XPeng Inc. (XPEV) Earnings Call Transcript & Summary

Welcome to XPENG Motors' press conference for the AI-defined and evolved X9 champion of innovation. Please welcome Mr. He Xiaopeng, the Chairman and CEO of the company, to the stage.

Hi, everyone. I am delighted to attend the annual Beijing Auto Show, which is the highlight of the year. Today, our auto show is hosting a very, very special press conference which is a part of the auto show. We all know that the past 10 years have been called the decade of new energy vehicles, and the new decade of smart cars is approaching. In the past, every auto show released new cars and hardware. However, starting this year, XPENG is introducing new features. Along with hardware, we'll also release new intelligent software, particularly AI-generated or AI-related software. I know that this may seem a bit premature and odd and you might wonder why car shows introduce software for cars. I believe that in the next decade, more and more software will be launched at auto shows, starting with XPENG. Today, I would like to highlight the features of X9, which was recently released, as well as debut the software that began public testing today. X9 has actually won a lot of champions or #1s since its release. In the innovation category, it offers a very interesting feature. If you haven't seen the X9 yet, you should definitely take a look today. It is a completely new category of car that transforms from a 7 seater to a 4 seater. In the past, people who drove a 7 seater mostly drove it with fewer than 4 people. Now it's essential to have the ability to turn it into a comfortable 4-seater car when that's the case. Now another feature that I would like to share with you is a set of numbers. X9: When it comes to pure-electric MPVs or pure electric 3-row cars, including 6 seater or 7 seaters, basically, since X9's release, it's become the sales king. And that means that actually -- well, I would like to share with you a trend that we observed. Hybrid vehicles have grown significantly in the past 2 to 3 years. And more and more car owners have noticed that actually they only need to refill a couple of times a year. And most of the time they spend is in charging the vehicle, and charging has become very troublesome for them. And in the future, we believe that charging will be required more and more. And the convenience of charging will -- received more attention as well. And that's why X9 has been so popular. We also have achieved record-breaking performance with X9 because we were able to achieve a takeover only once every 10,000 kilometers. This is outstanding. And also our vehicle has shown excellent performance in both urban and highway kilometers driving, especially on highways, in terms of its takeover rate. In addition to that, our X9 has a feature of cabin space visibility. No other 7-seater car can fit 5 bicycles. Moreover, if you turn it into a 4 seater, you can also see that it has a maximum interior space of 7.7 square meters. So when we travel, we often just need to carry a lot of things with us such as suitcases, golf equipment and camping gear. And fortunately, X9 has come up with an innovative solution, which is the one-click electric foldable seats. And it's incredibly convenient and you should definitely give it a try. And X9 boasts its impressive maneuverability. Now those of us who have driven big cars, one of the biggest concern was the maneuverability because they typically are very clumsy, but X9 comes with an active rear-wheel steering system. And also it offers a class-leading turning radius of 5.4 meters. I now drive X9 to work every day; and it's very comfortable on all types of roads, whether it be street or alleys. And the car can be driven in both manual and automatic modes. Initially, I was concerned about the car's size and its parking capability, but now I find it very flexible and effortless to park. Also allow me to explain why X9 achieves total security and safety because it is forged using the world's largest mass-produced die casting machine with 12,000 tons of clamping force. It also features the industry's first front- and rear-integrated aluminum die casting body structure. It has an impressive torsional rigidity of 46,000 N·m/deg. This structure satisfy the safety standards of China, the U.S. and Europe for rear collisions. Additionally, X9 is the champion of range achievement rate on the highway among its BEV peers. Now many of my friends who drive MPVs have expressed concern about insufficient driving range on a highway, but with X9, they no longer have to worry. And we have performed a thorough comparison of X9 with our competitors and discover that its highway driving range is actually more than 80% of its nominal range, making it the only vehicle in the industry capable of achieving this high rate. And many of my friends, they're entrepreneurs, acquaintances in Guangzhou and Beijing. Since many of them have purchased X9, they loved it so much that they recommended it to other users. And this is one of the reasons why X9 is so popular today. And also the Net Promoter Score of X9 reached 97. And it, X9, really has gained widespread acclaim for its spaciousness, comfort, smart