Last year, He Xiaopeng survived a brutal price war started by Tesla. Now he's betting on international growth to fire up his EV brand, Xpeng.

"Each year presents us with various internal and external challenges, along with inevitable ups and downs.
However, we've persevered through it all and quickly adapted to the changes. The upcoming years are crucial, even "brutal" as some may describe it, especially for EV players aiming to lead globally in the next decade and pioneer mobility technology development." - He Xiao Peng , of course thank you Forbes for the feature

By Yue Wang, Senior Contributor
Chinese automaker Xpeng isn’t a giant in the country’s fiercely competitive EV market, yet it has sky-high ambition—literally. At January's seminal CES tech trade show in Las Vegas, a company subsidiary displayed a model of a planned flying car and said it would begin deliveries in China toward the end of 2025.
There’s hefty skepticism about that timeframe, especially as China doesn’t have a clear regulatory framework that would allow flying cars. But while consumers might never be able to pilot such a vehicle, the Las Vegas promotion could help strengthen Xpeng’s image as a high-end brand using sophisticated technology. Its cofounder He Xiaopeng has made Xpeng one of China’s pioneering EV producers.
He, the company’s chairman and CEO, wasn’t at CES and isn’t talking to media about flying cars at present. The billionaire has plenty on his plate, including dealing with increasingly cutthroat EV competition at home and pushing multiple goals of the Hong Kong- and New York-listed company: to expand internationally, to be a high-end EV producer abroad, to end a string of losses and to become one of China’s three largest EV makers by 2030. (By deliveries, Xpeng wasn’t in the top ten in 2023).
Last year, the mogul survived a crisis stemming from a brutal price war started by Tesla, which made its vehicles 40% cheaper in China than in the U.S. To boost battered sales, He introduced the G6 SUV to compete with Tesla’s Model Y and brought in Volkswagen as an investor. In July, the German carmaker agreed to put in $700 million and own 4.99% of Xpeng. Full-year Xpeng financials aren’t out yet, but in the third quarter (the latest results available), revenue was up 25% year-on-year to 8.5 billion yuan ($1.2 billion), though losses widened to 3.9 billion yuan.
“Challenges also present opportunities,” the 47-year-old boss of the Guangzhou-based EV maker said in an exclusive interview in December in Beijing. “If it weren’t for the challenges, I wouldn’t be so determined to make the changes.” The billionaire echoed that in a recent letter to staff, seen by Forbes, in which he signaled plans to boost R&D spending by 40% from 5.2 billion yuan in 2023 and hire 4,000 people.
This year will be another one of intense competition, especially after Tesla in January slashed prices across multiple markets including China. “The competition this year will be very, very aggressive,” says Wang Hanyang, a Shanghai-based analyst at 86Research, adding that while the company made solid advances in late 2023, “Xpeng isn’t entirely out of its tough spot.”
To look for growth, the automaker chief is turning to Europe, the world’s second-biggest EV market after China (by vehicles delivered).
Chairman He, a computer science graduate of South China University of Technology in Guangzhou, is no stranger to boom-and-bust cycles. The Hubei native’s first venture wasn’t in the auto sector. In 2004, after working for Hong Kong-listed software developer Asia Info, he started a mobile browser operator called UC Web. A decade later he sold the company in a $4.3 billion deal to Alibaba. The e-commerce giant later became an investor in Xpeng, the auto company that He—sensing opportunities in the then-nascent EV sector—cofounded in 2014.
But when the company in 2018 readied its first model, the G3 SUV, for mass production, consumer demand fell as the Chinese government cut back on EV purchase subsidies. Xpeng managed to secure $400 million in funding from investors including private equity firms and He himself to survive. It went public in New York in 2020, raising $1.5 billion. Shares surged to value the firm at $57 billion—almost more than Ford and General Motors combined, at that time—as its second model, the P7 sedan, became an instant success and fueled optimism the Chinese EV maker might emerge as a serious contender to Tesla. But the stock in recent years spiraled down as competitors launched new models and the Covid-19 lockdown hit the firm’s supply chain.
