In the bitter winter, why is it Xiaomi that helps Xiaopeng Electric Vehicles survive?

New energy vehicles are an inevitable future, but this inevitability also has many uncertainties, among which considerations of life and death have become the biggest variable concerning the entire industry.

According to data from the China Automobile Association, in the first half of 2019, overall automobile sales fell by 14%. In October, the production of new energy vehicles was 95,000, a year-on-year decrease of 35.4%, and the sales volume was 75,000, a year-on-year decrease of 45.6%. Not only is the overall trend downward, but major new energy vehicle companies have also suffered setbacks on their journey. At the beginning of 2019, Minan Automobile planned to lay off 50% of its employees and owed many employees wages; Byton Automobile was exposed to owe FAW Xiali 310 million yuan; the new energy "unicorn" NIO was also caught in the storm of "being closed down" because of the delay in a new round of financing.

Therefore, no matter from which perspective, the new energy vehicle market in 2019 can be said to be facing a severe winter.

However, in the harsh winter, we still saw Xiaopeng Motors' strong counterattack - on November 13, 2019, Xiaopeng Motors issued an announcement, announcing the official completion of a US$400 million Series C financing, with Lei Jun's Xiaomi Group participating.

In the situation of industry downturn, Xiaopeng successfully completed huge financing and overcame the crisis. So why did Xiaomi, which had never been involved in this field, lend a helping hand? What plans do Lei Jun and his Xiaomi have for the future of travel?

The wind does not stop but the trees are still

Compared with the efforts made by new car companies such as NIO, Tesla, and WM Motor in delivery, Xpeng's frequent defaults have not received enough attention from the market due to various reasons such as its reputation. Sometimes a weak reputation is not necessarily a bad thing, and it may even have the effect of unintentionally producing beneficial results.

Take NIO as an example. It officially released the NIO ES8 on December 16, 2017, and delivered it hastily just half a year later. Although according to NIO's financial report, it delivered a total of 11,348 ES8s in 2018, the quality of the car has been a problem - since April 2019, NIO ES8 has had spontaneous combustion accidents for three consecutive months.

In the end, NIO had no choice but to announce in June 2019 that it would recall 4,803 ES8s produced as of October 19, 2018. According to public data, as of the end of June 2019, NIO had delivered a total of 17,550 ES8s, which means that NIO recalled nearly 1/4 of its ES8s at once.

According to NIO's statement at the Q2 2019 financial report conference, the main reason for NIO's Q2 profit decline was the recall incident. It is no exaggeration to say that desperately increasing production capacity is a major reason for NIO's losses.

In fact, not only NIO, but also new car companies including Tesla have been desperately increasing production capacity in order to get cars to consumers as soon as possible, ignoring quality issues, which has led to frequent spontaneous combustion accidents.

At this point, if we look back at Xiaopeng's frequent delivery delays and the current situation of Xiaopeng Motors having zero quality issues one year after delivery, it seems that we can understand the reasons for Xiaopeng's delivery delays in some way.

In fact, although Xiaopeng had extremely difficult deliveries in the early stages, when the production line matured, Xiaopeng's production capacity was not weak at all. According to data from the China Passenger Car Association, as of September 2019, Xiaopeng G3's sales volume was 12,829 units, much higher than that of first-tier new car companies such as NIO.

Considering that NIO’s financing scale is nearly 10 billion yuan higher than Xpeng’s, it is definitely a surprise that Xpeng can achieve such results.

It can be said that perhaps it was precisely thanks to the pursuit of products, refined operations and precise capital utilization efficiency that Xiaopeng avoided the "huge loss pit" of Weilai.

The new story of Xiaomi and Xiaopeng

The most notable investor in Xiaopeng's financing this time comes from Xiaomi. On the one hand, Xiaomi certainly recognizes Xiaopeng's business model, and on the other hand, Xiaomi's ambition is also exposed.

In fact, Xiaomi and Xiaopeng had shown signs of friendship long before the financing.

