XPeng Reports Third Quarter 2021 Unaudited Financial Results

XPeng Inc. (“XPeng” or the “Company”, NYSE: XPEV and HKEX: 9868), a leading Chinese smart electric vehicle (“Smart EV”) company, announced on Tuesday its unaudited financial results for the three months ended September 30, 2021.

XPeng G3; photo credit: XPeng

Operational Highlights for the Three Months Ended September 30, 2021  

• Deliveries of vehicles were 25,666 in the third quarter of 2021, setting a new quarterly record and representing an increase of 199.2% from 8,578 in the corresponding period of 2020 and an increase of 47.5% from 17,398 in the second quarter of 2021.

• Deliveries of the P7 were 19,731 in the third quarter of 2021, reaching a record quarterly high and representing an increase of 71.2% from 11,522 in the second quarter of 2021.

• Among the total P7s delivered in the third quarter of 2021, 99% can support XPILOT 2.5 or XPILOT 3.0.

• XPeng’s physical sales network consisted of a total of 271 stores, covering 95 cities as of September 30, 2021.

• XPeng-branded super charging stations expanded to 439, covering 121 cities as of September 30, 2021.

Financial Highlights for the Three Months Ended September 30, 2021  

• Total revenues were RMB5,719.9 million (US$887.7 million) for the third quarter of 2021, representing an increase of 187.4% from the same period of 2020, and an increase of 52.1% from the second quarter of 2021.

• Revenues from vehicle sales were RMB5,460.1 million (US$847.4 million)for the third quarter of 2021, representing an increase of 187.7% from the same period of 2020, and an increase of 52.3% from the second quarter of 2021.

• Gross margin was 14.4% for the third quarter of 2021, compared with 4.6% for the same period of 2020 and 11.9% for the second quarter of 2021.

• Vehicle margin, which is gross profit of vehicle sales as a percentage of revenues from vehicle sales, was 13.6% for the third quarter of 2021, compared with 3.2% for the same period of 2020 and 11.0% for the second quarter of 2021.

• Net loss was RMB1,594.8 million (US$247.5 million) for the third quarter of 2021, compared with RMB1,148.8 million for the same period of 2020 and RMB1,194.6 million for the second quarter of 2021. Excluding share-based compensation expenses and fair value change on derivative liabilities related to the redemption right of preferred shares, non-GAAP net loss was RMB1,492.1 million (US$231.6 million) in the third quarter of 2021, compared with RMB864.9 million for the same period of 2020 and RMB1,096.4 million for the second quarter of 2021.

• Net loss attributable to ordinary shareholders of XPeng was RMB1,594.8 million (US$247.5 million) for the third quarter of 2021, compared with RMB2,025.8 million for the same period of 2020 and RMB1,194.6 million in the second quarter of 2021. Excluding share-based compensation expenses, fair value change on derivative liabilities related to the redemption right of preferred shares and accretion on preferred shares to redemption value, non-GAAP net loss attributable to ordinary shareholders of XPeng was RMB1,492.1 million (US$231.6 million) for the third quarter of 2021, compared with RMB864.9 million for the same period of 2020 and RMB1,096.4 million for the second quarter of 2021.

• Basic and diluted net loss per American depositary share (ADS) were both RMB1.89(US$0.29) for the third quarter of 2021. Non-GAAP basic and diluted net loss per ADS were both RMB1.77 (US$0.27) for the third quarter of 2021. Each ADS represents two Class A ordinary shares.

• Cash and cash equivalents, restricted cash, short-term deposits, short-term investments and long-term deposits were RMB45,357.9 million (US$7,039.4 million)as of September 30, 2021, compared with RMB35,342.1 million as of December 31, 2020 and RMB32,871.2 million as of June 30, 2021.

Mr. He Xiaopeng, Chairman and CEO of XPeng, said, “In the third quarter, we continued record-setting growth with the highest vehicle deliveries among China’s startup new energy vehicle automakers. This outperformance testifies to the market’s recognition of the differentiated value our vertically integrated in-house developed software and hardware bring to our vehicles.”

Mr. He added, “We are committed to advancing the clear roadmap for our full-stack in-house technology and making high-performance smart products accessible to a broader customer base. Our leading technology is further showcased in the upcoming Navigation Guided Pilot (“NGP”) that expands usage to complex city driving scenarios. The solid progress we’ve made in the NGP fuels greater confidence in our ability to explore autonomous driving enabled mobility solutions in the future, such as robotaxi technologies.”