On the first day of 2024, He launched a seven-seater MPV called the X9 that targets the luxury market, with a starting price of 360,000 yuan. And he promises a faster pace of launches ahead. But the company—and industry—is again facing softening sales at home. Meantime, Xin Guobin, a vice minister at the Ministry of Industry and Information Technology, acknowledged in January that there was “insufficient” external demand after too many EV projects had been built in China. Officials have pledged to help the country's EV exporters by offering support in areas including finance and logistics.
The year got off to a rocky start for Xpeng shares, which as of mid-February had slid more than 30% in both New York and Hong Kong due to worries over a new price war as well as the Chinese economy. Citi analysts in February trimmed their price target again to HK$28.30 ($3.60) from HK$39.90. Elon Musk's warning of notably lower growth for Tesla in 2024 also dampened investor interest in EV-related stocks. He, who derives his wealth from a company stake, has seen his net worth shrink 70% from a peak of $5.5 billion in 2021 to the current $1.5 billion (Forbes real-time rank in mid-February).
To look for growth, the automaker chief is turning to Europe. The world’s second-biggest EV market after China (by vehicles delivered) is moving to phase out non-electric cars from 2035. Plus, import duties on cars are only 10% there, compared with as high as 27.5% in the U.S.
But there are issues in Europe. Amid the supply glut at home, Xpeng isn’t the only one hoping to sell to the region. Led by billionaire Wang Chuanfu’s BYD, which is building its first European car factory in Hungary, a dozen Chinese EV makers are already contending there. European Commission President Ursula von der Leyen said last fall that global markets “are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies.”
Xpeng’s mogul remains determined to build up in Europe, and then Southeast Asia, the Middle East and Latin America. The company also wants to enter Egypt this year. “I want to establish Xpeng as a mid-to-high end brand overseas,” He says. “Selling cars cheaply is definitely not my purpose.”
In Norway, Xpeng’s €57,990 ($63,000) G9 SUV became one of the 15 bestselling pure electric vehicles in 2023’s final quarter, according to Berlin-based research firm Schmidt Automotive Research. Wang of 86Research estimates that Xpeng in 2023 delivered about 2,000 cars in Denmark, Norway, Sweden and the Netherlands, the four European markets it has a presence.
While the number is small, it marks a step forward for Xpeng, whose first products for Europe failed to meet local preferences. This year, the company says it will expand to Germany, France and Italy. In the second half, it will introduce its first right-hand driving model for Britain and other countries.
The billionaire says the company will start researching self-driving tech for Europe this year, in a push to eventually make advanced autonomous driving features available across the region. He also wants to partner with European factories and suppliers to manufacture cars there.
But analysts say establishing a premium brand image will be an uphill battle. For high-end cars, European consumers still prefer entrenched local brands such as Porsche and Mercedes-Benz, says Matthias Schmidt, founder of Schmidt Automotive Research.
That means Chinese EV makers are competing more in the lower-priced market. MG, a once iconic British brand that was acquired by China’s state-owned SAIC Motor in 2007, later shifted to sell cheaper cars. The transition enabled it to become the fifth-largest EV brand by deliveries in Western Europe, according to Singapore-based research firm Canalys. Together, Chinese brands accounted for almost 9% of pure electric vehicles sold in Western Europe in the first ten months of 2023, when deliveries for such cars totaled about 1.6 million units, according to Schmidt Automotive Research. “The ambition to be seen as a mid-to-high end brand is easier said than done,” Schmidt says by email. “In short it will be very tough.”
Analysts say Xpeng has developed one of the best assisted driving products in China.
He knows winning high-end market share will be hard. “Expanding overseas is something I am extremely patient about,” he says. “We can only truly go global when we understand local markets, build teams and supply chains there and manufacture locally.” Eventually, the mogul wants to get half of the company’s sales from abroad. (Xpeng doesn’t disclose the current percentage.)
