On the evening of December 15th, Alibaba Group announced the sale of its partial stake in Xiaopeng Motors. "We have sold some of our shares in Xiaopeng based on our own capital management goals, reducing our shareholding from 10.2% to 7.5%. Xiaopeng is one of the leaders in China's electric vehicle industry, and we have established a strategic partnership with it. We believe in Xiaopeng's prospects and look forward to continued cooperation with the company," explained the relevant person in charge of Alibaba Group. The management of Alibaba Group recently stated that it will continue to optimize capital management, increase return on capital, and enhance shareholder value in the future.
On the evening of December 15th, the US stock market of Xiaopeng Motors plummeted significantly and closed at $14.47, a decrease of 7.54%. In response to Alibaba's partial reduction of equity in Xiaopeng Motors, Xiaopeng Motors responded to the Shanghai Stock Exchange reporter on December 16th that Alibaba's reduction was a strategy of implementing its Q3 quarterly report's external communication of investment realization and return to shareholders, rather than due to a change in views on Xiaopeng Motors. Alibaba will continue to be the second largest shareholder of Xiaopeng, holding approximately 8% of the shares, and will continue to engage in deep strategic cooperation with Xiaopeng Motors in areas such as cloud computing. In addition, Xiaopeng Automobile emphasized that it has established strategic cooperation with Volkswagen this year, and Volkswagen is currently Xiaopeng's third largest shareholder. Xiaopeng currently has over 40 billion yuan in cash on hand, with a positive free cash flow of several billion yuan in the second half of the year, indicating abundant cash and a significant improvement in cash flow.
He Xiaopeng has a close relationship with Alibaba
Xiaopeng Motors was founded by several internet executives, including former President of the New Mobile Business Group of Alibaba Entertainment Group, UC founder He Xiaopeng, YY founder Li Xueling, and Cheetah Mobile CEO Fu Sheng, as well as well-known venture capital firms and listed companies.
Xiaopeng Motors Chairman He Xiaopeng was born in 1977 and graduated from South China University of Technology. Before founding Xiaopeng Motors, he was a co-founder of UC Youshi. In June 2014, UC Youshi merged into Alibaba for nearly 4 billion US dollars, setting the highest merger and acquisition price in China's internet industry. Afterwards, He Xiaopeng started his second business and founded Xiaopeng Motors.
Since its establishment, Xiaopeng Automobile has received support from domestic and foreign investors such as Alibaba Group, Xiaomi Group, IDG Capital, Wuyuan Capital, GGV Jiyuan Capital, Chunhua Capital, Hillhouse Capital, and Sequoia China. In August 2020, Xiaopeng Motors was listed on the New York Stock Exchange in the United States. He Xiaopeng reviewed his two entrepreneurial experiences and thanked investors for investing real money and silver in us during our most difficult and lonely times.
In December 2020, Xiaopeng Automobile completed its first public offering after going public, raising $2.5 billion, marking the largest initial stock issuance in the history of Chinese concept stocks. In July 2021, Xiaopeng Motors landed on the Hong Kong Stock Exchange and raised HKD 15.8 billion, becoming the first smart electric vehicle stock in Hong Kong and included in the Hang Seng Composite Index.
An automotive industry analyst pointed out to reporters that representatives of China's new automotive forces, NIO, Xiaopeng, and Ideal, have all received support from internet giants in their early stages of development. Meituan founder Wang Xing has stepped forward twice to help Ideal Automobile. In the 2019 Ideal Automobile Series C financing, Wang Xing invested 300 million US dollars; In the 2020 Series D financing of Ideal Automobile, Wang Xing invested 500 million US dollars, totaling 800 million US dollars, and obtained 23.5% equity, becoming the "second shareholder" of Ideal Automobile. In September 2019, Tencent subscribed to half of the $200 million convertible bonds issued by NIO. With the support of Tencent, NIO quickly emerged from its low point and steadily rebounded.