On December 15, 2017, Lei Jun's Shunwei Capital participated in Xpeng Motors' Series A+ financing. On September 24, 2019, Xiaomi announced that the Xiaomi Mi 9 Pro 5G version can serve as the key for Xpeng's new P7, which will be launched in Q2 2020.

As early as 2015, Xiaomi began to lay out the IoT through a vigorous "chain building" campaign, hoping that IoT would become another driving force for Xiaomi besides mobile phones.

With the advent of 5G networks, IoT will flourish with greater vitality. According to the National Cable Television Association (NCTA), with the explosion of 5G networks, the number of IoT devices installed is expected to grow to more than 50 billion by 2020.

And with the development of 5G networks, self-driving cars may also become possible. Once cars enter the self-driving stage, the potential of the car "platform" may explode with infinite possibilities just like feature phones entering smartphones.

However, since the automobile industry is a high-threshold industry, entering the automobile industry simply by "building a chain" is nothing but nonsense. More importantly, IoT manufacturers seem to be gradually dissatisfied with Xiaomi's unique IoT share achieved by relying on closed data, and gradually begin to surround Xiaomi.

Taking these two aspects into consideration, Xiaomi started to develop automotive products early in the early stages of its development as a new force, which also filled the last piece of its IoT puzzle.

It can be said that while Xiaomi is investing in Xiaopeng, it is also supplementing its own resources and capabilities. This is a mutually beneficial and win-win situation for Xiaopeng and Xiaomi.

Although at present, Xiaopeng can be regarded as "riding high on the spring breeze and seeing all the flowers in Chang'an in one day" among the new forces of the car company, but considering the industry, Xiaopeng still has two major problems to face, one is the product upgrade, and the other is the encirclement of Tesla Model 3.

Looking at Xiaopeng's products, the average price of its G series is only in the range of 140,000 to 200,000 yuan. Compared with a number of new car companies, it has a bit of the "Xiaomi high cost-effectiveness" flavor.

Although this is of great significance for improving its own market share, cars are different from mobile phones after all. Simply competing on cost-effectiveness is destined to mean that the ceiling will not be too high.

And due to price cost constraints, if Xiaopeng continues to stick to its "low-price strategy", it will find it difficult to support corresponding products when faced with the upcoming autonomous driving technology brought by the upcoming 5G network.

Therefore, Xiaopeng urgently needs to launch Xiaopeng P7 to prove its potential in the high-end market, and achieve technological breakthroughs through Xiaopeng P7 as soon as possible to form an unbreakable technological barrier.

But on the other hand, the Xiaopeng P7, which is priced at around 300,000 yuan, will inevitably encounter the Tesla Model 3, a new energy legend that has been tested by the market for a long time.

In comparison, the Xiaopeng P7 has a range of over 600 km, supports L3-level autonomous driving assistance system, accelerates from 0 to 100 km/h in 4 seconds, and is priced at around 300,000 yuan.

The domestic Tesla Model 3 long-range version has a range of 590 km. If AP+FSD is purchased separately, it can accelerate from 0 to 100 meters in 3 seconds. The final price is about 400,000 yuan.

Although the Tesla Model 3 is more expensive, it has not yet been fully "localized". I believe that as the Tesla Model 3 is gradually "localized", its price will be further reduced. More importantly, with the gradual completion of Tesla's Shanghai Super Factory, its production capacity will be increased to 500,000 vehicles/year within two years, which is no less than a dimensionality reduction blow to Xiaopeng, which is "seeking progress in stability".

Therefore, although Xiaopeng has temporarily won the favor of the capital market and Xiaomi, a staunch ally, with its products, Xiaopeng still faces a lot of challenges in the external environment. The key to all this will be the Xiaopeng P7 delivered by Xiaopeng in Q2 2020. In the face of Tesla's layers of encirclement, can Xiaopeng continue to perform extremely stably? Can Lei Jun's lofty ideal of electric vehicles x IoT be realized? Everything will eventually return to the product itself.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.