China's EV Startup XPeng Reports Record Q1 Earnings as it Takes on Tesla in the World's Biggest Auto Market

author: Eric Walz   

The Xpeng P7 smart sedan is a strong competitor to the Tesla Model S in China.

Chinese electric vehicle startup and Tesla challenger Xiaopeng Motors ("XPeng") announced its first quarter results on Thursday, which included a big jump in vehicle deliveries and revenue. 

The company reported total revenues were RMB2,950.9 million (US$450.4 million) for the first quarter of 2021, representing an increase of 616.1% from the same period last year and a 3.5% increase from the fourth quarter of 2020.

XPeng's electric vehicle deliveries totaled 13,340 units in the first quarter of 2021, representing an increase of 487.4% from 2,271 in the corresponding period of 2020 and an increase of 2.9% from 12,964 vehicles in the fourth quarter of 2020.

Revenues from vehicle sales were RMB2,810.3 million (US$428.9 million) for the first quarter of 2021, representing an increase of 655.2% from RMB372.2 million for the same period of 2020 and an increase of 2.7% from Q4 2020. 

XPeng currently offers two electric vehicles, the G3 SUV, which launched in Dec 2018, and the flagship P7 sedan that XPeng began delivering to customers in June 2020. The company said the year-over-year increase was mainly due to deliveries of the P7 smart sedan, which launched in April 2020. 

Total vehicle deliveries for April reached 5,147 units, representing a 285.3% increase year-over-year. The April deliveries consisted of 2,995 P7s and 2,152 G3s, XPeng's compact SUV. As of April 30, 2021, year-to-date deliveries reached 18,487 units, representing a 412.5% increase year-over-year.

"The first quarter kicked off a great start to 2021 with a record-breaking vehicle deliveries notwithstanding seasonally slower demand for automobiles and the semiconductor shortage," said Mr. He Xiaopeng, Chairman and CEO of XPeng. "Our strong momentum in the quarter was propelled by our industry-leading full-stack autonomous driving technology, solid differentiated product strategy and our vision to lead Smart EV development and transformation."

XPeng's third electric vehicle named the P5 will be available in the fourth quarter this year. The company has already opened pre orders. XPeng said the P5 is being positioned as a more family-friendly model under its flagship P7 sedan.

XPeng unveiled its new P5 last month at Auto Shanghai 2021. The P5 will be the world's first production vehicle equipped with automotive-grade LiDAR technology during assembly for autonomous driving.

"The debut of the P5, the world's first mass-produced LiDAR-equipped Smart EV, underlines our mission to shape the mobility experience of the future," said Mr He.

XPeng's autonomous driving system is called XPILOT. The company said that 96% of all P7's sold can support XPILOT 2.5 or the latest version XPILOT 3.0. XPeng develops all of its autonomous driving technology in-house with approximately 50% of its employees working in R&D.

The new XPeng P5 will launch in China later this year.

R&D expenses were RMB535.1 million (US$81.7 million) for the first quarter of 2021, representing an increase of 72.2% from RMB310.8 million for the same period of 2020.

Gross margin was 11.2% for the first quarter of 2021, compared with -4.8% for the same period of 2020 and 7.4% for the fourth quarter of 2020.

Vehicle margin, which is gross profit of vehicle sales as a percentage of revenues from vehicle sales, was 10.1% for the first quarter of 2021, compared to -5.3% for the same period of 2020 and 6.8% for the fourth quarter of 2020. XPeng said the improvement was primarily due to material cost reduction and revenue recognition of XPILOT software sales.

The XPeng P7 sedan supports over-the-air updates, a technology pioneered by Tesla. XPILOT 3.0 was made available to P7 owners in late January. Its available as an OTA update by purchasing the XPILOT 3.0 software and upgrading services, which in the future will provide additional revenue streams for XPeng.  

"Since releasing OTA updates for XPILOT 3.0 in late January, we are now recognizing revenues from our proprietary XPILOT software," said Mr He. "As we continue to grow with rapid technology iterations powered by our full-stack in-house R&D capabilities and strong closed-loop data capabilities, I believe that XPILOT's software monetization will become recurring revenues as part of the revenues from our vehicle sales."

Net loss was RMB786.6 million (US$120.1 million) for the first quarter of 2021, compared to RMB649.8 million for the same period of 2020 and RMB787.4 million for the fourth quarter of 2020.  

"XPeng's robust performance in the first quarter of 2021 demonstrates our strong capabilities to make differentiated Smart EVs that appeal to various needs of a large and growing customer base," said Dr. Brian Gu, Vice Chairman and President of XPeng. "Thanks to our record-breaking deliveries in this quarter, our revenues reached RMB2,950.9 million in Q1, representing year-over-year growth of 616.1%. We also witnessed further improvement in our profitability." 

Net loss attributable to ordinary shareholders was RMB786.6 million (US$120.1 million) for the first quarter of 2021, compared with RMB935.1 million for the same period of 2020 and RMB787.4 million in the fourth quarter of 2020. 

XPeng also expanded its sales and service network in China. As of March 31, the company's physical sales and service network consisted of a total of 178 stores and 61 service centers, covering 70 cities in China.

Like Tesla's Supercharger network, XPeng is also building out its own EV charging infrastructure. XPeng-branded super charging stations expanded to 172 so far, covering 60 cities in China.

"Looking ahead, we remain dedicated to our long-term strategic roadmap and technology innovations to fuel Smart EV transformation. Additionally, we will continue long-term investments in building out our sales, service and charging facilities, as well as our production and supply chain capabilities to support vigorous growth over the next few years," Mr. He said.

In April, XPeng entered into a cooperation agreement with the City of Wuhan to develop and build the XPeng Motors Wuhan Smart EV Manufacturing Base ("Wuhan Base").

Supported by the Wuhan government, XPeng will soon begin the construction of Wuhan Base, featuring manufacturing and powertrain plants as well as R&D facilities. The new facility will boost XPeng's manufacturing capacity by 100,000 units annually, which will help the company meet growing consumer demand for its EVs.

For the second quarter of 2021, XPeng expects deliveries of 15,500 to 16,000 vehicles, representing a year-over-year increase of approximately 380.2% to 395.7%, if its goal is achieved.

XPeng is a publicly traded company in the U.S. and launched its IPO in Aug 2020. The company's shares are listed on the New York Stock Exchange under the stock symbol "XPEV."

The company's shares are down 4.81% on Thursday, closing at $23.56.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.