Can the G9 help XPeng catch up to NIO and Li Auto?

XPeng’s new G9 is on the horizon.

Summing up XPeng’s Q2 financial report in one sentence: Revenue, gross margins, and other data might not look very impressive, but the only shining aspect is the steady increase in sales volume, which can’t be said to have fully recovered yet, but the brand is indeed in a phase of revival.

It must be said that the success of the XPeng G6 in helping XPeng Automotive return to a monthly sales volume of tens of thousands is undoubtedly a crucial turning point in the brand’s development. However, due to production capacity not keeping up at the moment, the reflection in the financial report is still not very evident.

Looking at the trio of “NIO, XPeng, Li Auto” that used to be closely associated, now Li Auto and NIO are gradually achieving substantial sales figures, while XPeng Automotive’s sales volume is just above the ten thousand mark. After all, XPeng was one of the first new forces in China to join the auto industry, so it’s not true to say that XPeng isn’t feeling the urgency.

In the current situation, aside from ramping up production capacity, XPeng Automotive also needs multiple popular products. Therefore, for the next step in its product lineup, XPeng has set its sights on the upcoming XPeng G9.

According to Jacky, the Senior Director of Powertrain at XPeng Automotive, while retaining the advantages of quietness, good driving experience, and fast charging, the redesign of the XPeng G9 will focus on being high-end and offering great value. It is expected to be launched in the fourth quarter of this year.

Why do many brands have lower annual sales volumes compared to previous years, but higher revenue and gross margins? It’s because they are shifting their focus towards the high-end market. Although the XPeng G9, as the flagship SUV of XPeng Automotive, might not sell as well as family cars like the Qin PLUS or the Xuan Yi, maintaining monthly sales at an upper-tier level within its market segment could significantly improve the annual financial report data for XPeng.

However, the reality is that the current XPeng G9 hasn’t been as successful in terms of sales, with a certain gap compared to similarly positioned models like the Zhiji LS7 and the Aiways U11. From the official perspective, for the new XPeng G9 to succeed, it might not necessarily need to take a radical approach, but it must prioritize chasing after profits.

What’s happening with the XPeng G9?

XPeng Automotive has consistently placed high importance on the XPeng G9. Despite its debut at the 2021 Guangzhou Auto Show, it took almost a year for the XPeng G9 to hit the market. The production version of the vehicle indeed boasts high levels of features, including intelligent driving, fast charging, and comfort configurations, along with an attractive starting price of just over 300,000 RMB.

During the launch event, He Xiaopeng, the CEO of XPeng, expressed great hopes that the XPeng G9 would surpass the sales volume of the Audi Q5 this year.

However, even with such a promising product, the night of its launch was met with criticisms from a number of users.

(Image Source: XPeng Automotive)

On one hand, the complexity of the six different versions of configurations has made it difficult for users to decide, as each individual needs to consider performance, range, intelligence, and optional features. The sheer number of available configurations does not make it easy for users to make a judgment, leading to collective criticisms.

On the other hand, the entry-level model’s intelligent driving configuration retained only basic features. This might be acceptable for other vehicle models, but when such configuration adjustments are applied to the flagship SUV like the XPeng G9, it appears to lack the expected prestige.

The official response was sincere and swift, with adjustments made to the pricing and configurations just two days after the product launch. However, the misstep in the market launch of the XPeng G9 has already had a notable impact on the brand’s path towards success. The repercussions continue to linger.

Not long ago, Volkswagen and XPeng officially announced a collaboration, with their first joint product being an electric vehicle platform and software development based on the XPeng G9. Even such a large automaker as Volkswagen trusting XPeng can help boost consumer confidence, but in the end, product quality will be the decisive factor.

What can save the XPeng G9?

How can the XPeng G9 be revitalized? XPeng’s answer seems quite clear: value for money.

Remember when the XPeng G6 started its presale campaign with a starting price of 225,000 yuan? It was already 38,900 yuan cheaper than its competitor, the Model Y. Little did we know that the official guide price could drop even further.

There’s no denying that the XPeng G6’s popularity exceeded the brand’s expectations, largely due to its high value for money. To capture a share of the high-end market, the strategy of mimicking what worked for the XPeng G6 might indeed be the most efficient approach for the new XPeng G9.

(Image Source: XPeng Automotive)

Some might wonder, since the XPeng G9 is a flagship SUV, wouldn’t lowering the price make consumers perceive it as less high-end?

Many competitors, regardless of whether their brand positioning is truly high-end, maintain high prices for their products. They believe that lowering prices might affect their image in comparison to established brands, and they might consider focusing on “value for money” to be a less prestigious approach.

It’s possible that this strategy could impact brand perception, but what is certain is that aiming for a premium image isn’t currently XPeng’s top priority. Right now, the most important goal is to capture the market.

Take a look at Buick. Despite being one of the earliest joint venture brands to enter the pure electric vehicle field in China, it hasn’t gained a substantial following in the domestic electric market in recent years. However, after introducing two mid-size electric SUVs priced around 200,000 RMB this year, the entire brand has undergone a transformation.

The latest data shows that the monthly sales of the Buick E4 and Buick E5 have both exceeded three thousand units. While this achievement may not compare to the likes of BYD, Tesla, and other leading players, it represents significant progress compared to the data of the past few years. Moreover, this is an achievement that many other joint venture brands can only aspire to.

Currently, the XPeng G9 is priced at around 300,000 RMB. If the manufacturer can manage to bring the price down to around 250,000 RMB, or even lower, it would undoubtedly exert substantial competitive pressure on comparable models like the Zhiji LS7 and Avita 11.

At the same time, this could also be a significant blow to the market for mid-priced joint venture pure electric SUVs. After all, in the same price range, there are hardly any models that surpass the XPeng G9 in terms of intelligent features, space, and performance.

This presents an excellent opportunity for the XPeng G9 to turn around its market reputation.

Could there be more to the XPeng G9?

Considering the latest news, the new G9 might have more than just an improved value proposition.

Not long ago, Rocky Liu Yilin, the Senior Director of XPeng’s Autonomous Driving Products, revealed, “In the coming weeks, there’s still more to come!”

The true identity of this “more” could potentially be the official launch of the Navigation Guided Pilot (NGP) for urban environments.

Currently, many intelligent driving systems heavily rely on high-definition maps. While brands can achieve intelligent driving technology based on this approach, it’s only usable in a limited number of cities. It’s an inevitable trend to move away from high-definition maps in order to enable consumers in more regions to experience intelligent driving technology.

It’s almost certain that the XPeng G9, being a flagship SUV, will be equipped with the Navigation Guided Pilot (NGP) for urban environments. With the introduction of NGP technology, the XPeng G9’s coverage in the field of intelligent driving will expand, helping the brand to progress further. However, whether its scale can surpass that of the Audi Q5 will depend on how much time it takes.