Today I would like to give you a detailed insight into XPeng's conference call ($9868 (+0%)) on the results for the fourth quarter and financial year 2024, which I attended as a listener.
The mood was optimistic, characterized by milestones achieved and ambitious future plans, especially in the area of artificial intelligence (AI) and global expansion. Co-founder, Chairman and CEO He Xiaopenghighlighted the record number of 91,507 vehicle deliveries in the fourth quarter of 2024 the six consecutive quarters of improved vehicle margins and a positive free cash flow of over positive free cash flow of over RMB 4 billion in the second half of the year.
According to He Xiaopeng, these results underline the progress made in terms of scaling, organizational improvement and strategic execution. He emphasized that in the first two months of 2025, XPeng's monthly deliveries among emerging Chinese electric vehicle companies in the first two months of 2025, showing companies, demonstrating robust momentum.
For the year 2025, He Xiaopeng announced to focus on further improving the organizational capacity, user-centric product development, commercialization of AI and automotive technologies, and globalization. and globalization. He reiterated his belief that the next decade in the automotive industry will be characterized by AI and that advanced AI models will revolutionize autonomous driving by 2025. The progress of AI in China in the first quarter of this year has only reinforced his conviction.
He Xiaopeng proudly presented the development of a cloud-based base model with ten billion parametersthat can be used with over pretrained with over 100 million kilometers of real driving data an unprecedented scale in the field of autonomous driving in China. To further improve the generalization capability and handling of rare scenarios reinforcement learning techniques are being used.
He also mentioned DeepSeek R1's progress in large-scale language models and the integration of large-scale models in various industries, with XPeng collaborating with leading AI technology companies.
He Xiaopeng is convinced that AI will transform the automotive industry in a few years and accelerate the development of accelerate the development of L3 and L4 autonomous driving. autonomous driving. He also sees a growing trend of the convergence of intelligent vehicles and embodied AI, with intelligent vehicles paving the way for humanoid robots could pave the way for humanoid robots. His goal for this decade is to turn XPeng into an AI-powered global automotive company and a smart technology brand valued by users worldwide. appreciated by users worldwide. He emphasized the transition from the era of vehicle electrification to the era of AI and sees XPeng's internally developed AI vehicles and humanoid robots as two of the most significant applications of AI in the physical world in 2025.
A top AI company must have comprehensive full-stack software and hardware capabilities and be able to effectively iterate data in a closed loop across large cloud-based AI models, in-vehicle models, electrical/electronic architecture (EEA) and system-on-chips (SoC). This year, XPeng expects to start mass production of the self-developed Turing chip this year which is designed for vehicles, flying cars and humanoid robots and should enable rapid deployment in global markets and various scenarios. The Turing chip in combination with the internally developed software and hardware will enable XPeng to fully exploit the laws of scale of its vehicles and gain a significant advantage over competitors.
He Xiaopeng predicted that XPeng will be the first company in China to offer an intelligent driving experience with software functions and user experience equivalent to L3 autonomous driving in the second half of this year. He believes that L3 autonomy will generate strong user demand and extraordinary user loyalty, which he described as an "iPhone moment" for AI-defined cars. In addition, XPeng plans to mass produce 2026 to mass-produce vehicle models that will support L4 autonomous driving in low-speed scenarios. will.
He shared an interesting figure: From 2025, the penetration rate of advanced urban intelligent driving among new car buyers in China will exceed 10% for the first timewhich marks a turning point in the demand for intelligent driving. This growth trend is expected to be non-linear and represents a significant opportunity for XPeng. From a technology perspective XPeng and Tesla are the only two companies in the world capable of providing a globally reliable AI-based intelligent driving experience without high-resolution maps or LiDAR and with a single software suite across all vehicle models.
Starting with the P7+, all new XPeng models, including the recently launched G6 and G9 models, will be equipped with the industry-leading pure vision-based AI intelligent driving as standard across all trim levels, at no additional cost. The upcoming MONA M03 Maxscheduled for launch in May, will lower the entry barrier for urban intelligent AI driving into the RMB 150,000 range for the first time and make advanced vehicle technology more accessible to younger consumers.
From 2025, XPeng, launch new models or updated versions every quarter, all equipped with the latestall of which will be equipped with the latest next-generation AI technologies. The new G6 and G9 models were launched on March 13 and have been widely acclaimed. Orders are exceeding expectations and the increased footfall in stores has also boosted demand for the entire product range. Deliveries of the new G6 are scheduled to begin on March 21.
In the second half of the year, XPeng plans to deliver several new products, including battery electric vehicles (BEVs) and quantum super electric vehicles. Most of the models will have dual energy or performance and will significantly expand the addressable market with super electric models. By the end of 2026, XPeng will have a comprehensive product offering in the price range of 100,000 to 500,000 RMBcovering all major segments from compact to large models.
