Xpeng Motors IPO with a market value of $15 billion, its share price rose 41% on the first day.

Original Sharla Cheung titanium media

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Do you think the market value of Xpeng Motors will be super ideal?

Sharla Cheung, editor of Titanium Media

Following Weilai and Ideality, Xpeng Motors, a new car-making enterprise in China, also successfully listed in the US stock market.

On the evening of August 27th, Beijing time, Xpeng Motors was officially listed on the NYSE, with the stock code "XPEV". The opening price was $23.1 /ADS, up 56% from the issue price. At the close, Xpeng Motors’s share price closed at $21.22, up 41.47% from the issue price, with a total market value of $15.59 billion.

The issue price is superb and ideal.

The IPO price of Xpeng Motors was $15 /ADS, and a total of 99.73 million American Depositary Shares (ADSs) were issued, with a pre-market value of $11.021 billion.

It is worth noting that Xpeng Motors originally planned to issue 85 million shares of ADS, and the corresponding financing scale was US$ 1.28 billion. However, due to the higher-than-expected market demand, the issuance scale was increased to about 99.73 million shares, which means that the total amount of funds raised by Xpeng Motors this time is about US$ 1.5 billion.

At the end of last month, the issue price of LI, which landed on Nasdaq, was $11.5 per share, and the total amount of funds raised was $1.1 billion. On the day of listing, the pre-market value was $9.724 billion. Weilai listed in the US in 2018 at an issue price of US$ 6.26 per share, raising a total of US$ 1 billion, and its pre-market value on the day of listing was US$ 6.4 billion.

Comparatively speaking, Xpeng Motors’s listing price, pre-market value and fund-raising scale all exceed Weilaihe’s ideal of listing in the United States. This means that the head enterprises, a new force in car manufacturing, are still valued by the capital market, and the pure electric mid-to high-end market has been cultivated and matured by Tesla model3 and Weilai ES6. Compared with Weilai’s listing in that year, Tucki and Ideality are just in time to go public.

According to the prospectus, Xpeng Motors has completed 10 rounds of financing since its establishment. The latest financing was the C+ and C++ rounds in July and August this year, which raised 900 million US dollars. The investors included Alibaba, Aspex, Coatue, Gaoyou Capital and Sequoia China, and the post-investment valuation was 8 billion US dollars. In November last year, Xpeng Motors raised $400 million in Series C and introduced the strategic investment Xiaomi Group. By the end of the second quarter of 2020, Xpeng Motors had cash assets of 2.12 billion RMB, and its cash reserves were better than those of Weilai Automobile and LI before IPO.

At present, there are Internet giants behind the three new car-making companies, which have formed a pattern of "Weilai+Tencent, Ideality+Meituan, Tucki+Ali".

By August 28th, Weilai’s market value had reached US$ 23.5 billion, and its ideal market value was US$ 16.2 billion. From the market value, Xpeng Motors was closer to the ideal, and even exceeded the ideal on the first day of listing, but there was still a certain gap between them.

The strength of the three companies should not be underestimated, but from the product point of view alone, Xpeng Motors currently has two models G3 and P7 on sale, and plans to launch the third pure electric car before the end of next year; Weilai has three products, ideally only ONE Li ONE, and no new models will be launched within three years.

In addition, Tucki and Weilai take the route of pure electric technology, and the ideal is extended-range hybrid, and pure electric products will be launched later, but compared with Xiaopeng and Weilai, the ideal is a big step behind in pure electric.

The net loss in the first half of the year was 775 million.

Like Weilai and Ideality, Tucki has been in a state of loss.

According to the prospectus, in 2018, Xpeng Motors’s revenue was 9.7 million yuan and its net loss was 1.399 billion yuan; In 2019, it achieved a revenue of 2.321 billion yuan and a net loss of 3.692 billion yuan; In the first half of this year, Xpeng Motors’s revenue was 1.003 billion yuan, down 18.52% year-on-year (1.231 billion yuan in the first half of 2019), with a gross profit of-36.116 million yuan and a net loss of 796 million yuan. The gross profit margin narrowed sharply to-3.6% year-on-year (-38.23% in the same period of 2019).

In this regard, Xpeng Motors explained in the prospectus that the reason why the company experienced a year-on-year decline in revenue in the first half of the year was mainly due to the fact that most of the orders delivered in the first quarter of 2019 were accumulated in 2018, resulting in high revenue in the quarter; At the same time, due to the impact of the COVID-19 epidemic in the first quarter of this year, the speed of vehicle delivery decreased, which affected the income in the first half of this year.

It is worth noting that as of July 31st, Tucki G3 has delivered 18,741 vehicles, and Tucki P7, which started delivery in May this year, has delivered 1,966 vehicles, with a cumulative delivery volume of 20,707 vehicles.

