Tesla price cuts in China push rival Xpeng to cut manufacturing costs: ‘The industry is becoming a lot more competitive’

April 16, 2023, 3:59 PM UTC
Tesla CEO Elon Musk speaks as Chinese Premier Li Keqiang in Beijing on January 9, 2019.
Mark Schiefelbein—AFP/Getty Images

Chinese electric vehicle maker Xpeng Inc. hopes that dramatic cuts to manufacturing costs will propel the eight-year-old company to profitability, co-president Brian Gu told reporters at the Shanghai International Auto Show, which opens to the general public on April 20. 

The Guangzhou-based company plans to shave 25% off the costs of its power train, battery cells included, and save 50% on intelligent driving features by the end of 2024, Gu said. As of now, the two account for more than half of the cost building Xpeng EVs, he added. 

Last year, disappointing sales forced Xpeng to push back its timeline for profitability to 2025. 

But battery materials are getting cheaper, Gu said, generating savings this year and into next. The company is also trying to reduce its use of laser-based radar, chips, sensors and cameras in its automated driving features.

The company is also betting a new design and manufacturing architecture, which it calls SEPA2.0, will help boost efficiency and reduce costs, the company chief executive officer He Xiaopeng said on a launch event on Sunday.

Xpeng will introduce its first model developed on the new platform, a mid-sized sports utility vehicle to rival the Tesla Model Y, when the show opens to the media on April 18. It’s not saying how much it will cost, but Gu said the company will focus on developing core products with a price range of 150,000 yuan ($21,800) to 350,000 yuan. The company may launch another model by the end of this year.

“The industry is becoming a lot more competitive, and there are a lot more models,” Gu said. Not long ago, EV buyers were a smaller, wealthier group, he said, but as that’s changed, it requires “a focus on offering attractive products at an affordable price.” 

price war triggered by U.S. automaker Tesla Inc. in the beginning of the year has put pressure on carmakers in the world’s largest market. Roughly 20% of the passenger cars on the market saw price cuts of more than 10,000 yuan ($1,500) in the first quarter, data compiled by research provider China Auto Market show.

Xpeng said its intelligent driving technology is “a lot better suited for the Chinese market” compared with Tesla’s, Gu said, pointing out that the technology originally developed in the US doesn’t work with high-definition maps and lacks local developing and testing. 

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