Realization of the XPILOT software will be a sustained source of revenue and profit for XPeng Motors in addition to vehicle sales, Northeast Securities said in a report released Tuesday.
XPeng’s first-quarter earnings report recognized revenue from its self-driving software, XPILOT, for the first time. While the revenue is a small percentage of overall revenue, it reflects XPeng’s industry-leading position in self-driving software subscriptions and shows new room for profitable growth, the team said.
In the era of software-defined cars, relying on software fees is gradually becoming a trend recognized by car companies, and software can open up more potential gross profit imagination for new energy car companies, according to the report.
XPeng is the first automaker to achieve full-stack in-house developed self-driving software that charges separately, and the first Chinese new energy automaker to confirm software revenue, the team noted.
Full-stack in-house developed capability means mastering the core capabilities of each segment including vision perception, sensor fusion, decision making, planning and control.
In the field of autonomous driving, after Tesla, XPeng is the second in-house developed car company in the world, and the first in China based on an open computing platform, which also means it can dominate the R&D pace of perception, decision-making, planning and control, the team said.
XPeng’s software is more suitable for Chinese road conditions compared to its competitors, mainly in terms of technical route, algorithm style and Chinese road characteristics, according to the team.
In terms of technical principles, Tesla uses a pure vision solution, while XPeng and NIO choose high precision maps. In terms of Chinese road characteristics, Tesla tends to be uncomfortable with the local environment, while XPeng is more integrated into the local situation, the team said.
In terms of algorithmic style, Tesla’s decisions are more aggressive, NIO’s are more conservative, and XPeng is somewhere in between, ensuring safety and speed at the same time, the team said.
The team expected XPeng’s net income from 2021-2023 to be RMB -3.183 billion (-$490 million), RMB -2.115 billion and RMB -1.318 billion, respectively, with EPS of RMB -1.87, RMB -1.24 and RMB -0.77, respectively.
The team gave XPeng a “Buy” rating, but did not specify a price target.