driving capability and flexibility. And since X9, our hardware and software iteration efficiency has reached new heights. And we invested a considerable amount of effort in this vehicle, and we are confident that we can surpass all previous models. And also, in the future, our new models will also overperform people's expectation. I think X9 also is popular among numerous celebrities. We have -- a lot of celebrities are our product owners; for example, [ Huang Jianxiang, Liu Jianhong ]. These are sports commentators. We also have Olympic champions, and also well-known singers, actors. X9 really are being used in their day-to-day lives. And X9 holds a record of being the MPV with the highest number of celebrity owners in the market. Now X9 also has some very interesting features. For example, one of the most important features for me is the air conditioning. When I sit in many cars, I often turn the air conditioning to the minimum setting. However, even at the lowest speed, I sometimes still catch a cold because the normal wind speed is about 2.5 to 3 meters per second. And XPENG actually can do a lot better than that because X9's AC can allow it to reduce the wind speed by 80% while improving the adaptation speed and also temperature adjustment by 11.4%, resulting in a very, very comfortable and quiet temperature environment. This is very important for the elderly, children and also middle-aged people like us. Also it's worth noting that XPENG's AC hardware cost is about 3x that of ordinary vehicle ACs. We can also see that X9 is the #1 player in innovation, sales volume, smart -- I mean, advanced smart driving, cabin space visibility, maneuverability, safety, driving range, customer satisfaction and also popularity among celebrities, but after mentioning all of these great advantages to X9, I would like to also talk about AI which has helped X9 make further progress. The entire vehicle is now entering a whole new level. Today marks a very, very special day because, in the past, Chinese companies working on autonomous driving mainly relied on rule-based coding for regulation and planning, which means that they used hand coding a lot. For example, when making a right turn, a lot of the rules needed to be adapted. XPENG actually start the public testing, beta tests of our end-to-end large model. And a large amount of videos and actual data are being used to train unlimited rules. This will greatly improve the accuracy of any planning such as turning right or going straight and can greatly reduce the amount of codes. Starting from X9, all the way to the upcoming new models, we plan to upgrade the autonomous driving system of all of these models to the newer end-to-end large model. Today, we're announcing 2 upgraded model at X9. The first is the industry's first mass-produced 2K pure visual occupancy network. And the other is XPlanner, the industry's first neural network-based planning and controlling large model. [Presentation]

Here in this short video, you can actually see that the naked-eye 3D display technology is just as powerful as lidar. And actually, high-definition cameras used in the XPENG models can produce effects that surpass the human eyes in many cases, even in low-sensitivity mode or at night. This would have been unimaginable a few years ago. If we use high-definition cameras and advanced network algorithms, machine perception can be more accurate than human perception in many environments and scenarios. That's why XPENG, as a leading company in autonomous driving, has always been emphasizing the importance of visual perception and observing the world. I mean basically all highways and traffic regulations are designed for human driving, not for machine driving, so a large visual perception model is the most suitable approach for autonomous driving and aligns with human driving and logic around the world. Today, as we mentioned, we are beta testing the first large planning and control model based on neural networks. As you can see, this model has been trained on a significant amount of real-world data collected from human driving, which includes a wide range of factors such as people, vehicles, weather, traffic and environment. Later this year, we're going to utilize the almost largest amount of computing power available in the Chinese auto making industry to conduct substantial training. So starting from May this year, XPENG will enter a new phase of ultrafast software AI upgrades. This means that the largest large model capabilities will be newly trained every 2 months or so with larger data sets and stronger capabilities. XPENG is striving to outdo all of China's competitors in the autonomous driving industry who have previously claimed to lead the way in the new generation of intelligent driving. However, this year, we are set to exceed our own expectations and really enter the next phase of the intelligent driving era. We recently conducted a test of XPENG's autonomous driving technology on the highways in Germany. And we have made significant adjustments over the past 2 years to achieve efficient globalization and localization, something that no other Chinese and global manufacturers have done, so far. The hope is that XPENG's autonomous driving technology will be successful not only in China but also in Europe, Asia and other countries as well. This will allow people to personally experience our driving capabilities while traveling abroad in the coming several years and understand that XPENG offers one of the best smart driving options from China available worldwide. Today also marks the global debut of XOS 5.1.0, the first new operating system to apply AI to smart driving and smart cockpit. Let's watch a video. [Presentation]

