Xiaopeng Motors’ First Quarter Performance Reveals Sluggish Sales and Gross Profit Margin Compression

On the evening of May 24, Xiaopeng Motors, one of the former three new car-making forces, announced its performance for the first quarter of 2023.

Overall, in terms of key indicators, Xiaopeng’s operating income in the first quarter of this year reached 4.03 billion yuan, a year-on-year decrease of 45.9%, and a quarter-on-quarter decrease of 21.5%. %; the gross profit margin dropped sharply to 1.7%, which was 10.5 percentage points lower than the 12.22% gross profit rate in the same period last year, and 7 percentage points lower than the 8.7% gross profit rate in the fourth quarter of last year.

Wall Street Insights and Wisdom Research believes that due to the unsatisfactory release of the new model G9 in the early stage and the painful period brought about by the subsequent remodeling of the old model, the sales level of Xiaopeng in the first quarter of this year is indeed not satisfactory. The price war brought about by Tesla’s first price reduction, and Xiaopeng’s price reduction strategy as a last resort also made the overall revenue and gross profit rate relatively sluggish. It can be seen thatXiaopeng still has a long way to go to turn around against the wind, and it still needs subsequent facelift models to quickly make efforts to restore the situation.

So far, Xpeng’s first remodeled P7i received a good response after its release in March, which has slightly led to a recovery in sales. Whether the recovery trend can be maintained in the next few quarters will be the next step for Xpeng to return to its peak. top priority.

1. Sales continued to be sluggish, and it was necessary to give time to change models to make efforts to restore the situation

Xiaopeng’s sluggish sales has become an absolute heart problem at present. After the sales volume of products in the fourth quarter of last year was only 22,000 units, which was the lowest level in the whole year, Xiaopeng continued to maintain its decline in the first quarter of this year, although it was still within the previous sales guidance of 1.8 in the first quarter. In the range of 10,000 to 19,000 vehicles, it barely met expectations, but the overall sales volume was only 18,000 vehicles. This is the fifth consecutive quarter that Xiaopeng’s sales have declined month-on-month.

If we say that the continuous year-on-year decline in sales of Xiaopeng is due to seasonal factors in the peak and low seasons of the auto market and temporary “minor illnesses” after the exit of new energy vehicle subsidies at the end of the year (Xpeng’s sales fell quarter-on-quarter in the first quarter 18%, and the year-on-year growth rate has dropped to -48%, which is almost cut in half), then the sharp year-on-year decline is really the “serious disease” caused by the poor replacement of new and old models and modified models of Xiaopeng and the decline in demand.Moreover, according to Xiaopeng’s sales guidance for the second quarter of this year, the company expects the delivery volume of cars in the second quarter to be 21,000 to 22,000. The average monthly delivery is still maintained at a level of less than 10,000 vehicles. It can be seen that there is still a long way to go for Xiaopeng’s return sales to break through the 10,000 mark.

Of course, on the bright side, although Xiaopeng’s monthly sales have been slow to return to the level of 10,000 units, each month alone is still in a slow month-on-month recovery (sales from January to March were 5,200 units, 0.6 10,000 and 7,000), unlike Weilai’s sales in March and April, which once again experienced negative month-on-month growth.

In addition, with the launch of Xpeng’s main model, the remodeled P7i, in March and the rapid start of delivery, the total delivery of Xpeng’s P7 models reached 3,030 units in March this year, accounting for nearly half of the total sales, an increase of 32% month-on-month , It can be seen that the market and consumers have given some affirmation to this former main model of Xiaopeng.In the second half of this year, whether several other old models of Xiaopeng, such as P5 and G3, can help Xiaopeng’s sales to recover quickly, thereby regaining the attention of the market and consumers. top priority.

2Forced to face price wars, Xiaopeng’s gross profit marginThe space is extremely compressed

Due to the price war in the first quarter, Xiaopeng’s bicycle income fell below the 200,000 yuan mark and reached 193,000 yuan in the first quarter of this year. The previous plan to increase bicycle income through the high-priced new model G9 obviously failed. However, fortunately, the revenue from bicycles has not fallen off a cliff due to poor overall sales and the unsmooth launch of the new model G9. Overall, revenue from bicycles has returned to the level of Xiaopeng in the first half of 2020.

In addition, Xiaopeng’s gross profit rate has also been greatly affected. In the first quarter of this year, Xiaopeng’s overall gross profit rate plummeted to 1.7%, a year-on-year decrease of 10.5 percentage points, and continued to remain below 10%. The gross profit margin of automobiles has even dropped to negative -2.5%. This is the first time that Xiaopeng has had a negative gross profit margin of automobiles in the past three years. Make a profit, sell one and lose one.Wall Street Insights and Wisdom Research believes that Xiaopeng’s price reduction strategy implemented in the first quarter of this year in response to Tesla’s price war (the guide prices of Xpeng’s P7, G3 and P5 models were lowered by 20,000 yuan to 36,000 yuan respectively. etc.) still compresses the space for Xiaopeng’s own gross profit margin.

Although the price of upstream raw materials, especially the price of lithium carbonate, did decline in the first quarter, due to factors such as long-term cooperation prices, the decline in cost is unlikely to be as large as the spot price of battery-grade lithium carbonate, and there must be a slight delay.

In addition, even in terms of the decline in the spot price of battery-grade lithium carbonate (the price of battery-grade lithium carbonate fell from 520,000 yuan/ton at the beginning of the first quarter to 245,000 yuan/ton at the end of the first quarter, a decline The rate is as high as 52.9%), and the cost of Xiaopeng’s main model P7 (80 kilowatt-hours) will drop by about 15,000 yuan, which is still lower than the price drop of Xiaopeng’s own products.

3Xiaopeng is far away from making real money

Xiaopeng’s net loss in the first quarter of this year reached 2.34 billion yuan, an increase of 37.4% year-on-year. There is still a big gap from achieving breakeven. At the same time, although Xiaopeng’s cash reserves are still in a good state, the speed of burning money has increased. In the first quarter of this year, Xiaopeng’s cash and cash-like asset reserves were 34.12 billion yuan. Compared with the cash reserves of 38.25 billion yuan in the fourth quarter of last year, Xiaopeng’s cash reserves were 4.13 billion yuan less. About 2 billion to 2.5 billion yuan.

Among them, the main direction of burning money is to increase investment in intelligence, while the rapid expansion of the sales network and the investment in advertising have decreased. However, these are rigid expenses, and it is difficult to continue to reduce them in the short term. In the first quarter of this year, Xiaopeng’s research and development expenses reached 1.3 billion yuan, a year-on-year increase of 6.1%, accounting for 32.3% of the overall operating income; while sales expenses reached 1.39 billion yuan, a year-on-year decrease of 15.5%, accounting for 34.6% of the overall operating income .

By the end of the first quarter of this year, the number of Xiaopeng stores reached 425, an increase of 5, and the city coverage reached 145, an increase of 2. It is precisely because these rigid expenditures are difficult to be quickly amortized and diluted that the overall profit of Xiaopeng is also suppressed to a certain extent.

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