Could XPENG Be China’s Answer To Tesla? -

Could XPENG Be China’s Answer To Tesla?

Every startup in the electric vehicle market is gunning for Tesla. In the USA, Lucid and Rivian hope to challenge Elon Musk’s company. But the bigger threat could be from outside America, where so many of the components going into EVs come from – China. One of the leading Chinese companies mounting the challenge is XPENG. I talked to Brian Gu, President and Vice Chairman of XPENG, about the company’s strategy and aims.

“We started our operations eight years ago, so it’s a relatively young company,” says Gu. “We didn’t just want to build electric vehicles. We believe that, in the long run, the mobility differentiation will come not just from energy differences, but also from intelligence. That’s why when we are developing our models, we also spend a lot of effort and resources making our vehicles as smart as possible.”

So far, XPENG has concentrated on the Chinese market, starting with its crossover SUV, the G3, which was updated to the G3i in 2021. The company’s second model, which has become its flagship, is the P7. This is a sports sedan in the same class as the Tesla Model 3. More family oriented is the P5, launched in September 2021. Soon to arrive will be the G9, which is being seen as a direct competitor to the Tesla Model Y, and the next step in the brand’s cementing of its status on the global automotive stage.

In 2021, XPENG delivered over 98,000 vehicles to its customers, which is obviously small potatoes compared to Tesla’s current volume. Most of these sales were in China, and Gu claims this ranks XPENG number one amongst emerging new energy vehicle players. However, in the first half of 2022, XPENG has already delivered over 80,000 cars, implying a near-doubling of volume year-on-year.

Now XPENG doesn’t want to remain focused on the local market. “We don’t want to be limited just to a China market because we feel our technology should be enjoyed by consumers all over the world,” says Gu. “We always had a global presence in mind as we were building up our company, even though we’re very young. For example, we have started R&D centers in North America, in Silicon Valley, in San Diego. We also have offices outside of China in Europe.”

As it looks beyond China, XPENG has Europe firmly in its sights. “We started our globalization expedition two years ago by setting up a commercial presence in Europe,” says Gu. “We picked Europe as a first step because we are developing in a premium segment, which the European market is more suited to target. The European market is also one of the largest markets in the world, is very mature and has established infrastructure, government policies and consumer recognition for such products.”

Within Europe, XPENG has focused on the most mature countries for EVs including Norway, Sweden, Denmark and the Netherlands. “Our goal this year and next year is to lay the foundation for our growth in the European market, to build up the infrastructure, build up the team, build up the relationship, build the brand, and also to deliver to these countries to get experience so we can have the confidence to expand to other parts of continental Europe.”

So far, XPENG has delivered a few hundred of its G3 SUVs to Norway, with the first deliveries arriving at the end of 2020. Going forward, however, Gu sees the P7 and newer models as being key to a successful entry into other European countries. However, XPENG is keeping quiet about plans to enter the US. Right now, China and Europe are the bigger markets, with Europe in particular offering the most attractive blend of volume and premium focus. “The USA is not an easy market for emerging players,” says Gu. “Based on the segment that we are developing, Europe is the right starting point for us.”

The P7 is certainly a tempting alternative to a Tesla Model 3. Aside from flashy Lamborghini-style scissor doors, the P7 promises up to 439 miles of range (NEDC testing) and 0-62mph in as little as 4.5 seconds, although these features are for two different variants (RWD Super Long Range and 4WD Performance respectively). The P7 also showcases XPENG’s XPILOT 3.0 assistance system, which incorporates the XPENG Navigation Guided Pilot (XNPG). This offers self-driving features similar to Tesla’s Autopilot on highways. XPENG has already shipped over 100,000 P7s.

However, Gu sees the forthcoming G9 as the most important product for XPENG, just as the Tesla Model Y has begun to usurp the Model 3 for sales volume since its launch. “It has the XPENG design language, which is cool, hip, young and really trendy,” he says. “But, more importantly, it has some outstanding features. For example, it uses the 800-volt platform that can support 480KW charging. So it’s faster than anything that you have in China or even globally for that matter.”

Like Tesla, XPENG is putting technology at the core of its product offerings rather than attempting to compete on price. One of the central pieces of this technology is autonomous driving, although Gu admits that this will be a long game because most countries’ safety regulations don’t allow autonomous vehicles above Level 2. “The G9 will have the one of the most intelligent, autonomous driving sensor packages, as well as computing packages coupled with our leading software algorithm stack.” Gu sees the G9 as very exciting for the Chinese market, but with great potential in the international market as well. He expects to see the car launched in Europe in 2023.

This focus on technology sits at the center of XPENG as a company, which like Tesla revolves around its software capabilities first and builds the vehicle platform outwards from that. XPENG’s founders are also from an Internet and software background, like Elon Musk. “We have a much better balance between software and hardware as a company compared to traditional OEM brands that are mostly focused on the hardware engineering,” says Gu. “We have full stack software capabilities.”

For now, XPENG has no plans to compete in the budget sector, because this wouldn’t allow the company to offer the advanced technology that it sees as central to its brand differentiation. The P7 and forthcoming G9 can already steer themselves on highways and even perform overtaking maneuvers autonomously. Tesla may have promised similar features in a $25,000 car back in 2020, but this is likely to be years away still if it every arrives at all. This level of autonomy will remain a premium feature for some time to come.

In other words, XPENG won’t be bringing affordable EVs to Europe in the same way that other Chinese-manufactured brands such as MG are already doing, such as the latter’s MG4. But Europe’s premium car market is huge, and ripe for competition. In 2021, the European luxury car market was worth $157.3 billion, and as this rapidly switches to EVs, there will be plenty of opportunities for challenger brands such as XPENG. China is rapidly losing its former reputation for cheap mass production. The time could fast be approaching when European car buyers choose an XPENG electric vehicle ahead of Mercedes, BMW, Audi – and Tesla.

Leave a Reply