Chinese EV start-up Xpeng seeks European expansion, expects half of sales in 2025 to come from overseas markets
- Europe has welcoming policies and an open market, making it easier for Chinese brands to compete, Brian Gu, Xpeng’s vice-chairman and president, says
- Gu says chip shortage will ease slowly with Chinese alternatives emerging, but supply will not fully return to normal until mid 2023
Chinese smart electric vehicle (EV) start-up Xpeng Motors expects to sell half of its vehicles overseas, even though the country’s technology firms are increasingly concerned about getting caught in the crossfire of rising US-China tensions.
The Guangzhou-based carmaker, which went public in Hong Kong and New York in 2020, has global ambitions and plans to expand further in Europe.
“The competitiveness of Chinese products in Europe will allow us to make it a more important market in the future,” Brian Gu, Xpeng’s vice-chairman and president, told “Integral Conversation”, an event hosted by Hong Kong textile manufacturer Esquel Group in Guilin, in China’s southern Guangxi region, this week.
“If we do it successfully, most of our future sales will come from international markets, maybe half,” he added, without giving a specific timeline for achieving this goal. “Europe has welcoming policies and an open market, making it easier for Chinese brands to enter.”
US-China tensions continue to affect Chinese companies, which have long been reliant on America for chips and key technologies. For instance, Washington imposed fresh restrictions targeting China this week, according to chip designer Nvidia. It has moved to stop the export of two top computing chips for artificial intelligence work to China, which could cripple Chinese firms’ ability to carry out advanced work like image recognition, which is crucial for self-driving technology.
Under the “Made in China 2025” industrial strategy, Beijing wants its top two EV makers to sell 10 per cent of their total cars abroad by 2025. It did not specify which companies.
It does not come as a surprise then that Xpeng is not alone in harbouring global ambitions. But its goals appear to outstrip those of its Chinese peers.
Zhejiang Geely Holding Group, for instance, expects overseas sales to account for 20 per cent of its total tally in 2025. Great Wall Motor hopes 25 per cent of its sales can be generated in markets outside mainland China in the same time frame, while SAIC Motors says it aims to export 1.5 million vehicles in 2025, which could represent about 25 per cent of its total deliveries that year.
In February, Xpeng said it had signed agreements with two European retail companies to sell its cars in Sweden and the Netherlands. It also opened its first self-operated store outside China in Stockholm the same month.
In the US, Xpeng has fewer than 200 employees working on research and development (R&D) of advanced autonomous driving technologies, accounting for only 1 per cent of its overall employees.
“It’s easier to recruit talent in the US if you want to conduct cutting-edge R&D on a large scale,” Gu said. “But in the US, we must take into account the requirements of American supervision … The US has strict export controls, so we must make sufficient preliminary preparations and analysis for each [instance of] research and development.”
Xpeng executives have repeatedly expressed concerns about a chip shortage. He Xiaopeng, Xpeng’s founder and CEO, said in May at the company’s second-quarter financial report meeting that the chip supply chain challenges were taking longer to resolve than imagined.
Gu said he expected the shortage to slowly ease with Chinese alternatives emerging, but supply would not fully return to normal until the middle of next year.
“Because we have chips and a lot of different components coming from international suppliers, we don’t want to be completely detached from the international supply chain,” he said. “Meanwhile, as a Chinese company, we do hope to have a self-sufficient, self-developed and more localised supply chain.”
Author: Yujie Xue, SCMP