Meanwhile, back in China, competition doesn’t just come from Tesla. Although He cut the price of one popular P7i model by 15% to offer a $7,000 discount in January, Xpeng will have to make its cars stand out among some 120 EVs that will be launched this year, according to estimates from HSBC Qianhai Securities. Among them is the SU7, a much-anticipated sedan from Chinese smartphone maker Xiaomi, which is a Xpeng shareholder. But domestic sales of new energy vehicles are expected to grow at a slower pace of 20% this year to about 11 million units, according to the China Association of Automobile Manufacturers. In 2023, sales increased 38%.
On top of cracking the luxury segment with X9, Xpeng will probably launch a mass-market brand in the third quarter. It will be a collaboration with ride-hailing giant Didi, and have a lower price point of about 150,000 yuan. In August, Didi sold Xpeng its smart EV business in a $744 million deal, with the two agreeing to jointly work on new models.
“In 2024 we will launch several EVs, and the pace will be further accelerated in 2025 and 2026,” says He. By the end of 2027, the company aims to have 30 new or facelifted models, according to He's internal memo. Analysts give a wide range for this year’s Xpeng domestic sales. Citi cut its forecast to 195,000 from 250,000. But Yale Zhang, Shanghai-based managing director at consultancy Automotive Foresight, says it might be as high as 300,000.
But over the first two months of 2024 deliveries aren’t entirely on an upward trajectory. The company delivered 4,545 cars in February, and that is down almost 25% from a year ago. In January, deliveries were up 60% year-on-year to 8,250 units though.
According to He, the path to the top also entails broadening Xpeng’s portfolio while pursuing more advanced self-driving technologies. The EV upstart has always tried to appeal to the younger generation. Its technology-packed and stylishly designed vehicles are often pitted against Tesla’s Model 3 as a local alternative.
He asserts that Xpeng is “much more advanced” than others in autonomous driving technology. The company announced in January that its self-driving service was available in 243 Chinese cities, where the vehicles use installed sensors and self-developed software to analyze road conditions. Analysts say Xpeng has developed one of the best assisted driving products in China. Chinese laws, however, still require the presence of a human driver, and drivers of cars can intervene when the vehicles are in auto mode.
The company works with Alibaba Cloud for the training of self-driving related algorithms. Although Alibaba in December sold $391 million of Xpeng shares, cutting its stake to 7.5% from 10.2%, the Xpeng boss says “our long-term collaboration will continue.”
Xpeng aims to reduce costs of certain parts by 20% in 2024, helped by its partnership with Volkswagen, which is opening up part of its supply chain. That allows Xpeng to tap into some of Volkswagen’s auto parts suppliers at lower prices, according to Morningstar equity analyst Vincent Sun. The two companies are also jointly developing two EV models under the Volkswagen brand that will be sold specifically in China. Mass production of the cars is expected to start in 2026.
According to He, efficiency has improved. In January 2023, He brought in former Great Wall Motor executive director and vice-chairman Wang Fengying as Xpeng’s president, overseeing everything from product planning to sales. Wang, who has been included several times in the annual Forbes list of the World's Most Powerful Women, has played an instrumental role in streamlining operations, says He. This year she initiated another round of staff changes. Local media reports said that among those replaced were the heads of human resources and manufacturing.
He says autonomous driving is moving ahead as planned. Xpeng is likely to have stockpiled enough advanced Nvidia chips for the next two years, as the company uses them to power its self-driving cars, but faces rising uncertainties from export restrictions imposed by the Biden Administration as China and U.S. clash over technology, according to 86Research’s Wang.
Xpeng hasn’t reported a profit since going public in 2020. Can the changes and Xpeng’s strategy make it profitable anytime soon? Morningstar’s Sun doesn’t expect it to happen till 2026 and Blue Lotus Capital Advisors’ Eric Wen targets 2031. Chairman He expects it sooner, by 2025. “I am very confident that we are doing better than a lot of people are projecting,” he says. “The outsiders don’t know how fast we are changing.”