“Looking forward, XPeng will continue to trailblaze new and disruptive advancements that redefine China’s automobile industry, transforming future mobility with technology,” Mr. He concluded.

“We achieved strong growth momentum in the third quarter despite the challenges of semiconductor shortage. Our third quarter delivery number approximated 2020’s full-year delivery total and our year-to-date deliveries more than doubled last year’s full-year delivery count,” said Dr. Hongdi Brian Gu, Honorary Vice Chairman and President of XPeng. “Our record-high deliveries drove significant revenue growth of 187.4% year-over-year in the third quarter with further gross margin expansion. We believe our innovative mindset, outstanding full-stack R&D capabilities and a powerful pipeline of products will continue to drive our future success.”

Recent Developments  

Deliveries in October 2021

Total Smart EV deliveries of XPeng reached 10,138 in October 2021, representing a 233% increase year-over-year. The October deliveries consisted of 6,044 P7 smart sports sedans and 3,657 G3 and G3i smart SUVs. The P5, XPeng’s smart family sedan that was officially launched in September 2021, demonstrated strong market appeal with 437 units delivered in October and a solid order backlog. As of October 31, 2021, year-to-date total vehicle deliveries reached 66,542, representing a 289% increase year-over-year. The Company’s cumulative deliveries exceeded 100,000 as at the end of October 2021, reflecting its robust business momentum and customer recognition.

ESG Performance

XPeng released its inaugural Environment Social and Governance Report (https://ir.xiaopeng.com/ESG/default.aspx) on October 15, 2021. XPeng received an “AA” rating from MSCI ESG Research, the highest MSCI ESG rating among automobile companies worldwide in 2021 for the second consecutive year.

XPeng Tech Day 2021: Technology Unveiled

On October 24, 2021, XPeng hosted its third annual 1024 Tech Day event where it unveiled a series of breakthrough innovations, including a mass-production 800V high-voltage SiC platform and lightweight 480kW high-voltage supercharging piles.

Additionally, the Company showcased its XPILOT 3.5 driver assistance system featuring industry-leading capabilities for urban driving scenarios.

The new Smart EV model and 2021 Guangzhou International Automobile Exhibition (“Auto Guangzhou”)

On November 19, 2021, XPeng launched its fourth Smart EV model, the G9, at Auto Guangzhou. The G9 will be the first mass-produced Smart EV that supports XPILOT 4.0. Meanwhile, the G9 will be equipped with an 800V high-voltage SiC platform and XPeng’s new proprietary X-EEA 3.0 electronic and electrical architecture that adopts domain controllers, deeply integrating hardware, software and communications architecture to achieve powerful performance and high flexibility in OTA upgrades.

Flying Vehicle Announces Series A Funding

On October 19, 2021, XPeng’s urban air mobility affiliate, HT Aero, announced that it entered into a definitive agreement with a consortium of investors to raise over US$500 million for its Series A funding, which marked the largest single-tranche fundraising to date in Asia’s low-altitude flying vehicle sector.

Unaudited Financial Results for the Three Months Ended September 30, 2021  

Total revenues were RMB5,719.9 million (US$887.7 million) for the third quarter of 2021, representing an increase of 187.4% from RMB1,990.1 million for the same period of 2020 and an increase of 52.1% from RMB3,761.3 million for the second quarter of 2021.

Revenues from vehicle sales were RMB5,460.1 million (US$847.4 million) for the third quarter of 2021, representing an increase of 187.7% from RMB1,898.0 million for the same period of 2020 and an increase of 52.3% from RMB3,584.4 million for the second quarter of 2021. The year-over-year and the quarter-over-quarter increases were mainly attributable to higher vehicle deliveries, especially of the P7, as a result of channel expansion and brand value improvement.

Revenues from services and others were RMB259.9 million (US$40.3 million) for the third quarter of 2021, representing an increase of 182.2% from RMB92.1 million for the same period of 2020 and an increase of 46.9% from RMB176.9 million for the second quarter of 2021. The year-over-year and the quarter-over-quarter increases were mainly attributed to more income from service, parts and accessory sales in line with higher accumulated vehicle sales.

Cost of sales was RMB4,899.1 million (US$760.3 million) for the third quarter of 2021, representing an increase of 158.0% from RMB1,898.6 million for the same period of 2020 and an increase of 47.9% from RMB3,312.7 million for the second quarter of 2021. The year-over-year and the quarter-over-quarter increases were mainly due to the increase of vehicle deliveries as described above.

