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BusinessXPeng Founder Responds to Sales Decline and Restructuring

XPeng Founder Responds to Sales Decline and Restructuring

Chinese electric vehicle maker XPeng initiated its largest organizational restructuring to date in October, and its delivery data that month suffered monthly and annual declines. On November 3, He Xiaopeng, Chairman of XPeng, was given the opportunity to respond to consumer concerns in an interview with domestic media in Guangzhou.

XPeng‘s share price closed at $6.60 on November 3, which was more than 90% lower than its highest point two years ago. Regarding its stock, He Xiaopeng said that in the past two years, when he had dinner with his friends, he could still become everyone’s hope, but this year, everyone has suffered from major pressure.

The organizational structure adjustment of XPeng took place one month after the release of its G9 model, so many people think that it is directly related to the dissatisfaction of users caused by the complex configuration sheet of the G9.

He Xiaopeng said he believed that the G9 is an excellent car, but the problem is that the company did not fully communicate with the media and consumers when it was unveiled, blindly settling the price based on the logic of the P7. The G9 and P7 models are different because the market has higher expectations for the G9, with an average selling price of over 300,000 yuan ($41,069).

However, He did not agree that some problems encountered by the G9 have led to this large-scale organizational restructuring. “We actually adjust our structure every year, and this adjustment has been under discussion since the beginning of this year. This year, consulting companies were invited to conduct research. They suggested that this adjustment should be made at the end of the year, but we decided to do it two months ahead of schedule according to changes in the market.”

Two market changes were beyond his expectation – one is the impact of the pandemic on production and sales, and the other is the rising price of raw materials.

“We were not so strong when we had a high sales volume last year, and we are not so bad when we encounter challenges this year,” He Xiaopeng said, emphasizing that XPeng needs to solve these problems this year, or it will only become more difficult. He believes that XPeng will overcome these difficulties in the next three to four months, with increasing sales in November and December, and a peak in January.

In addition, the firm’s rapid expansion in the past two years has brought many problems to XPeng‘s huge organization. Its prospectus in 2020 showed that the firm had only 3,676 employees as of June 30 of that year. According to its Q2 financial report ended June 30, 2022, the number of employees had increased to 13,955, with a CAGR of nearly 100%.

However, XPeng‘s upgrades to management abilities and organizational values has not kept up with its expansion speed. He Xiaopeng’s idea of organizational structure adjustment is to improve efficiency and focus on customers. XPeng has established three product matrix organizations, which are responsible for the entire sales link of the models they cover. Stock keeping units will also be gradually simplified.

XPeng, which has completed an organizational structure adjustment, faces stark competition from Tesla, which has recently cut prices for its vehicles in the Chinese market, as well as from products in the same price range such as the NIO ET5 and NETA S.

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