The new design center in Shanghai is now in operation and growing rapidly. The global growth efforts are also strong and there is still considerable potential for electrification and smart technologies. In 2024, the foreign vehicle sales of XPeng exceeded 20,000 units making it the leader in exports among emerging Chinese electric vehicle brands as well as in exports of Chinese mid- to high-end BEVs. For 2025, the global business targetsto double sales and establish over 300 sales and service outlets worldwide (twice as many as at the end of 2024) .
In addition to the global expansion of vehicle sales, XPeng is committed to becoming the leader in advanced technology and high quality quality. In 2025, new overseas research and development centers established and foreign research and testing activities for Turing AI-powered intelligent driving will be launched with the aim of offering these capabilities in more countries worldwide from 2026 while complying with local regulations. With the launch of more competitive products and ongoing global expansion, He Xiaopeng is confident that XPeng's XPeng's total sales will more than double in 2025 compared to 2024which is expected to significantly increase its market share in the Chinese and global smart EV sectors and establish XPeng as the leading AI automotive brand.
For the first quarter of 2025 total deliveries of between 91,000 and 93,000 units are expected, which corresponds to an increase of 317% to 326.2% compared to the previous year. compared to the previous year. The total sales is expected to be between 15 billion to 15.7 billion RMB is forecast, which corresponds to annual growth of 129% to 139%. corresponds.
Afterwards James Wu, Vice President of Finance & Accountingpresented an overview of the financial results for the fourth quarter of 2024. total revenue amounted to 16.11 billion RMBan increase of 23.4% compared to the previous year and 59.4% compared to the previous quarter. The turnover from vehicle sales amounted to 14.67 billion RMBan increase of 20% compared to the previous year and 66.8% compared to the previous quarter, mainly due to higher deliveries. The Revenue from services and other reached 1.43 billion RMB, an increase of 74.4% year-on-year, mainly due to increased revenue from technical R&D services related to the Volkswagen Group. The gross margin in the fourth quarter of 2024 was 14,4 %compared to 6.2% in the prior-year period. The vehicle margin amounted to 10 %compared to 4.1% in the same period of the previous year. The increases are mainly due to cost reductions11 . The R&D expenditure increased to 2.01 billion RMBan increase of 53.4% compared to the previous year, due to higher spending on the development of new vehicle models. The loss from operating activities amounted to 1.56 billion RMBan improvement on the previous year. The net loss amounted to 1.33 billion RMBalso an improvement compared to the previous year. As at December 31, 2024, the company had cash and cash equivalents cash and short-term investments totaling RMB 42 billion.
In the subsequent question and answer session analysts asked various questions:
Tim Hsiao from Morgan Stanley asked about the competitive situation in the autonomous driving space given the increasing democratization of AI in China and the upcoming upgrade to Level 3. He wanted to know whether this will widen the gap between leaders and laggards or remain a tight race. He Xiaopeng replied that the announcements of many OEMs in the smart driving field are very exciting and will trigger a wider acceptance of intelligent driving functions. He believes that recent progress, especially the introduction of AI-powered vehicles with advanced ADAS functions as standard, will turn AI vehicles into "AI agents". In terms of L3, he sees significant technological progress in software, hardware and model capabilities. He is convinced that XPeng, due to its full-stack in-house development, the use of big data and big models, closed-loop data iteration and early investment, XPeng is will create an ever greater lead over its competitors. Also the combination of intelligent driving with the intelligent cockpit, platform and powertrain, as well as horizontal integration, are also advantages. are also advantages. The use of a single platform for all these capabilities and the early consideration of the global market also give XPeng a significant first-mover advantage in globalization.
Hsiao's second question concerned the synergies between XPeng's investments in AI applications (autonomous vehicles, humanoid robots, etc.) and when the first sales from the robot products could be expected. He also asked whether these projects would lead to a significant increase in R&D and other operating expenses in the following quarters. He Xiaopeng explained that the long-term long-term goal is the research of future mobilitywhich includes not only vehicles but also flying cars and humanoid robots. The L3 capabilities for autonomous vehicles are quite compatible with the L3 capabilities for humanoid robots, he said.although it is mainly the training data that differs. There are also synergies in other areas such as the global sales network and production. He believes that excellent results from these synergies will be visible by 2026 and XPeng may be the first company in China to mass-produce flying cars.
Ming-Hsun Lee from Bank of America also asked questions about autonomous drivingin particular on the potential narrowing of the technology gap between leading and lagging companies through the use of end-to-end models. He also asked how the self-developed Turing chip could improve XPeng's AI and AD capabilities in addition to cost control.
He Xiaopeng reiterated that for every player in the automotive industry automotive industry, comprehensive full-stack in-house development capabilities including software, hardware and supply chain. The ability to effective closed-loop data iterationthe profitability and the economies of scale would give XPeng a clear advantage. The Turing chip not only enables cost advantages, but also the customization of customization of products and significant development potentialThis secures XPeng's leading position and brings advantages in terms of energy efficiency and performance, as well as enabling more effective collaboration with other players.
