XPeng Says Musk's Tesla's Price Cut Strategy Had No Impact On Its Sales: 'Anticipated Pressure From Competition When Determining Pricing'

Electric vehicle maker XPeng Inc. XPEV shed light on the impact of the price war spurred by Elon Musk‘s Tesla Inc. TSLA in the Chinese market and its collaboration with Volkswagen VWAGY in the company’s second quarter earnings call on Friday.

What Happened: “First of all, the recent price movements of our competitors have not really impacted our sales,” said company President Brian Gu.

It didn’t particularly impact the growth trend of G6 either because the company “anticipated pressure from competition when determining pricing at the onset,” he added. The President was responding to a question on the impact of the price war initiated by Elon Musk‘s Tesla in the Chinese EV market.

The G6 made its market debut at the end of June and has since become a bestseller in the RMB 200,000 to RMB 300,000 price segment, the company said. It is now looking to scale production volume for the G6 and expects deliveries to grow in September. The goal is to deliver more than 10,000 G6 vehicles monthly, company CEO Xiaopeng He said.

XPeng is looking to gain volume and scale in the second half, thereby improving gross margins. It expects gross margin to become positive in the fourth quarter while also achieving strong cashflow to the later half of the year.

Partnership With Volkswagen: XPeng was recently involved in a collaboration with German automaker Volkswagen. The two companies will work on developing EV platforms and are highly compatible in their underlying technological beliefs, the CEO said. The collaboration can further help combine XPeng’s EV technologies with the German automaker’s world-class design, engineering and supply chain capabilities, he added.

When asked about future collaborations, Vice President of Corporate Finance and Investments Charles Zhang said that the company remains open-minded but selective.

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