XPeng Inc. (NYSE:XPEV) Q1 2021 Earnings Conference Call May 13, 2021 8:00 AM ET Company Participants Charles Zhang - Managing Director, Strategy Xiaopeng He - Co-Founder, Chairman & Chief Executive Officer Dennis Lu - Vice President, Finance Brian Gu - Vice Chairman & President Conference Call Participants Jeff Chung - Citi Edison Yu - Deutsche Bank Tim Hsiao - Morgan Stanley Nick Lai - JPMorgan Chase Bin Wang - Crédit Suisse Ming Lee - Bank of America Operator Hello ladies and gentlemen. Thank you for stan ...

Financial Data and Key Metrics Changes - In Q4 2020, XPeng achieved total revenues of RMB2.9 billion, a 345% increase year-over-year from RMB640 million, and a 43% increase from RMB2 billion in Q3 2020 [19] - Vehicle sales revenue for Q4 was RMB2.7 billion, up 376% year-over-year from RMB575 million, and up 44% from RMB1.9 billion in Q3 2020 [19] - Gross margin for Q4 was 7.4%, compared to a negative 6.6% in Q4 2019 and 4.6% in Q3 2020 [20] - Net loss for Q4 was RMB787 million, an improvement from RMB1 billion in the same period a year ago and RMB1.1 billion in Q3 2020 [23] Business Line Data and Key Metrics Changes - Vehicle deliveries reached 12,964 units in Q4 2020, a 303% increase year-over-year and a 51% increase quarter-over-quarter [6] - Total vehicle deliveries for 2020 were 27,041 units, a 112% increase year-over-year [6] Market Data and Key Metrics Changes - As of December 31, 2020, XPeng had 160 sales stores and 54 service centers across 69 cities in China, with plans to increase to approximately 300 stores covering 110 cities by the end of 2021 [13] - The number of XPeng-branded supercharging stations was 159, covering 54 cities, with plans to expand to over 500 by the end of 2021 [14] Company Strategy and Development Direction - XPeng aims to diversify its product portfolio and expand market share while investing in Smart EV technologies and leading innovation [11] - The company plans to launch multiple OTA updates for XPILOT 2.0 in 2021, enhancing safety and functionality [9] - XPeng is committed to increasing R&D spending significantly to support advancements in autonomous driving technology [52] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that battery supply will remain a critical issue for all OEMs in the coming months, particularly for new models [31] - The company expects to see healthy growth in deliveries in Q2 2021, despite challenges in component supply [35] - Management expressed confidence in overcoming supply issues and achieving production targets in the second half of 2021 [31][35] Other Important Information - XPeng's cash and cash equivalents totaled RMB35.3 billion at the end of 2020, compared to RMB2.8 billion at the end of 2019 [25] - The company plans to introduce a new mass-produced Smart EV model equipped with LIDAR in the second half of 2021 [10] Q&A Session Summary Question: Guidance on pricing erosion in Q1 - Management explained that the expected 5% sequential pricing erosion is due to seasonal factors and volume mix impacts, despite including XPILOT 3.0 revenue [28][29] Question: Impact of component supply tightness - Management acknowledged challenges in battery supply for Q2 but expressed confidence in resolving these issues by Q3 and Q4 [30][31] Question: Sales run rate and semiconductor shortage - Management refrained from providing long-term guidance but indicated healthy growth expectations due to new product introductions [34][35] Question: Sales mix between LFP and LCM powered BEVs - Management noted that LFP battery versions are gaining traction, with expectations for increased orders and improved margins [40][43] Question: R&D headcount and spending - Management plans to double the R&D team by the end of the year and significantly increase R&D spending [59][62] Question: Monetization of autonomous driving - Management stated there are no plans to narrow the price gap between XPILOT versions, focusing instead on advancing technology and monetization opportunities [60][62]