Since adopting the large model, we've recently upgraded our voice assistant Xiao P to an AI-powered version called AI Xiao P. We believe that the AI Xiao P is the only thing that's smarter than its predecessor. We partner with [ Tripo AI ], a leading AI model provider, to make this possible. And we equipped this AI Xiao P with a lot of advanced AI capabilities. And we welcome and we invite auto media friends to experience this new AI at our booth later. Today, I would like to also highlight one of its interesting capabilities, the AI Bodyguard feature. With rapid improvements in SR perception capabilities, XPENG and XOS are now equipped to provide you with the best AI assistance possible. The vehicle-sensing range now spans across 1.8 standard football fields; and can identify over 50 targets, including manhole covers and street signs. And the assistant can actually alert the driver of potential risks and provide reminders to help the driver stay safe while driving. Additionally, our AI Bodyguard feature provides a 24/7 sentry mode which automatically records any abnormalities in the surroundings to ensure all risks are noted. We have recently introduced 2 innovative features in the automotive industry as well. Now the first one is AI Valet Driver, an advanced ADAS feature that memorize specific routes after the EV owner manually drives it once. And it can store up to 10 memory routes and cover up to 100 kilometers each. The AI Valet Parking has also been enhanced, enabling the car to park automatically without requiring a driver inside it. Additionally it can also park in very tight spaces with only a 30-centimeter gap between the vehicle body and a nearby car. Now we have chosen May 20 as a particularly good day to conduct a full OTA update for owners of our X9, G9, G6 and P7i vehicles. And from next month onwards, we plan to release new updates for the AI software OTA every quarter. And our goal is to provide a fresh experience for all car owners of XPENG by introducing small new features every month. In addition to X9 and also X9's AI capability along with the new end-to-end large models, I wanted to quickly share a few topics with you as well. XPENG is planning to launch the 800-kilowatt liquid cooling S5 ultrafast charging upgrade in Q3 this year. This upgrade will provide more than 1 kilometers of range in just 1 second. Additionally, we plan to expand our supercharging network to 3,000 charging stations in China by end of the year. This will make XPENG one of the largest companies in China with its own supercharging stations. Also, on the right hand -- on my right-hand side, you can see the electric vertical takeoff and landing flying car, which is also another big topic. 10 years ago, when we first introduced this low-altitude flight technology, nobody believed in it. However, during this year's CES show, we showcased the flying car for the first time and it shocked everybody. In March this year, during the 2 sessions, the government emphasized that low-altitude economy will be a new technology in China's future, particularly in the field of transportation and new energy, with immense development potential. XPENG has long-term plans in this regard. And we firmly believe that low-altitude flying cars will undoubtedly revolutionalize our lives and mobility in the next few years. At the same time, our modular flying car is currently undergoing airworthiness certification, which also is not easy to achieve. Our goal is to begin presales in the fourth quarter this year so that everyone can experience the joy of flying. This is our dream. I have an important update to share with you, our new brand MONA. MONA is a revolutionary and innovative car brand that I believe will usher in a new era of automobiles. Just a decade ago, it was very hard to believe that China would produce cars with AI capabilities; electric vehicles with outstanding performance, beautiful design and low prices. At that time, we couldn't have made it. However, after investing over 5 billion in research and development, I'm confident that MONA will be available soon. MONA means made of new AI. I believe that, in the second half of the year, MONA has the potential to generate better sales than the SU7 made by our excellent Mr. Lei. MONA is a unique and innovative product created by XPENG. Today, I hope to provide a glimpse of MONA's features to you. And further information about MONA will be available in June or later this year. And I kindly request all prospective vehicle buyers to wait for a little bit and witness the arrival of an entirely different brand and model. This concludes our press conference today. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]