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XPEV stock forecast 2025: can selling software make money?


The new energy vehicle industry has a relatively high degree of attention, that is, Xiaopeng(XPEV) released its first-quarter 2021 financial report.

 The general performance data of XPEV are as follows:

 The total delivery volume reached 13,340 units, a year-on-year increase of 487.4%.

 Total revenue was USD 450 million, a year-on-year increase of 616.1%.

 Auto sales revenue was US$429 million, an increase of 655.2% year-on-year.

 The gross profit margin was 11.2%, compared with -4.8% and 7.4% in the same period last year and the fourth quarter of 2020, respectively.

 The gross profit margin of automobile sales was 10.1%, compared with -5.3% and 6.8% in the same period last year and the fourth quarter of 2020.

 To be honest, this data itself is not eye-catching in comparison with Weilai and ideals. Although for officials, this quarter’s financial report has ushered in two major milestones. 

One is that gross profit margin continues to improve and climbs to double digits;  Software revenue is included in revenue, confirming the sales revenue of XPILOT software.

 Just look at the year-on-year growth in this data. After all, the epidemic raged during the same period last year, so this year's growth data are generally in this situation, and there is no surprise.

 In fact, the challenges faced by Xiaopeng Motors are still severe.

 First of all, from a product perspective, as Xiaopeng’s current flagship product, the P7 has not been satisfactory in terms of market performance—the main models are the P7 with 266,900 and 276,900, and all parameters are excellent.

 XPEV the sales volume is quite satisfactory, and there is not even Weilaiduo, which has a higher transaction price.

 Xiaopeng's models are P7+G3, no matter which one is not as high as ES6 and ideal ONE, so in terms of quality, Xiaopeng's results are indeed inferior.

 And this is the problem Xiaopeng is solving.

 In my opinion, there are many underlying reasons for Xiaopeng’s sales problem, but one of the most important reasons is that all P7 owners know it, but Xiaopeng himself seems reluctant to invest resources to solve it.

 XPEV One of the biggest problems of this car company is that it is really not good at user operations.

 In the opinion of some car owners, although they have bought Xiaopeng's car, if Xiaopeng does not make some major changes, then they are not really looking forward to the development of Xiaopeng in the long run.

 Xiaopeng is a bit far away from users compared to Weilai and Ideal in the eyes of many car owners.

 This can be reflected in many details. For example, the owners of Weilai and ideal car owners have encountered problems. After feedback, relevant people will find ways to help the car owners solve them as soon as possible. However, Xiaopeng’s operational logic is in line with traditional car companies.  Similar "sink logic".

 The so-called sinking logic is easier to understand. It uses various methods, or simply ignores it, and lets this matter sink in the vast ocean of information on the Internet.  All problems encountered by car owners will be released later. As for unhappy car owners if the leaders and the media can't see them.

 This is also the reason why Xiaopeng is currently in the leading position in terms of technological content and autonomous driving, but it is far inferior to Weilai in terms of the old and new ratios.

 Many times the user's request is not excessive, but Xiaopeng just pretends not to see it and has no choice but to come out to appease.

 The most typical example is the Brembo brake of Xiaopeng P7. The abnormal noise is severe on rainy days. It is basically a common problem recognized among car owners. This problem has been discussed for several months. Although Xiaopeng promised to replace it for free, it did not.  Do it well.

 So for Xiaopeng, the biggest shortcoming of this car company is user operation and after-sales service. Although Xiaopeng also has very good projects such as X moment in operation, the overall feedback to users is still consistent with that of Wei.  There is a certain gap between coming and ideals.

 NIO, which can be regarded as a benchmark in terms of user operations and after-sales services, with the increase in the number of car owners, many non-mainstream voices have gradually increased. For example, the recent collective "rights protection" seat for NIO owners is a very important issue.  Typical embodiment.

 And Xiaopeng currently does not have an actual up-scale model, so many car owners’ dissatisfaction with the P7 has not been passed on.

 But this group of car owners will no longer recommend people around them to buy, and this also means that the effects of old and new ones will be greatly discounted because of after-sales and user operations.

 At this point, I need to emphasize one thing. Most Xiaopeng P7 owners are very satisfied with this product, but from an investor's point of view, it is not a good thing that such an excellent product as P7 cannot be sold.

 I believe that if the operation and after-sales problems can be solved, it will become a turning point for Xiaopeng’s sales.

 Next, let's talk about the recognized bright spots in Xiaopeng's financial report

 DennisLu disclosed in the conference call that the XPILOT3.0 software revenue in this financial report was 80 million U.S. dollars, of which 50 million U.S. dollars was last year's revenue, and the remaining 30 million U.S. dollars was this year's software revenue.  In terms of proportion, the software revenues this time merged accounted for 2.5% of the total revenue of the financial report.

 This means that Xiaopeng's development space is indeed very imaginative.

 How big is the software potential of XPEV?

 A P7 owner, because he didn’t trust Xiaopeng, although he bought the P7 but did not buy the Xpilot 3.0 software, and from his point of view, he bought the earlier Weilai ES6 because of the NP function.  There is no need to buy more auto-assisted driving software.

 But after the launch of NGP, he said to me a bit "deeply regret".

 Because the Xpilot 3.0 software is only 20,000 yuan when ordering a car, the price of the software after picking up the car will become 36,000 yuan. When it was launched, the performance of NGP was very amazing, and it was basically better than version 2.9.0 of NIO.  The previous NOP.

 He must be reluctant to spend RMB 36,000, but what about NGP?

 The answer is obvious: the "paid subscription" model used by Internet companies that we are very familiar with. In this model, users can enjoy the same experience as full-paid purchases at a very low cost.  

For NGP, most people may not travel far most of the time, but when traveling far, you can temporarily pay to activate NGP to get a better experience, which will greatly reduce the experience threshold of Xpilot3.0.

 This means that for auto companies such as Tesla, NIO, Xiaopeng, and Ideal, as the software ecosystem becomes more abundant and autonomous driving functions become more and more powerful, they will transform from traditional manufacturing valuations to a kind of new type of software company.

 To sum up, Xiaopeng Motors will focus on the following in the future:

 1. Is it possible to increase the ratio of old to new ones by improving after-sales and user operations?

 2. When will the subsequent subscription model of Xpilot3.0 software be launched?

 3. The new model P5 is equipped with lidar, and in the future, it will be able to turn on the auto-assisted driving function in the urban area. Can it become a real volume product?

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