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Xiaopeng Motors’ Beta: a short-lived hype or the beginning of a successful brand?

Some say the latest chapter in China’s EV story is a roaring success, some say it is a big disappointment: too many entrants and most are just speculators.

Before September 13, not many have heard of Xiaopeng Motors. 

Different from other EV startups such as Youxia Motors, there was no PPT and no concept showcase at Xiaopeng Motors’ Beta launch event. The Beta was presented in front of audiences as an electric SUV featuring high-tech, intelligent and stylish characteristics. It has powerful acceleration performance and considerable range.

Equipped with multiple intelligent hardware and driving functions, the Beta version is both interesting and distinctive with a rumored price tag of only ¥100,000 ($15,385) after subsidies. It has a range of 300 km and 0-100 km/h acceleration time of 7.9 seconds for the 2WD version and 5.8 seconds for the 4WD version. It comes with a 12.3-inch LCD screen at a resolution ratio of 1,440*540 in the instrument cluster, which is a categorical improvement on conventional dashboard design. It provides outstanding display effect and diverse functions that the user can customize.

The Intelligent Driving in City feature allows the vehicle to follow the car in front autonomously in city traffic driving. It can park itself in a narrow parking spot and owners can also summon the vehicle out of tight parking spaces using keys or the Car Owner APP.

It is equipped with HD cameras for photography and video recording. Suitable position & angle and prompt action are all users need every time they find beautiful scenery on the way. With camera on the car roof, users can photograph, record and share their memories.

The mobile App also has remote control functions for A/C, charging, vehicle conditions, location and navigation and taking and sharing photos. The car is always by your side, in a sense.

 

What’s with the name?  

The brand name Xiaopeng comes from the name one of the founders – He Xiaopeng, who graduated from Tsinghua University with a major in Automobile Engineering. Prior to co-founding Xiaopeng Motors, he served as the supervisor for the New Energy Vehicle Control Section at Guangzhou Automobile Group as well as the UC President of Alibaba Group. He led the control systems R&D for quite a few new energy and smart vehicles, and has lots of experience in international collaboration as a resident engineer in Europe with teammates mainly coming from automakers and internet companies such as GAC, BMW, Lamborghini, BYD, Alibaba, Tencent, Huawei, Sumsung, etc.

“Everyone has inspirations in different stages of their lives. After we have achieved financial freedom, we may make some very different choices. Right now, I want to be healthy. I hope I can still do a lot of things in the future,” said He in a recent media interview, having reached what he says a “certain inner peace” over the last two years. Of course now is not like back in college time with all those big dreams. “But now I know how I’m going to move on. Trying to balance work and family, I am willing to try some different approach to change the world.”

Xiaopeng Motors is his new attempt to change the world. In comparison with the Tesla Model 3, the Beta is positioned in the mid to lower pricing segment of smart electric SUVs, according to He.

 

The company and its development team

Founded in June 2015 in Guangzhou, Xiaopeng Motors is backed by a group of people from tech giants including He, who co-founded the Chinese mobile internet software and service provider UCWeb; Li Xueling, who founded the Chinese video-based social network YY; and Bo Sheng, who founded China’s second largest internet security software provider Cheetah Mobile.

Xiaopeng Motors has raised a combined $42 million in Series A funding as well as $60 million interest-free loans from investors to support its development for the next two years.

As for the usage of the financing, Xia Heng, Xiaopeng Motors’ co-founder and CEO, said that the money will be mainly used for R&D of the car. “First, the auto industry has very large demand for capital, especially Xiaopeng Motors was about to enter into the production preparation stage, so this $100 million is really not too much, followed by internet car currently on the market will be more teams, investors also hope that we made this request to speed up the development speed, as soon as production models land.”

“Our company has been concentrating on making cars silently for two years. As of now, five mule cars have been tested, with testing distance exceeding 50,000 km,” Xia told AllChinatech.

The company declared that it is leading in R&D for the core technology of motors, batteries, electronic control systems and central touchscreen displays in China. Xia emphasized that the company aims to attract a younger generation by using new technology and craftsmanship to make better vehicles in the future.

“We will apply the concept of the sharing economy to our products. Methods of both selling and renting vehicles will be adopted, but the latter will be our main profit source,” said Xia, who also disclosed that production is expected to start by the end of 2017.

 

Business model

Xia said there are three approaches when it comes to building EVs in China at the moment. The first one is Chinese internet company partnering with Chinese automakers to integrate internet technology into their vehicles; the second one is a Chinese internet company cooperating with a European or U.S. car manufacturer; and the last approach is establish a new company by a group of Chinese car manufacturing experts and internet experts.

Xia says Xiaopeng Motors belongs to the third category and he believes the first approach is doomed to fail and the second one is to the advantages of car manufacturing, because the R&D staff are not able to have enough mutual communication during the early phase of R&D and in addition, the cultural differences may lead to a final product with defects. As for the third approach, he said that first-class local talent and internet experts have a better understanding of Chinese culture and know what Chinese consumers want from their cars, and the final products will be best fit for the Chinese market.

They could deliver excellent user experiences beyond the expectations of customers.

“We are determined to serve our customers with extraordinary products. We get our customers involved in the developing process and listen to them carefully to build a car that meet their needs properly,” said Xia.

The vehicle will use a combination of rental business model. According to Xia, Xiaopeng Motors will try out a pre-sale model where fans can participate to vote for exterior design.

In addition, Xia also said Xiaopeng Motors has registered more than 40 patents, among them more than 10 have been approved including the “tri-screen” and a number of lightweighting technologies.

 

How can it compete?

From Fisker to Coda, the auto industry is littered with failed EV startups.

How does a Chinese small EV startup compete with existing giants both at home and abroad? Chances are slim.

China’s EV industry, with 200 plus companies backed by billionaire investors like Jack Ma, Terry Guo and Jia Yueting who have poured in at least $2 billion into building alternative-energy vehicles as China tries to combat the smog choking its big cites. The threshold for permits will be raised by the government and it also plans to phase out subsidies after 2020.

Xiaopeng Motors has set up a very aggressive time line for production toward the end of 2017. The time is tight and the products must also deliver quality to earn consumer trust as it is the key for a new brand. After satisfying the first batch of customers of NEV enthusiasts and investors, the company should also make the business case and make a profit.

There’s few thing harder as building an auto brand. But as the saying goes “No pain no gain.” Let’s see if Xiaopeng Motors can successfully deliver its first vehicles to customers, let alone building them.

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