Mr He Xiaopeng expects the ongoing intense price war in China’s competitive EV industry to last for two to three years, he said in an exclusive interview with CNA.
BEIJING: Chinese electric vehicle (EV) firm and Tesla rival XPeng hopes to have a presence in 20 international markets this year, up from the four last year.
The Guangzhou-headquartered firm’s cars are expected to be on German roads this month, and Singapore later this year. Also in the plans are expansion into the United Kingdom, Australia and France.
But billionaire CEO He Xiaopeng told CNA that there is no clear and precise plan for going global, despite these targets.
“We have taken a very slow path in the past three years because many people think that you should be able to achieve results quickly as soon as you enter the international market. I never thought so,” he said in an exclusive interview.
“If you look at how many companies can succeed in going global, (there are) very few. How many Chinese companies can succeed in going global? That is even fewer. From my perspective, going global is at least a 10-year plan.”
PLANS TO GO INTERNATIONAL
XPeng, which is backed by Volkswagen, was founded in 2014. Mr He said that if the firm appeared to have a slow start in releasing models, it was because his vision was for global expansion.
“Why did we not create too many localised products and services in China at the beginning? Because I think they would not be able to go global,” he said.
“We may take 12 more months to prepare than others, but we will earn it back later, from my perspective. We have a lot of different logic,” he added.
Referring to himself as a serial entrepreneur, Mr He said he has made many mistakes in the past when trying to take businesses international.
Prior to XPeng, Mr He co-founded UCWeb Inc in 2004, a mobile internet company that was eventually acquired by Chinese tech giant Alibaba Group in 2014.
The 46-year-old distilled his lessons into two main ones – using technological innovation to create differentiation and ensuring win-win cooperation with locals in the foreign market.
“I think that going global fast with cars is more challenging, so regardless of whether we have big goals in the next 10 years, we will proceed step-by-step steadily,” he added.
He noted that XPeng sold only a few thousand cars in a few countries in Europe in the past three years, but that number stands at about 1,000 within a month in March.
“This is because we have been laying the groundwork for three years,” he said.
XPeng said it delivered 141,601 vehicles last year, a 17.3 per cent increase year-on-year. That is still a distance away from Chinese EV giant BYD, which sold a record 3 million new energy vehicles in 2023. BYD, which is backed by billionaire investor Warren Buffet, overtook Tesla in the fourth quarter of last year as the world’s largest EV maker.
PLANS TO BE NUMBER ONE IN CHINA
But that hasn’t stopped Mr He from setting big goals.
As XPeng looks to be successful in the international market, Mr He is also eyeing the top spot at home by 2030, and looking at the firm turning a profit by 2025.
The carmaker reported a 153 per cent increase in revenue for the fourth quarter of 2023 and narrower losses.
Of his ambitious plan, Mr He said: “We all know that there is a saying that, ‘a soldier who does not want to be a general is not a good soldier.’”
He added that he believes the next three to four years will be a “knockout tournament” in the EV car industry in China, and the following years an “all-star competition”.
“In this field, in 2030, we can probably see the abilities and feasibility of the top one and top two (players) during the all-star game,” he said.
“The car industry is a marathon, it is not like a sprint,” he added.
While the firm’s previous focus was on leveraging advantages and becoming large-scale, it changed tack last year, he said.
The firm is now looking at how to make its capabilities more balanced and comprehensive before pursuing scale, instead of pursuing scale first and then reducing costs and making profits, he said.
PRICE WAR EXPECTED TO LAST TWO TO THREE YEARS
He expects the ongoing intense price war in China’s competitive EV industry to last for two to three years, as gasoline-fuelled cars also look to cut prices to maintain market share.
China is the world’s largest EV market with a penetration rate of 35.7 per cent last year, up 8 percentage points year-on-year.
But Mr He expressed optimism, calling it “good market competition”.
“It will not last for many years. I think after it reaches a stage, your competitors will gradually become stable. At this time, you will use better R&D (research and development), better quality and stable prices to serve customers well,” he said.
“I think this is a process. From a market perspective, everyone will have challenges in the short-term, we say we are very ‘juan’ (Chinese slang for competitive). But in the medium-term, it makes the enterprise bigger and even stronger.”
This process also requires XPeng to make products that are more powerful and technologically different, said Mr He.
“If you’re just making the same thing, for cheaper, I don’t think it’s necessary,” he added.
His hope is that XPeng can ultimately change how people travel by making it more safe and efficient.
Mr He predicted that in 10 to 20 years, cars will become increasingly autonomous.
“You can fly between cities or provinces by yourself, although only 5 per cent to 15 per cent of people can. Others still use trains or other means of transportation plus cars, but giving more people a choice – I think this is what we want to do,” he said.