Car Companies That “Listen” and “Stay Sober” Will Never Do Too Badly
How long does it take for a car company to go from “falling behind” to “making a comeback”? XPeng has given us the answer in 730 days.
Just the other day, I came across the topic of “XPeng topping the new energy vehicle (NEV) sales in Q1.” Upon checking the official information, it stated that XPeng Automobile sold 94,008 units in the first quarter, making it the only NEV company with both year-on-year and quarter-on-quarter growth. It also set a new record for quarterly deliveries and has seen deliveries exceed 30,000 units for five consecutive months, breaking records once again!
Seeing this information, I don’t know if you feel a sense of relief, but I certainly do. It seems that XPeng Automobile has truly “raised its head and let out a sigh of relief” this time.
You see, starting from the end of 2022, many media outlets began to question the future of XPeng. There were even a lot of people online stirring up the narrative that XPeng might suddenly “become irrelevant” one day.
Now, more than two years have passed, and XPeng has staged a “reversal drama” for everyone. The hashtag #XPeng’s 730 Days from Blow to Breakthrough# has also become a hot topic among netizens.
So, what exactly did XPeng Automobile go through and what did it do right to go from “falling behind” to “making a comeback”? Today, I’d like to talk about this topic with everyone.
XPeng’s “Darkest Moments”
The automotive industry can be quite ruthless. Even though XPeng Automobile once successfully became one of the top three new energy vehicle companies, it still faced tough times during its “darkest moments.”
I still remember that the XPeng G9, which was launched in 2022, was the car that really dragged XPeng to the “bottom.” Friends who followed this car should know that XPeng had done a lot of buildup for it and even called it the “best SUV under 500,000 yuan.”
Unexpectedly, after the launch of this car, it was soon found to have very confusing configurations and problematic pricing, which led to a sharp decline in XPeng’s reputation. Although XPeng made an emergency adjustment of reducing prices and increasing configurations within 48 hours, the damage had already been done and was irreversible.
I think this can be considered a “disastrous defeat” for XPeng in its product matrix layout. After all, at that time, XPeng only had the P7 as a hit model. The company had never been profitable and was counting on the G9 to bring some hope. With this hope shattered, there was no more room for sales growth.
And that was not the worst consequence. In the following days, XPeng Automobile hardly achieved any good results. Don’t believe me? Let’s take a look at the financial reports.
The financial report shows that in 2023, XPeng Automobile achieved a revenue of 30.8 billion yuan, a year-on-year increase of 2%. However, the net loss was as high as 10.8 billion yuan, setting a new record. At the same time, its automotive gross margin also plummeted. In Q4 of 2023, the automotive gross margin was -6%, a year-on-year decline of 11 percentage points.
This data is quite alarming. A car company that “fell behind” during the booming period of new energy vehicles is indeed hard to inspire confidence in. This is also why many media outlets were not optimistic about XPeng Automobile at that time.
Fortunately, XPeng Automobile did not disappoint. Judging from the data, it has been striving to climb up. According to XPeng’s 2024 financial report, its revenue in 2024 was 40.87 billion yuan, a year-on-year increase of 33.2%. Automotive sales revenue was 35.83 billion yuan, a year-on-year increase of 27.9%. The net loss narrowed from 10.38 billion yuan in 2023 to 5.79 billion yuan. Although still in deficit, the narrowing speed is quite fast, which is definitely worth affirming.
Of course, I’m not saying all this just to bring up XPeng Automobile’s old wounds. Think about it from another perspective: Only by clearly seeing XPeng’s “darkest moments” can we understand how valuable the achievements XPeng Automobile has made today really are.
He Xiaopeng’s Timely “Awakening”
It took XPeng Automobile a little over two years to go from “falling behind” to “making a comeback.” I think this period of time is not long, and there is even some “luck” involved.
The current hot topic of “XPeng topping the new energy vehicle sales in Q1” feels very satisfying. But behind this, He Xiaopeng has done a lot. Or rather, it is mainly because He Xiaopeng’s “awakening” came in time.
He Xiaopeng used to be a typical internet entrepreneur. As a certain media outlet said, he liked to pursue technological singularity with the romanticism of “Cultivation of Immortals.” He raised a lot of money, explored, and expanded.
At first, this approach did bring him some sweet success, such as the hit model P7. However, the automotive industry cannot just talk about dreams and ignore reality. The subsequent failure of the G9 was a heavy blow to He Xiaopeng. As Lei Jun once told him, “You just want to be the chairman and don’t want to be the CEO.”
Fortunately, He Xiaopeng is someone who “listens to advice.” He began to understand that technological innovation is important, but he should first learn to prioritize. In his own words, he needed to be a large-scale, manufacturing-oriented CEO who pursues technological innovation. In simple terms, it’s not that he doesn’t care about technology, but rather he temporarily puts technological innovation at the end of the list.
Over the past two years, He Xiaopeng has adopted a completely new philosophy of survival. He led the company to shift from a technology-oriented approach to a customer-oriented one. He personally broke down departmental barriers, established horizontal processes, and ensured that technology must be translated into market-perceptible experiential differences.
In 2023, he removed 10 executives at once and had more than 30 meals with over 600 employees. From someone who disliked “conflicts” and didn’t like to “manage things,” he became an entrepreneur who manages a lot, including technology and all horizontal processes, and makes decisive decisions.
The results proved that He Xiaopeng’s awakening was not too late. These series of measures have brought hope to XPeng Automobile. In an interview with a certain media outlet, He Xiaopeng mentioned a logic of “shifting from emphasizing technological strengths to working hard to make up for weaknesses”: A car has both an upper limit and a lower limit. In the past, we had too many lower limits. We have done a lot of things in the past two years.
I think this logic is the core of XPeng Automobile’s current “small victory.”
What Should the Future Be Like?
Although XPeng Automobile now shows signs of rising, in the fierce competition, no one can guarantee that its future will be absolutely safe. XPeng Automobile, which has experienced its “darkest moments,” has a clear understanding of the future.
He Xiaopeng once said at a press conference not long ago: “Some friends told us that they are already in the KTV, but in fact, we are still far away. We are still at the entrance of the ICU.”
Obviously, XPeng is not blindly optimistic about the future. I think this is actually a good thing. Compared with some car companies that lose their way after achieving a little success, XPeng Automobile can be considered “sober-minded.”
In the past, XPeng Automobile followed a “medium-scale, high R&D, high-cost” route of being refined and beautiful. After being “beaten up,” it realized that if it couldn’t sell cars well, there would be no high R&D costs; without enough R&D costs, it couldn’t do a good job in technology; and without good technology, it couldn’t compete with others.
Therefore, “going for scale” is something that XPeng Automobile must do. It can be seen that XPeng Automobile has now figured out its own survival rules.
In addition to working hard to build its business capabilities (making good cars and selling good cars), XPeng actually has a “technology” advantage. I think that once the weaknesses are made up for, combined with the strengths of its long board, XPeng Automobile will still be very interesting to watch in 2025, when “technology will decide the future.”
Conclusion
He Xiaopeng was right. In the “elimination competition” of the automotive industry, there is no tolerance. “Cruelty” is the essence of industry competition. Fortunately, XPeng Automobile realized it in time and changed its way of thinking quickly, thus obtaining a “revival card.” Although no one can predict the future of XPeng Automobile, I believe that a car company that “listens to advice” and “stays sober” will never do too badly.