From January to July this year, Xpeng Motors delivered 7,950 vehicles, Weilai delivered 17,702 vehicles and LI delivered 12,182 vehicles. Tesla Model 3 delivered 11,014 vehicles in July alone, ranking first in the sales of new energy vehicles in China.

As a car company whose main source of income is car sales, the decline in sales directly affects its income. With the current sales performance in Xpeng Motors, after IPO, it will face greater sales pressure.

Xpeng Motors predicted that the cost of batteries would drop significantly in the next 2-3 years. At the same time, by expanding vehicle types and production scale, sharing multi-platform effect, supplier collaboration, etc., we can also reduce costs and increase efficiency.

Although it continues to lose money, Xpeng Motors continues to invest in R&D. In 2018, 2019 and the first half of 2020, Xpeng Motors’s R&D expenditure reached 1.051 billion yuan, 2.07 billion yuan and 630 million yuan respectively, accounting for 89.2% and 62.9% of the total revenue in 2019 and the first half of 2020. Up to now, the accumulated R&D investment is 3.752 billion yuan, cumulatively.

Emphasize self-research ability

Xpeng Motors said that the proceeds from this IPO will be used for R&D and expansion of sales channels, and the remaining funds will be used for general corporate purposes.

In the prospectus, Xpeng Motors said that it has designed and developed its own software, core hardware and data technology, and it is the first new force car enterprise in China to independently develop and commercialize autopilot software (hardware is based on Xavier of NVIDIA, which supports L3 autopilot).

Xpeng Motors repeatedly emphasized self-research in the prospectus, including autonomous driving, intelligent operating system, internal powertrain and electronic and electrical architecture, and disclosed his own proprietary algorithms, including localization and high-precision map fusion; Camera-based perception and multi-sensor fusion; Behavior planning, motion planning and control.

In order to further prove its self-research ability, Xpeng Motors also disclosed a lot of key information, such as the use of ADAS: the adaptive cruise control function has accumulated 25.1 million kilometers of driving, and the lane centering control function has accumulated 11.1 million kilometers of driving.

Tucki also revealed some functions that the latest XPilot 3.0 will realize, and plans to launch the "navigation guided pilot" which can be used on expressways early next year, namely NGP, which can realize the functions of automatically changing lanes, overtaking other vehicles, recognizing traffic signs and adjusting speed.

In addition to software, Xpeng Motors has also achieved autonomy at the core hardware level. In the most critical three-electric system of electric vehicles, except for battery core procurement, battery management system (BMS) and battery pack are all independently developed by Xpeng Motors. And has completed the dual product line layout of SUV and car, becoming the only smart car company in China that has mastered the whole industry from design, research and development to manufacturing.

Risks after IPO

Although in terms of software, the new domestic car-making forces have certain competitive advantages. But compared with Tesla, there is still a certain gap. As to whether Xpeng Motors’s share price is inflated, an insider told the titanium media, "Let the bullets fly for a while. As a bulk product, automobiles ultimately depend on product strength. If the sales volume can continue to grow, the capital market will continue to be optimistic. If it is a bubble, it will burst sooner or later. "

Listing is a double-edged sword, with advantages and disadvantages. Building a car is a process of heavy assets and long-term investment, and it is difficult to make a profit in the short term. For the new forces of building a car, listing is not only a manifestation of fulfilling their promises to investors, but also a way to attract other capital. At the same time, talents will also flow to the head enterprises in large numbers, thus ensuring that there is enough "ammunition" to go forward and fight.

At the current time node, the market prospect of new energy vehicles has been clearly visible. Behind the new forces competing to go public, they are more looking for opportunities to survive. Xpeng Motors’s choice of IPO is also a key step.

However, listing will also bring risks, and some of its own problems will be exposed in the capital market without any cover. For Xpeng Motors, a large amount of R&D investment will follow, and if the sales volume cannot be greatly increased, the loss will be enlarged.

Coupled with the limited number of models on the market and the charging services such as software ordering, there is also great uncertainty whether it can meet the expectations of users.

In addition, some core technologies, such as batteries and semiconductors, are dependent on suppliers, and the charging service is mainly dependent on third-party cooperation, with risks such as cooperation renewal and quality control, and the new Zhaoqing factory has operational risks, which will bring many uncertainties to the subsequent development of Xpeng Motors.

For Xpeng Motors, listing in the United States is just the beginning, and there will be many challenges in the future. How to continuously improve the product strength and become a real breaker in the new energy vehicle market is the key.

(This article is the first titanium media, author/Sharla Cheung)

Original title: "Xpeng Motors IPO with a market value of $15 billion, and its share price rose by 41% on the first day"

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