XPeng Inc. (NYSE:XPEV) Q3 2022 Earnings Call Transcript

Nick Lai: My second question is really about autonomous driving XNGP solution. And can you give a little bit more how are we different from the other solutions in terms of LI and Audi and so on? And also management mentioned that we are looking for potential opportunity to work with other potential partners at NGP product, and can we explain a bit more on that as well? Thank you.

He Xiaopeng: First of all, allow me to address the first part of your question. From our own user experience, there are four key components to the adoption of ADAS technology nowadays. The first one is scenario coverage or scenario support. Now, from our data, we noticed that highway and parking only took up about 10% of people’s daily use in terms of the scenario, and 90% of people’s use of ADAS technology is actually on city roads. And the second component to the adoption of ADAS is the cost, how much people are willing to pay for the advanced technology. And we actually are confident that in the future, the cost of affording our XNGP or related ADAS software will be able to be reduced to 20% to 30% of their current cost. And the third component is safety, and the fourth component is the true value that you are able to contribute to your customers.

Now for XNGP, where we are able to roll out our city-based scenario or function, we are actually expanding the scenario coverage by over 9x because 90% of the usage happens on city roads compared to only 10% happen on highways and parking scenarios. Now, in the past, without our XNGP, people mainly rely on, for example, high definition maps or laser-related €“ laser-based technology, etcetera, those pose a lot of challenges, especially in areas where you don’t have high definition mapping available and that caused a sharp difference €“ that actually produce a sharp difference in terms of user experience and in terms of the safety as well. And we don’t think that, that is our final target. That’s why we launched XNGP, that allows very consistent performance even in areas where we don’t have high-definition mapping or high-definition maps available.

And that actually is the reason why we are so excited that with the rollout of our city road based or city scenario-based XNGP, we will be able to support a true €“ a full scenario functionality in a true sense, and we will be able to provide a very consistent experience when people are switching the use of such functionality from areas with high definition maps and without high-definition maps. And that will allow our customers to have a very easy and safe and efficient driving experience just like when you are a passenger in a car driven by an experienced driver and that kind of seamless integration is our goal here, and that is why we are very confident with the rollout of our XNGP to achieve higher customer satisfaction. Thank you.

Brian Gu: Yes. And Nick, to answer your second question regarding the openness in terms of collaboration and cooperation, I think it’s all generated from the recognition that we have spent a lot of effort and resources to develop market-leading technologies. And we think actually, in addition to increase our sales, I think there is tremendous value embedded in these technologies that can be monetized in other ways potentially. We also saw tremendous interest in such technologies. We have leading technology in smart driving autonomy, in smart cockpit, in electrification and then in high-voltage platform, and etcetera. So, I think these technologies, I think could become valuable if we actually have ability to make it more scalable and also using €“ leveraging potential partners’ resources to quickly penetrate scenarios or markets that we currently doesn’t focus on.

So, with that, I think our openness, I think that we are evaluating a number of potential opportunities to hopefully help us to make these technology reach more scale, at the same time without compromising our focus on producing sort of attractive and competitive products ourselves. So, this is an attitude. Obviously, if there is more specific progresses I am happy to update when it’s available.

Operator: Thank you. We have next question from the line of Bin Wang with Credit Suisse. Please go ahead.

Bin Wang: Hi. My first question is about auto backlog, basically two parts. Number one, what’s the new order flow for China in November? Second, what’s the accumulate order backlog for G9, because COVID has impact and your delivery should be more than 10,000 order backlog already secured? Thank you.