It has been revealed that hundreds of Volkswagen engineers have moved into the headquarters of XPeng Motors in Guangzhou. It is said that "the scope of cooperation between the two parties is very broad, and the depth of cooperation is unprecedented," suggesting that major moves from both sides are not to be ruled out.

This indicates a comprehensive upgrade in the technical cooperation between Volkswagen and XPeng Motors. XPeng Motors' response to this matter appears to be quite cautious. The public relations department of XPeng Motors responded that detailed information regarding further cooperation with Volkswagen will be disclosed to the public at an opportune time next week.

This response is reminiscent of XPeng Motors' subtle replies before Wang Fengying joined, with a focus on not directly acknowledging or denying. This not only piqued the interest of the industry but also highlighted the importance and sensitivity of the cooperation between the two parties.

Objectively speaking, this news has a significant boosting effect on XPeng Motors. Since entering 2024, XPeng Motors' market sales have been sluggish, mainly due to a tendency to lag behind brands such as NIO, Leapmotor, and ZEEKR, and the lack of a popular model. Recently, there have also been cases of executive departures and personnel instability.

In summary, the upgraded cooperation between Volkswagen and XPeng Motors is good news for the latter.

Market sales are gradually falling behind

XPeng Motors' June delivery data showed that about 10,700 new vehicles were delivered that month, an increase of 24% year-on-year and 5% month-on-month. From January to June, XPeng Motors delivered a total of 52,000 new vehicles, an increase of 26% year-on-year. During the same period, NIO delivered 21,209 vehicles in June, an increase of 98% year-on-year, marking the second consecutive month of sales exceeding 20,000. NIO delivered a total of 87,426 vehicles in the first half of the year, an increase of 60% year-on-year; Leapmotor delivered 20,116 vehicles in June, an increase of 52.3% year-on-year and 10.7% month-on-month, setting a new record. The cumulative delivery for the first six months was 86,696 vehicles; ZEEKR delivered over 20,000 vehicles in June, reaching 20,106, an increase of 89% year-on-year. From January to June, ZEEKR's cumulative sales reached 87,870 vehicles, an increase of 106% year-on-year.

Needless to say, Lixiang and Hongmeng Zhixing, with monthly deliveries exceeding 40,000, are far ahead of XPeng Motors.

XPeng Motors' delivery target for 2024 is 280,000 vehicles. With 52,000 vehicles delivered in the first half, an average of 38,000 vehicles need to be delivered per month in the second half, putting considerable pressure on the company.

In terms of sales alone, if Lixiang and Hongmeng Zhixing are considered the first tier of new forces, and NIO, Leapmotor, and ZEEKR the second tier, then XPeng Motors has fallen to the third tier, on par with Nezha.

From a product perspective, XPeng Motors has not had a popular model in recent years. The XPeng G9, launched in the second half of 2022, was highly anticipated as a competitor to the Lixiang L9, but pricing issues led to its underperformance. This led to significant changes in XPeng Motors' organizational structure and the addition of Wang Fengying. Subsequently, models such as the P7i, G6, and X9 failed to generate significant sales despite the hype.

Intelligent driving technology has always been a proud label for XPeng Motors and its positioning, but faced with strong pressure from Huawei and competition from NIO, Lixiang, and Xiaomi, XPeng's halo seems to be fading. More importantly, for most consumers, intelligent driving is not the primary factor in purchasing a car; space, range, and price are more direct and decisive factors. Not only in the mass market but also in the premium market, XPeng Motors finds it difficult to win solely based on intelligent driving.

While it is not appropriate to judge the success or failure of a technology-driven automaker solely based on sales, a long-term lack of improvement in sales can certainly dampen market confidence. There were rumors of Wang Fengying's departure, although they were denied. However, Jiao Qingchun, the former head of XPeng Motors' automotive technology center, did leave. Everything seems intriguing.

In a financial report conference call, He Xiaopeng said that XPeng Motors' strategy will no longer focus on sales growth as it did in the past but will instead pursue high quality and efficiency.

On the surface, He Xiaopeng's statement demonstrates his strategic resolve and vision as the helmsman. However, it also reveals a sense of helplessness—NIO and Lixiang, who were once in the same trench, are now high above, and even the former juniors ZEEKR and Leapmotor have surpassed XPeng Motors. Unable to increase sales, XPeng Motors can only focus on quality.

Deeper cooperation with Volkswagen

Although XPeng Motors has not achieved outstanding sales through in-depth technology development, it has attracted the attention of Volkswagen.

In July 2023, Volkswagen announced a $700 million investment in XPeng Motors. Based on the XPeng G9 platform, smart cockpit, and advanced driver assistance system, the two companies jointly developed two new models and achieved technology sharing.

Entering 2024, the cooperation between Volkswagen and XPeng Motors has made new progress. In February, the two parties signed a strategic technology cooperation joint development agreement and a joint procurement plan. In April, they announced a new strategic cooperation framework agreement on electronic and electrical architecture technology, indicating that they will jointly create more advanced and intelligent electric vehicle platforms in the future.

It can be said that the cooperation between the two parties has been continuously upgraded, with cooperation in multiple areas.

Currently, XPeng Motors has started to benefit from its cooperation with Volkswagen. The first-quarter financial report for 2024 showed that XPeng Motors' service and other sales were 462.3 million yuan, compared to 365.9 million yuan in the first quarter of 2023. Some believe that the additional revenue of over 100 million yuan should be the research and development sharing income from the cooperation with Volkswagen.

To put it bluntly, XPeng Motors has found a way to make money without relying solely on car sales. As the cooperation with Volkswagen deepens, XPeng Motors' future earnings in this regard are expected to be even more substantial.

Moreover, XPeng Motors is not limited to cooperation with Volkswagen alone; it is also communicating with other automakers on autonomous driving technology cooperation. "XPeng will seek strategic cooperation opportunities with other participants with an open mind. However, we value most how to bring value to the partnership and create value for each other, rather than just being a supplier relationship."

Being both a competitor and a supplier takes XPeng Motors a step further than Huawei.

XPeng Motors' focus for the second half of the year is on the MONA series, with the first model, M03, currently open for online reservations and expected to be officially launched in August. He Xiaopeng described M03 as having "the strongest intelligent driving capability in its segment," and with few competitors in the 150,000 yuan market focusing on intelligent driving, M03 is worth looking forward to.

Additionally, M03 is designed by Juanma Lopez, who has previously worked for Lamborghini and Ferrari, which will enhance its positioning and quality. It remains to be seen whether it will garner the same overwhelming praise as Xiaomi SU7.

It is evident that He Xiaopeng has high expectations for M03. He also expressed the hope of achieving better sales than Xiaomi SU7 in the second half of this year.

As for whether M03 can replicate the success of Xiaomi SU7 and rescue XPeng from its sales slump, we will continue to keep an eye on it.

People's Car Review

For non-top brands, it seems like they have entered a dead end. Price wars are not a long-term solution, and without them, sales remain stagnant. XPeng Motors' in-depth cooperation with Volkswagen and its preliminary results provide valuable experience for the diversification of Chinese automakers.