Xpeng hits speedbump

One of China’s many would-be “Tesla killers”, Alibaba-backed XPeng Motors, has sparked a furious backlash from owners. Its sin? Introducing significantly better new models at slightly higher prices. But that is not all. The models are being rolled out just months after customers who bought previous models had received their pre-ordered cars.

The Guangzhou-based electric car startup recently launched its 2020 G3 model, an electric SUV, in two versions: one with a battery that goes 401km, another that goes 520km. That is a big range advantage over the 2019 model, which has a battery that takes it just 365km. and the higher-end model, with optional fitout extras, turns out to be RMB30,000 cheaper. 

If that were the only reason to complain, existing owners might not be eliciting much sympathy from their fellow netizens. However, the new models are due to be delivered in September. Many existing owners have been waiting months for their pre-ordered cars to arrive, and only finally got them in late May.  If they had waited two more months, in other words, they would have been able to buy the same car with more than 150km extra range at RMB30,000 less.

Angry owners have been asking for compensation. One suggestion is the replacement of batteries to improve the range of their 2019 series cars, or to exchange their old models for new models for free. Some have demanded full refunds, and hundreds parked their cars in a long line outside the company’s Guangzhou headquarters over the weekend, according to local media. 

He Xiaopeng, the 42-year-old founder of Xpeng, responded on his personal social media account by explaining that G3’s existing owners enjoyed many subsidies and it was unfair to simply compare the sales prices of the two models. He did, however, apologize for making car owners feel dissatisfied and conceded to offer a RMB10,000 subsidy if they or their relatives would buy or upgrade to any new Xpeng Motors vehicle within three years. He also stressed that Xpeng cannot just simply replace batteries of old models to extend the range due to safety and legal concerns. 

Xpeng has not been the only EV maker that has beemn in the headlines for the wrong reasons. Its nemesis, Tesla, has taken similar flak lately after cutting prices by up to a quarter in the mainland, shortly after it had increased them to offset the impact of tariffs imposed by Beijing as part of the US-China trade war. 

In late February, the bestselling American electric carmaker announced its cheapest car to date: a US$35,000 version of its Model 3, which previously started at US$42,000. In addition, the company cut the starting prices of eight versions of the Model S and Model X, by US$12,000 to US$18,000 less than before. The dramatic price reduction irked existing consumers, who have taken to Tesla’s official Weibo microblog with vitriol, accusing the company of not caring about them. It even prompted some to protest in front of a Tesla store in Central China’s Changsha city. 

An unnamed executive from the vehicle battery sector fanned the flames further by commenting to local media about the motivation for these carmarkers to keep pushing out newer models. He said the cost of a China-made battery has been dropping by 20% every year while the recharge power has been increasing tremendously. The intense competition among EV makers has resulted in them wanting to capture market share at the expense of existing customers by installing these new features into newer models ASAP. “It is becoming like an endurance test for these carmakers to see who can last until the day the market matures,” he said. 

The incident is yet another hit to Xpeng’s credibility, following long delays in its production and accusations of intellectual property theft leveled against one of its executives, Cao Guangzhi, by Tesla, his former employer. 

Xpeng completed a Primavera Capital-led RMB4 billion funding round last August at a valuation of RMB25 billion, despite the fact that it had not yet delivered a single mass-produced vehicle at the time. The five-year-old startup has raised over RMB10 billion since its inauguration. 

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