Lee's second question concerned the development of humanoid robots. He asked whether the first sales could be expected next year after the series production planned for 2026 and in which areas XPeng was satisfied with the progress and where there was still room for improvement. He Xiaopeng emphasized that the series production of humanoid robots for the commercial market is planned from 2026 but that production is even more challenging than that of AI vehicles. A real humanoid robot requires fully integrated capabilities in hardware, real and simulated data. Many competitors are currently focusing on the movement of the lower body, which in his opinion is too limited. Even for the simplest model, a high level of integration is required to achieve L3 AI capabilities capabilities, without which a humanoid robot is essentially useless. R&D for humanoid robots is going well, and XPeng is working not only on basic movement capabilities, but also on simple but necessary "agent" capabilities. simple but necessary "agent" capabilitiesa kind of semi-humanoid intelligence. However, this is very challenging and he hoped to provide more information in the near future.
Bin Wang from Deutsche Bank asked two finance-related questions. He asked for a gross margin forecast for the first quarter and and inquired about improvements in long-term investments and fair value gains that might bewhich may be related to the DiDi acquisition. James Wu replied that the vehicle margin had increased in the fourth quarter thanks to cost reductions and higher scaling and that the company is continuing to work on cost reductions in order to to keep the vehicle margin in the double-digit range on a sustainably in double digits. With regard to the DiDi transaction, he confirmed an adjustment adjustment in connection with an earn-out clausewhich was linked to the delivery of vehicles for DiDi's ride-hailing platform.
Pingyue Wu from Citic Securities asked about the overseas marketwhich is seen as one of the pillars of long-term development. He wanted to know whether XPeng would consider setting up a factory or other form of capacity cooperation abroad. consider. Brian Gu replied that the international expansion is a central pillar of the growth strategy. The response in new markets last year had been very encouraging and XPeng was now selling in over 30 countries, with products in the top 3 EV models in some categories. For this year, a further expansion of the global platform platform this year, with a doubling of international stores and outlets and a doubling of international sales. doubling international sales. XPeng is investing in teams and international infrastructure, including new overseas R&D centersto recruit local talent for international technology development. It is also exploring various local local production solutionssuch as the previously announced cooperation with a partner in Indonesia.
Wu's second question concerned autonomous driving and the goal of reducing human intervention per 100 kilometers (NPI) to 100 kilometers by the end of the year. He asked whether this was the ultimate goal and how XPeng saw the possibilities of OEMs or insurance companies taking on some of the responsibility for the driving systems. He Xiaopeng explained the paradox of the NPIas it strongly depends on the driving scenarios and the driver's behavior. Even with claims of L2++ or L3/L4 capabilities, the actual intervention rate could be high. Achieving L3 capability is challenging, but achievable with the next generation of models, computing power, capabilities and data. The long-term goal is that drivers may only need to intervene once a week or month, which would promote the acceptance of intelligent driving. The targeted NPI of 100 kilometers is more of a as a measure of L2 capability where XPeng considers itself to be above the industry average and sees this as an early stage of L3 capability. With regard to safety issues and responsibility for traffic accidents He Xiaopeng explained that XPeng has studied this at an early stage and has also put forward proposals to drive the next generation of safer driving regulations. He believes that China will lead the world in this area.
Y.C. Lai from JPMorgan asked about the long-term outlook for the three main business areas (AI cars, foreign market, humanoid robots) until around 2030. He Xiaopeng replied that it is difficult to make precise forecasts for 2030. However, the target for the next ten years (up to 2034) is that half of sales to come from China and the other half from the foreign market. Internal plans for 2030 exist, but are confidential. With regard to humanoid robots it is difficult to predict when the technological and commercial turning point will be reached. There may be more clarity at the end of 2026 or 2027, when the first mass-produced robots come onto the market. The current state of development is roughly comparable to that of electric vehicles in 2010 or 2011.
Lai's second question related to new EU policy to promote foreign investment in the European automotive market, particularly in the field of AI and autonomous driving. He asked whether new opportunities could arise in light of the partnership with Volkswagen.
Charles Zhang explained that XPeng is building up its building up its overseas R&D centers and is preparations to offer its autonomous driving technology to global customers. The cooperation with Volkswagen is currently focused on the SOP of the G9 platform and the EEA cooperation.. However, he sees potential and industrial logic for cooperation in the potential foreign market.
Conclusion
The XPeng analyst conference for the fourth quarter and full year 2024 conveyed a picture of a company with strong momentum and a clear vision for the future. The record deliveries and the improved margins in 2024 are impressive achievements. The focus on AI and autonomous driving is seen as a decisive competitive advantage and growth driver, with self-developed technology and extensive data volumes playing a key role. The ambitious plans for global expansion and entry into the market for humanoid robots underline the company's innovative spirit and long-term thinking. The financial situation appears to be solid and the forecasts for the first quarter of 2025 point to further significant growth.
Overall, the conference left the impression that XPeng is well positioned to take a leading role in the field of intelligent electric vehicles and beyond in the coming years.
