The spear and shield in XPeng's methodology, its inflection point and node of scale growth

Most likely, XPeng is approaching an inflection point in its growth.

Even excluding the sales of the MONA model, XPeng is currently in the early stages of its scale expansion and will soon enter this process.

However, development is never straightforward, so XPeng's growth will also face inherent resistance. The manifestation of this contradiction will likely mark the node of its current round of scale expansion.

This article will review XPeng's development over the past year to present the logical reasons for its impending growth inflection point. Then, through the universal law of change from unity to opposition, it will illustrate the transformation of contradictions in XPeng's growth from inflection point to node.

‍01

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XPeng's Methodology and Logic Have Gained Positive Feedback

A year ago, XPeng, caught in a whirlwind of public opinion, presented its methodology to reverse its unfavorable situation to the market (refer to the article "From Recognition to Consensus: XPeng's Methodology"). The key performance indicators included:

1. Quickly "clearing" the early E-platform business and assets (i.e., G3 and P5 models) in accounting, including related equipment and inventory, to financially rid itself of this long-term drag and pre-release pessimistic guidance for 2023Q3 financials;

2. Leveraging the then industry-competitive G6 model, XPeng aimed to achieve a monthly delivery volume of 20,000 and turn gross margin positive by 2023Q4;

3. Completing the acquisition of Didi's smart car business to lay the foundation for the rapid launch of the 150,000-yuan-level autonomous driving model (i.e., MONA M03). Additionally, leveraging Didi's unique B2B channel advantages to achieve rapid volume growth for this model, making it one of the main engines for XPeng's overall sales growth;

4. After Volkswagen Group's strategic investment, XPeng would deepen its collaboration with Volkswagen, including providing technical support to Volkswagen (Anhui) for XPeng's D-platform (i.e., the production platform for G9 and P7) to help Volkswagen China develop two B-segment pure electric models. It also included potential collaborations in future EV platforms, software technology, and supply chain to achieve mutual benefits.

Following this methodology and the above KPIs, let's look at XPeng's specific developments and results over the past year:

1. In 2023Q3 and 2023Q4, XPeng's quarterly deliveries were 40,000 and 60,000 units, respectively, with gross margins of -2.7% and 6.2%. The gross margin for vehicle sales was -6.1% and 4.1%, indicating that the G6 indeed had significant market competitiveness and value, allowing XPeng's operational improvement plan to show initial results;

2. In November 2023, XPeng officially acquired Didi's smart car business assets, which were consolidated into XPeng's financials. Didi received over 58 million newly issued shares (then 3.25% of total shares). By July 2024, XPeng began mass production of the MONA M03, and Didi received another 4.6 million shares (about 0.24% of post-issuance shares), indicating smooth progress in their collaboration, with 2 of 4 交割 stages completed;

3. September 2024 was the first month of M03 sales, with deliveries exceeding 10,000 units, helping XPeng achieve a new monthly record of 21,352 units. M03's order volume was also impressive (reportedly over 70,000 orders by mid-September), partly due to Didi's channels. If M03 achieves cumulative sales of 100,000–180,000 units within 13 months, with 25% 来自 C 端， Didi will receive up to 14 million additional shares, completing the 3rd 交割 stage;

4. In December 2023, Volkswagen Group completed its share purchase agreement with XPeng, acquiring over 94 million shares (4.99% post-issuance) for over $700 million. The deal stipulated XPeng's provision of G9 platform technology, connected car, and ADAS software to co-develop two B-segment 纯电 models for production in China by 2026;

5. In February 2024, XPeng and Volkswagen signed a joint development agreement for platform and software technology, along with a joint procurement plan for shared components, deepening their strategic collaboration;

6. In 2024Q1, XPeng delivered fewer than 22,000 vehicles, but its gross margin reached 12.9%, with vehicle sales gross margin at 5.5% and service/other income gross margin at 53.5%, reflecting significant revenue growth from 智能化 tech exports to Volkswagen;

7. In April 2024, XPeng and Volkswagen signed an electronic/electrical architecture (EEA) tech 合作 framework, with XPeng's X-EEA 3.5 (vs. 3.0 in G9) to co-develop Volkswagen's new CEA architecture for its China-specific CMP platform;

8. 2024Q2 deliveries were only 30,000 units, but gross margin rose further to 14.0% (vehicle sales: 6.4%; services: 54.2%), suggesting cost optimization from joint procurement;

9. In July 2024, XPeng and Volkswagen 正式 signed the EEA joint development agreement, aiming to 量产 CEA-equipped 大众 models in China within 24 months;

10. 2024Q3 deliveries reached ~47,000 units, with 财务结构 likely further 优化 due to scale and Volkswagen collaboration.

Thus, despite 年初 price wars hurting sales, XPeng's 财务结构 improved, validating its methodology.

This reflects XPeng's 跳出同质化竞争 via 衍化 as a supplier，暂时避开规模战. Now, with P7+ launches, it shows readiness to join price wars，潜力持续释放 via Volkswagen 合作。

For 2–3 years ahead (given small scale), this methodology remains viable.

02

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Volkswagen: The Key to XPeng's Methodology

XPeng's core issue was inability to join price wars，削弱 G6's competitiveness and causing 2024H1 sales 悬崖式下跌—trapped by "small scale, high R&D, high costs."

Didi 合作 could mildly alleviate but not solve this. MONA M03's A-segment 纯电 non-autonomous version (¥119,800–129,800) lacks competitiveness, but its 智驾版 (¥155,800) is unique for 差异化竞争。

Pricing 锚点 lies in Didi's SOP 交割条件 requiring 75% B 端 sales, limiting 毛利。智驾版's ¥26,000–36,000 premium may struggle in 运营车工具属性， while C 端 faces 同级竞品 from price wars.

Thus, M03 aids 规模 but not 财务结构改善. However, P7+'s strong 预售价/订单 reflects Volkswagen 合作的开源降本效果：

- 2024Q1/Q2 service 收入推测为 ¥500m/¥600m from Volkswagen, likely exceeding ¥2bn annually through 2026;

- Joint procurement may yield ~10% 单车降价空间， enabling P7+'s competitiveness.

Didi 合作 brings 规模; Volkswagen 合作 enables 财务改善 and price war participation. Thus, Volkswagen is pivotal.

XPeng also expanded dealerships from 395 (2023Q3) to 611 (2024Q2), targeting ~800 by 2024-end under 王凤英's leadership.

03

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The Node:矛盾切换

Volkswagen supports XPeng's scale expansion to test 其技术价值. During this 检验期， their 关系 is unified.

Volkswagen's missteps in China's EV market left it needing a partner like XPeng—small, tech-rich，股权简单. The $700m investment and ¥2bn–¥3bn/year tech fees are 检验费用。

对立 will emerge at 定价阶段. XPeng's 矛盾 is its late timing in 新能源黄金期， leaving it small-scale in a 规模战行业. As discussed in "How Many Automakers Do We Need?", XPeng may eventually be 整合。

Its best path is maximizing 规模/valuation in limited time. Founder He Xiaopeng (ex-Ali) knows this well.矛盾 will 爆发 at Volkswagen's 定价阶段—but for now, both sides align on scaling.

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