins have improved sequentially as it had projected during the Q2 earnings call.