XPeng, Inc. Q3 FY2024 earnings call

• Deliveries: Delivered 46,533 units in Q3, a 54% QoQ and 16% YoY increase; September deliveries exceeded 20,000 units. - Gross Margin: Gross profit margin reached 15.3% in Q3, the highest in five consecutive quarters. - Product Strategy: Implemented strategic changes in strategies, products, management, and structure; AI investment yielding advantages in product experience and cost efficiency. - Globalization: Accelerating global presence with over 30 countries and 110 sales stores; plans to expand to over 300 stores by 2025. - Upcoming Models: Plan to launch at least four new models in 2025, including extended range products, and update existing models.

XPeng Inc. reported total revenues of RMB10.1 billion for the third quarter of 2024. Revenues from vehicle sales were RMB8.8 billion, accounting for approximately 87.1% of total revenues, and revenues from services and others were RMB1.31 billion, making up about 12.9% of total revenues. The gross margin was 15.3% in the third quarter, with vehicle margin at 8.6%. The gross profit margin increased to 15.3% due to technology-driven cost reduction and scale growth, achieving a five-consecutive-quarter improvement.

• Fourth Quarter 2024: Anticipates total deliveries to range from 87,000 to 91,000 units, a QoQ increase of 87% to 95.6% and YoY increase of 44.6% to 51.3%; total revenue expected to be between RMB15.3 billion and RMB16.2 billion, a QoQ rise of 51.5% to 60.4% and YoY increase of 17.2% to 24.1%; cash flow to improve significantly with positive free cash flow in the second half and cash on hand exceeding RMB40 billion by year-end. - Future Margin: Next-generation models' gross margin expected to reach double-digits, moving toward scale profitability.

• Market Competition: Intense competition in the automotive industry, especially in the AI-defined car sector, where winners will need in-depth full-scale self-development capabilities. - Regulatory and Infrastructure: Potential bottlenecks in overseas markets due to insufficient charging infrastructure and varying regulations. - Supply Chain: Possible impact from component shortages, though current mass production of Turing SOCs is progressing well.

Q: On driving technology gap in the next three to five years, how will it evolve and how XPeng ensures consumers appreciate the difference?

A: He Xiaopeng stated the gap will widen as companies need full self-developed R&D combining software and hardware, and XPeng's end-to-end large model solution and whole vehicle capability will set it apart.

Q: About profitability next year, how to narrow loss and turn to profit?

A: Brian Gu mentioned operating leverage narrowing, P7+ with better margin profile, scale effect, R&D spend control, and new models launching to drive continued margin improvement and breakeven toward end of next year.

Q: Export outlook and potential bottlenecks in overseas markets?

A: Brian Gu said overseas is a robust growth market; potential bottlenecks in some markets due to charging infrastructure, but BEV and EREV products have growth opportunities globally.

Q: Gross margin of vehicles in Q3 and Q4 outlook?

A: James Wu said Q3 margin improvement driven by cost reduction and EOP impact; Q4 margin to improve further with P7+ contributing double-digit gross margin.

Q: Details on 2025 new models and volume outlook?

A: Brian Gu said next year will continue momentum, with four new models including extended range, spread over four quarters, and growth more moderate than 2024 but still positive.