After Xiaopeng Motors went public, there was less interaction between Alibaba and Xiaopeng. However, after the establishment of Zhiji Automobile, a cross-border deep strategic cooperation between Alibaba and SAIC Group, He Xiaopeng once commented on his social media, "Will the cross-border strategic cooperation between two powerful enterprises in a stable and profitable market be successful? The answer is definitely that there are many successful cases; if stability and profit are removed, will it be successful? It seems that there is no such thing in the domestic technology industry, and the differences in the execution of the system culture route caused by the struggle for dominance cannot be avoided. Strategic cooperation can only be tactical value, while strategy is actually a loss."
The price reduction promotion advertisement released by Xiaopeng Motors
Xiaopeng Motors faces a severe test
On November 15th, Xiaopeng Motors released its financial report for the third quarter of 2023, with a revenue exceeding 8.5 billion yuan, achieving a year-on-year and month on month increase, but still in a gross loss state.
The revenue growth is due to the increase in delivery volume. Xiaopeng Motors delivered 40000 vehicles in the third quarter, compared to 29600 vehicles in the same period last year, an increase of 72.4% compared to 23200 vehicles in the second quarter of this year. In October, the delivery of Xiaopeng exceeded 20000 vehicles, setting a new high for monthly delivery. The Xiaopeng G6 became the main model.
However, despite achieving a double increase in revenue and delivery volume, Xiaopeng Motors still faces the dilemma of "increasing revenue without increasing profits". The net loss in the third quarter reached 3.89 billion yuan, an increase of 63.6% from 2.38 billion yuan in the same period last year. In the second quarter of 2023, this figure was 2.8 billion yuan, an increase of 38.6% compared to the previous period; The comprehensive loss attributable to ordinary shareholders reached 4.01 billion yuan, an increase of 481.1% year-on-year and 107.9% month on month.
In terms of gross profit margin, Xiaopeng Motors had a gross profit margin of -2.7% in the third quarter of 2023, 13.5% in the same period last year, and -3.9% in the second quarter of this year; The gross profit margin of automobiles (i.e. the percentage of gross profit or loss from automobile sales to automobile sales revenue) is -6.1%, a decrease of 17.7 percentage points from the same period last year and a slight increase of 2.5 percentage points compared to the previous year. Starting from the first quarter of 2023, Xiaopeng Motors has shown negative gross profit for three consecutive quarters.
Since 2023, "reducing costs and increasing efficiency" has become a key keyword for Xiaopeng. The executive team, organizational structure, and marketing channels have all undergone reforms, including reducing direct stores and expanding distributors, reducing product costs, and combating supply chain corruption. "Under the leadership of Ms. Wang Fengying, the President, the sales channels are undergoing a transformative transformation. I believe it will make the entire system more efficient and flexible, with faster channel expansion speed and targeting more third - and fourth tier cities." He Xiaopeng said that by the end of 2024, the company will achieve the goal of reducing overall costs by 25%. Cost reduction measures will significantly improve Xiaopeng's gross profit margin in 2024 and achieve a balance of income and expenditure in 2025.
As of November, the cumulative sales of Xiaopeng Motors in 2023 were 122000 vehicles, while Xiaopeng set an annual sales target of 200000 vehicles at the beginning of the year, and the current target achievement rate is only about 60%. In December, Xiaopeng Motors announced a full range price reduction for its Xiaopeng P7i model. The P7i 550 Max, originally priced at 239900 yuan, can now be purchased for only 224900 yuan, with a discount of 15000 yuan.
Industry experts have pointed out that although it may cause dissatisfaction among old car owners. However, from a corporate perspective, the price reduction of Xiaopeng P7i will help Xiaopeng Motors achieve better performance at the end of the year. From a market perspective, one of the main reasons for the price reduction of the Xiaopeng P7i is the successive launch of similar products such as the Smart S7, a collaboration between Huawei and Chery, and Geely's Jike 007. At this time, Xiaopeng Motors adopted a "price for quantity" approach to cope with the severe market test.