Gross margin was 14.4% for the third quarter of 2021, compared with 4.6% and 11.9% for the third quarter of 2020 and the second quarter of 2021, respectively.

Vehicle margin was 13.6% for the third quarter of 2021, compared with 3.2% for the same period of 2020 and 11.0% for the second quarter of 2021. The improvement was primarily attributable to better product mix and manufacturing efficiency driven by economies of scale.

Research and development expenses were RMB1,264.2 million (US$196.2 million) for the third quarter of 2021, representing an increase of 99.0% from RMB635.4 million for the same period of 2020 and an increase of 46.4% from RMB863.5 million for the second quarter of 2021. The year-over-year and the quarter-over-quarter increases were mainly due to (i) the increase in employee compensation as a result of expanded research and development staff, and (ii) higher expenses relating to the development of our new models, namely the G9 and the P5, and related software technologies to support future growth.

Selling, general and administrative expenses were RMB1,538.4 million (US$238.8 million) for the third quarter of 2021, representing an increase of 27.8% from RMB1,203.8 million for the same period of 2020 and an increase of 49.3% from RMB1,030.8 million for the second quarter of 2021. The year-over-year and the quarter-over-quarter increases were mainly due to (i) higher marketing, promotional and advertising expenses to support vehicle sales, and (ii) the expansion of our sales network and associated personnel cost, and commission for franchised store sales.

Other income was RMB179.2 million (US$27.8 million) for the third quarter of 2021. The Company received higher government subsidies of approximately RMB312.1 million, offset partially by relocation and disposal cost of approximately RMB132.9 million related to Haima Plant.

Loss from operations was RMB1,802.6 million (US$279.8 million) for the third quarter of 2021, compared with RMB1,744.2 million for the same period of 2020 and RMB1,443.2 million for the second quarter of 2021. The higher year-over-year and quarter-over-quarter losses were mainly attributable to higher operating expenses as described above.

Non-GAAP loss from operations, which excludes share-based compensation expenses, was RMB1,700.0 million (US$263.8 million) for the third quarter of 2021, compared with RMB822.6 million for the same period of 2020 and RMB1,345.0 million for the second quarter of 2021.

Net loss was RMB1,594.8 million (US$247.5 million) for the third quarter of 2021, compared with RMB1,148.8 million for the same period of 2020 and RMB1,194.6 million for the second quarter of 2021.

Non-GAAP net loss, which excludes share-based compensation expenses and fair value change on derivative liabilities related to the redemption right of preferred shares, was RMB1,492.1 million (US$231.6 million) for the third quarter of 2021, compared with RMB864.9 million for the same period of 2020 and RMB1,096.4 million for the second quarter of 2021.

Net loss attributable to ordinary shareholders of XPeng was RMB1,594.8 million (US$247.5 million) for the third quarter of 2021, compared with RMB2,025.8 million for the same period of 2020 and RMB1,194.6 million for the second quarter of 2021.

Non-GAAP net loss attributable to ordinary shareholders of XPeng, which excludes share-based compensation expenses, fair value change on derivative liabilities related to the redemption right of preferred shares and accretion on preferred shares to redemption value, was RMB1,492.1 million (US$231.6 million) for the third quarter of 2021, compared with RMB864.9 million for the same period of 2020 and RMB1,096.4 million for the second quarter of 2021.

Basic and diluted net loss per ADS were both RMB1.89 (US$0.29) for the third quarter of 2021, compared with RMB5.07 for the third quarter of 2020 and RMB1.50 for the second quarter of 2021.

Non-GAAP basic and diluted net loss per ADS were both RMB1.77 (US$0.27) for the third quarter of 2021, compared with RMB2.16 for the third quarter of 2020 and RMB1.38 for the second quarter of 2021.

Balance Sheets  

As of September 30, 2021, the Company had cash and cash equivalents, restricted cash, short-term deposits, short-term investments and long-term deposits of RMB45,357.9 million (US$7,039.4 million), compared with RMB35,342.1 million as of December 31, 2020 and RMB32,871.2 million as of June 30, 2021.

Business Outlook  

For the fourth quarter of 2021, the Company expects:

• Deliveries of vehicles to be between 34,500 and 36,500, representing a year-over-year increase of approximately 166.1% to 181.5%.

• Total revenues to be between RMB7.1 billion and RMB7.5 billion, representing a year-over-year increase of approximately 149.0% to 163.0%.

The above outlook is based on the current market conditions and reflects the Company’s preliminary estimates of market and operating conditions, and customer demand, which are all subject to change.