Xpeng Mona M03 can make a profit despite low price, and more details on Max's smart driving

Many were surprised by how low the starting price of the Xpeng Mona M03 EV was for the new model, ranging from 119,800 to 155,800 yuan (16,800 – 21,850 USD). This has led many people to question how Xpeng will make a profit from such a car. Following the launch, more information has emerged regarding how Xpeng can sell the car at such a low price, along with the other big question mark over what exactly the Max is going to offer with regard to smart driving ability.

The Mona M03, which, despite looking like a sedan, is really a liftback-style hatchback, is the product of more than four years of R&D and an investment of four billion yuan (560 million USD). He Xiaopeng, Xpeng's chairman, answered many of the burning questions on the media's lips at a Q&A session after the main press conference.

One of the main ways that Xpeng has been able to produce the car at such a low price has been through its commitment to controlling costs through technological innovation. He emphasized breakthroughs in vehicle energy management that enable vehicles to achieve longer ranges with lower battery capacity. It should be noted that the Max version, which is the heaviest, has a curb weight of only 1739 kg, which for an EV of that size is quite light. No doubt furthering this ability to get more range from a smaller battery is the Mona M03, claiming to have the lowest drag coefficient figure for a mass-produced electric hatchback. The car manages to get up to 620 km of CLTC range from a 62.2 kWh lithium iron phosphate battery supplied by BYD subsidiary FinDreams.

According to Xpeng, technical optimization not only improves the product's performance but also effectively reduces the production cost, which means that Xpeng's Mona M3 (see specs) can be priced more competitively.

Yang Guang, product manager for the Xpeng Mona M03, said that the company's goal was to sell 10,000 of the model a month. Furthermore, Xpeng is developing follow-up models. According to Xpeng data, the number of orders for the new car reached 10,000 within 52 minutes of the launch.

He Xiaopeng revealed that despite the apparently low pricing all versions of the Mona M03 can achieve profits. It has previously been reported that the gross profit margin for Xpeng has increased over the last four quarters and in Q2 2024 reached 14% a level which is higher than that of Nio. However, between Jan and Jul 2024, the company only sold 63,000 vehicles, just 22.6% of the annual target. Although Xpeng has high hopes for the Mona M03 to increase volume, this comes from the company's cheapest vehicle, and so will unlikely have a huge effect on the company's bottom line.

Concerning positioning, He Xiaopeng draws parallels between the Mona M03 and the BYD Qin. For many in China, the Qin was their first new energy vehicle, and in the case of the Mona M03, it will be their first smart car. The car seems to be particularly aimed at younger people.

Some Chinese media are saying that the Tesla Model 2 is already on sale in China, and that car is the M03. When making such statements, they're talking about the Max version of the car, which won't be available until after the Chinese New Year in 2025. Not only does the interior of the Xpeng Mona M03 take a very Tesla-like approach with its minimalist style, but the Max version also takes a Tesla-like approach to smart driving.

Up to now, most vision-based systems in China have been restricted to situations such as highways and urban expressways, along with offering parking assistance. Similarly, the computing power of the cars has been much lower than those equipped with Lidar. Most Lidar-equipped cars use Nvidia Orin X chips to provide the computing power with most of them using a pair for 508 TOPS. This is exactly the same as used in the Max version of the Mona M03, but this car will not be equipped with Lidar. Despite not having Lidar, the Max version will offer urban NOA as a standard and it will not depend on road conditions, cities, or maps.

In terms of sensors, the Max version is equipped with 12 exterior cameras, 12 ultrasonic radars and 3 millimeter wavelength radars. Xpeng believes it has created the cheapest high-end smart car model in history. Although Xpeng is not referring to the system as XNGP the capabilities are very similar, according to what we currently know. Of course, as the system has yet to be released, we don't know how well it performs in real life. According to Xpeng the Max version of the Mona M03 will have the same capabilities as the flagship X9 MPV for parking. Furthermore, the car will be able, without high-precision maps, to negotiate roundabouts, U-turns, and other road conditions.

Xpeng is calling its vision-based solution Eagle Vision. It appears that the system will first debut on the forthcoming P7+ before making its way into the Max version in 2025. Allowing the system to operate is an upgrade in camera accuracy and viewing distance which has partly been aided by the color resolution of the Eagle Vision solution. This means the system will work in low light and where there is a significant light difference or other environments. AI appears to be one of the crucial elements behind the system and the solution reduces the need for computing power by 20% compared with Xpeng's XNGP system. Visual information does not need to be transformed and is directly used as input in the neural network.

The result is that the delay for the intelligent driving system is reduced by 100 ms, giving a much smoother system with faster responses. Eagle Vision is an innovation at the algorithm level, and the underlying technology behind Eagle Vision and XNGP is the same, but the implementation is different. The Mona M03 was launched on the tenth anniversary of Xpeng, and the Eagle Vision system is, in many ways, a full circle, whereby Xpeng is once again returning to its vision-based origins for its smart driving system.

One thing that currently no one appears to be talking about is the fact that the Mona M03 has a front wheel drive layout. For a smart EV start-up, it seems a strange choice, but it should be noted that both the G3 and P5 models from Xpeng were also front wheel drive. This leads us to question whether perhaps the Mona M03 might be based on some development of the David platform, which underpins the earlier two models. If that is indeed the case, then that would also help explain how Xpeng is able to offer the M03 at such a low price – one which, in fact, undercuts both the G3i and P5.

Xpeng Mona M03 can make a profit despite low price, and more details on Max's smart driving

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SoundOfMusic : "Xpeng believes it has created the cheapest high-end smart car model in history. "

The US market can't believe what they see. Can't believe Xpeng is Tesla in China. Can't believe the ingenuity and innovation from Xpeng. They dropped the share price by 10% on the 28th. What a great opportunity.

Xpeng has told you .194 Cd drag coefficient months ago.

Only if the West accepts the facts, true competition can start. Tariffs are not the answers. Politicians can't make anything. They are slowing progress.

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bullrider_21 OP SoundOfMusic : Analysts are very bearish on China EV stocks. Prices are being manipulated.

Xpeng has the best tech among China EV makers. The US is just being complacent and blocking China EVs. You can only compete if you are more innovative than your competitors, not by tariffs.

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VIVEK SURANA : There is big difference between "can make profit" and " making profit". Apart from BYD no chienese company has proved that they are able to make a profitable BEV business. Even the NiO CEO was projecting earlier that 2024 will be a profitable year and now it is nowhere near profit.

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bullrider_21 OP VIVEK SURANA : Unfortunately, the Mona M03 is a low end car. Xpeng can make a profit if it can sell premium cars in large quantity. This is achievable now that they reduce the costs. But Xpeng is spending heavily in R&D.

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AnaiAnai : Xpeng now one month only sold 10k units. Even add the cheapskate model Mona M03 10k also only 20k units. In the past 20k units also cannot breakeven. Now can breakeven in 2025?

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AnaiAnai VIVEK SURANA : Li Auto not making profit? Green QR for a 6 Qtrs already.

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VIVEK SURANA AnaiAnai : I mentioned BEV, li auto doesn't make BEV their first model badly flopped, BYD is earning profit on both Hybrid and BEV.

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AnaiAnai VIVEK SURANA : BYD is different. Warren Buffet found the gem.

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