XPENG Develops Fast: Biggest Challenge After B Round is Mass Production

XPENG announced the start of its B round financing of 2.2 billion yuan in Hong Kong on January 29. The financing was led by Alibaba, Foxconn and IDG. XPENG will raise more than 5 billion yuan from the capital market. The amount of financing is only less than NIO’s financing of $2 billion and WM Motor’s financing of 12 billion yuan.

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XPENG chairman He Xiaopent emphasized the amount of financing has raised XPENG's rank to become second in the industry. He said "only the funds used on development and production count." The company has developed fast enough. In 2014, XPENG joined the electric car boom after Tesla opened its patent. In 2016, it was the first to achieve mass production among all Internet car-making enterprises. On October 12, XPENG’s first mass-produced SUV was unveiled in Zhengzhou, Henan Province. In January 2018, at CES, XPENG unveiled the G3.

Targeting Internet Users

“We regard young Internet users in China as the core group, because it is easy for this group to accept new things and they have purchasing power," He said in the interview. Aiming at the crowd, XPENG hopes to achieve "high beauty, high quality, high endurance and high cost performance." He explained the way XPENG pursues "high quality": The first step is to invest more in research and development. He said no traditional car companies in China employ more than 150 workers in their smart driving research departments. But there are about 1,500 people in XPENG’s smart driving department. "For example, how to deal with cameras needs a whole team – 150 people can't do it," he said. The second is to "force" developers to drive their own cars. "We have to get the developers to experience the cars. And now, we are experiencing different kinds of cars," He said. At this point, he himself is a pioneer: He was XPENG's first user.

Compete for Valuable Data

That the product is accepted by the market as soon as possible is very important for XPENG automobiles. In the interview, He said more than once that XPENG hopes to obtain valuable user data, which is the key to the difference between XPENG and other brands. Previously, he emphasized the importance of user involvement in generating data in public events. "User participation is not about making cars. All users in this room today may be our first users, and Internet users are the most likely to use Internet cars. They can generate the data that will support product iteration, and they are the most valuable users for the Internet cars. This is what XPENG will do,” He said.

The biggest challenge after B round financing is mass production

In an interview with the media, he said the money raised in the B round will be mainly used for three purposes: research and development, vehicle design and development and the establishment of a marketing system. The biggest challenge is "quality delivery". He said it would be easy to build a couple of cars, but creating thousands of cars would be a huge challenge to the supply chain and the production process. This is the most important challenge that XPENG will face in 2018, He said.. "Once the car is mass-produced, it needs billions of dollars," he said. XPENG will complete two rounds of financing, valued at least $1 billion, in 2018, he said. Previously, XPENG disclosed that its future business model would use a combination of leasing and selling, as well as long-term leasing. XPENG hopes to sell rights of use rather than ownership.

This article originally appeared in NetEase Technology and was translated by Pandaily.