Chinese electric vehicle (EV) manufacturer XPeng hopes to raise up to $1.11 billion in its IPO in New York. It said on 21 August 2020 it intends to sell 85 million shares American depositary share (ADS), each representing two class A ordinary share, priced between $11 and $13 per share.
Founded in 2015, Xpeng is one of China’s leading smart electric vehicle, or Smart EV, companies. It designs, develops, manufactures, and markets Smart EVs in China. Its products include an SUV (the G3) and a four-door sports sedan (the P7).
According to the IHS Markit Report, Xpeng G3 was among the top-three best-selling electric SUVs in China in 2019. The P7 offers an NEDC range of up to 706 km (439 miles) on a single charge, which is the longest among EVs that are available in China, based on the MIIT NEV Catalogues.
Xpeng primarily targets the mid- to high-end segment in China’s passenger vehicle market, with prices ranging from RMB150,000 to RMB300,000, for its Smart EVs.
According to the IHS Markit report, the mid- to high-end segment represented 30.6% of China’s passenger vehicle market by sales volume in 2019 and had a higher EV penetration rate than other price segments.
As of June 30, 2020, over 90% of purchasers of the G3 chose the versions with autonomous driving capabilities. As of the same date, approximately 50% of customers ordered the versions of the P7 that can support XPILOT 3.0, its upcoming advanced autonomous driving system.
In order to optimize its customers’ mobility experience, Xpeng has strategically chosen to focus on developing full-stack autonomous driving technology and in-car intelligent operating system, as well as core vehicle systems, including powertrain and the electrical and electronic architecture, or the E/E architecture, in-house.
The XPILOT 3.0 is expected to offer the highest level of autonomous driving capabilities in commercially available passenger vehicles according to IHS Markit.
Xpeng started production of the G3 in November 2018, and as of July 31, 2020, it had delivered 18,741 units of the G3 to customers. It started production of the P7 and began delivery in May 2020, and as of July 31, 2020, we had delivered 1,966 units of the P7 to customers.
Xpeng plans to launch its third Smart EV, a sedan, in 2021. The table below sets forth certain features of the G3 and the P7.
Its autonomous driving system and in-car intelligent operating system allow customers to enjoy a new smart mobility experience, and its Smart EVs can be upgraded through over-the-air, or OTA, firmware updates.
XPILOT, its autonomous driving system, provides assisted driving and parking functions tailored for driving behavior and road conditions in China. Currently deployed on the G3 and the P7, XPILOT 2.5 offers adaptive cruise control, adaptive turning control, lane centering control, automated lane changing, and automated parking.
As of June 30, 2020, its adaptive cruise control function had been used for 25.1 million kilometers of driving cumulatively, and its lane centering control function had been used for 11.1 million kilometers of driving cumulatively.
They plan to roll out XPILOT 3.0 by early 2021. XPILOT 3.0 will feature several new functions, including a navigation guided pilot for highway driving and advanced automated parking, in addition to the functions available in XPILOT 2.5.
Xmart OS, its in-car intelligent operating system, supports a smart cockpit that delivers a seamless, easy-to-use, and voice-controlled smart mobility experience.
Xmart OS enables a broad range of smart connectivity functions, such as artificial intelligence, or AI, voice assistant, smart navigation and an app store. The in-car app store allows its customers to conveniently access third-party services and infotainment and allows Xpeng to develop its smart connectivity ecosystem and create value for all participants.
As a result of its efforts in modular design across key aspects of Smart EVs, Xpeng has strategically established two Smart EV platforms. These platforms are scalable for both SUVs and sedans with different wheelbases within a wide range, which allows it to develop new models in a fast and cost-efficient manner.
As of June 30, 2020, its physical sales and service network consisted of a total of 147 stores and service centers, which cover 52 major cities in China.
A substantial majority of its stores are located in shopping malls in tier-one and tier-two cities, as it believes such locations enable Xpeng to raise its brand awareness and attract customer traffic in a cost-efficient manner.
In addition, it actively engages in data-driven and targeted online marketing through a variety of channels to further enhance its brand recognition and acquire customers.
It produce the G3 through a contract manufacturing collaboration with Haima, which has over three decades of automotive manufacturing experience, at its plant in Zhengzhou, Henan province.
The arrangement allows Xpeng to retain effective control of key manufacturing and procurement processes and product quality with minimal required capital outlay. In addition, it has built its own plant in Zhaoqing, Guangdong province.
It started the production of the P7 at the plant in May 2020 and will also utilize the plant for future models. The Haima plant and the Zhaoqing plant have an annual production capacity of up to 150,000 units and 100,000 units, respectively.
As of June 30, 2020, it had 3,676 employees in China and the United States. As of June 30, 2020, approximately 43% of its employees focused on research and development, of which 66%, 17% and 17% were dedicated to automotive design and engineering, autonomous driving, and intelligent operating system, respectively.
Xpeng delivered a total of 2,451 Smart EVs, including 1,641 units of the P7 and 810 units of the G3, to customers in July 2020.
In August 2020, It completed Series C+ round financing. It has only recently started to generate revenues and has not been profitable since its inception. It has been incurring losses from operations and had negative cash flows from operating activities since inception.
It incurred net losses of RMB1,398.8 million, RMB3,691.7 million (US$522.5 million), and RMB795.8 million (US$112.6 million) for 2018, 2019, and the six months ended June 30, 2020, respectively.