One of three U.S.-listed Chinese EV makers, it is relying on innovation to overtake its rivals.
4 min
GUANGZHOU—Once a Tesla Inc. fan who owned four of its vehicles, He Xiaopeng, co-founder of Chinese electric-vehicle startup XPeng Inc., now wants to overtake the car company that originally inspired him.
While acknowledging Tesla as an inspiration, Mr. He said XPeng—one of three Chinese EV companies listed in the U.S.—can win using innovation, an area in which Chinese technology companies have become increasingly formidable.
“We have a saying in China,” Mr. He said in an interview Wednesday at XPeng’s headquarters in the southern city of Guangzhou. “To defeat someone, you need to do something different.”
XPeng, alongside its U.S.-listed peers Li Auto Inc. and Nio Inc., has taken investors on a wild ride over the past eight months.
The company’s August listing on the New York Stock Exchange valued it at US$8 billion. By November its value had jumped to nearly $58 billion. Now it is back down to about US$27 billion. In March, the Shanghai-based research firm Hurun Report said Mr. He was worth US$11 billion.
XPeng unveiled its third production vehicle, the P5 sedan, in Guangzhou on Wednesday. Deliveries of the P5, which is said to have approx. 600km driving range, are due to start this year. The company didn’t announce the car’s price, though it will be lower than the in-production P7 sedan, which starts at roughly $60,000 and is a direct competitor of the made-in-China Tesla Model 3, which costs the equivalent of about $66,900.
XPeng began low-volume exports to Europe in December and plans to enter the U.S. market in the future.
Considered by some analysts as the most tech-centric of China’s EV players, Xpeng deploys a voice-operated user interface in its cars, and an autonomous-driving system for use on stretches of highway with 5G internet coverage.
It recently tested the software by sending a fleet of its cars on a 3540km trip from Guangzhou to Beijing, and logging 0.71 human-operator interventions per 100 km—a new benchmark for self-driving cars, the company claimed. On the roughly 320km Shanghai to Nanjing leg attended by the Journal, the car’s human operator intervened once, swerving when the car failed to notice a bus changing lanes ahead.
XPeng claims its autonomous-driving systems, which have previously used radar and cameras, will be significantly enhanced by the addition of lidar, which uses lasers to scan the vehicle’s surroundings—and which Tesla Chief Executive Officer Elon Musk has dismissed as a waste of money. Xpeng says the new P5 is the first Chinese EV that comes with lidar as standard.
XPeng sold 13,340 vehicles in the first quarter of 2021 and likely needs to sell as many cars every month to break even, said Tu Le, founder of Sino Auto Insights, a consulting firm. Mr. He said in the interview that he was focused on building revenue and growing XPeng’s reputation, rather than on profit.
Tesla sold 69,280 vehicles in China in the January-to-March period, according to the China Passenger Car Association, while Nio sold 20,060 cars.
XPeng is in a strong position as a car company whose main asset is its software, Mr. Le said. “The post-1990s generation in China are all digital natives, and they like Chinese brands,” he said. “What XPeng is doing plays very well with that young Chinese consumer.”
At a moment of rising nationalism in China, homegrown brands have generally been gaining ground on Western ones among local consumers, from clothing to cars.
Mr. He this month announced plans for a third XPeng plant in Wuhan; its second plant, in Guangzhou, is still being built. The three plants will give the company an expected production capacity of 300,000 cars a year.
XPeng last year unveiled a prototype flying car that Mr. He said was far from being a gimmick and potentially key to the company’s future. The company’s growing fleet of EVs is just a starting point for a company with ambitions to define “the future commute,” he said.
Originally a computer programmer, the 43-year-old Mr. He, who comes from the central city of Huangshi, founded UCWeb Inc., a mobile-browser developer, in 2004. He sold the company to Alibaba Group Holding Ltd. a decade later in what was then China’s biggest internet merger, and worked as a senior Alibaba executive until 2017 before leaving to run XPeng, which he had co-founded as an investor in 2014.
The birth of his son in early 2017 jolted Mr. He into starting something new, he said. He settled on EVs despite having no automotive background and, by his own admission, regarding the overheated EV sector as “a crazy business.”
“I wanted my son to think that he had a cool dad,” he said.
Unable to persuade Alibaba to let him develop an EV in-house, Mr. He joined XPeng as full-time chief executive and brought the e-commerce giant on board as an investor. Alibaba owns 12.5% of the company, while Mr. He holds 22.7%. Alibaba didn’t immediately respond to a request for comment.
Mr. He said he only fully realized the difficulty of teaming software engineers with car mechanics when the company produced its first working prototype in late 2017.
The XPeng team was moved to tears when the vehicle rolled out: Engineers wept with joy because the machine worked, while the software developers were heartbroken because to them the unpainted and incomplete test-model “looked like trash,” Mr. He said.
The experience taught Mr. He and his software colleagues that developing a competitive car would be an arduous, years-long process.
Mr. He said his priority was to build XPeng into a global company rather than to outflank Tesla or other competitors, but there is open enmity between Mr. He and the company that once inspired him.
In 2019, Tesla filed a lawsuit against a former employee who had quit Tesla to join XPeng, alleging that he had downloaded its Autopilot source code with a view to handing it over to his new employer. XPeng was never a party to the legal case and said it is “confident we have engaged in no wrongdoing.”
In November, Mr. Musk trashed XPeng’s autonomous-driving system, saying on Twitter that “they have an old version of our software” and alleging that intellectual-property theft “was just an XPeng problem. Other companies in China have not done this.”
Mr. He fired back on Weibo. “It seems XPeng’s next-generation autonomous driving architecture…has made someone in the West feel very upset,” he said.
“Elon Musk is an amazing person and a great entrepreneur, despite some flaws,” Mr. He said in the Wednesday interview. Tesla didn’t respond to a request for comment.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: April 15, 2021.
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Report by the San Francisco Fed shows small increase in premiums for properties further away from the sites of recent fires
3 min
Wildfires in California have grown more frequent and more catastrophic in recent years, and that’s beginning to reflect in home values, according to a report by the San Francisco Fed released Monday.
The effect on home values has grown over time, and does not appear to be offset by access to insurance. However, “being farther from past fires is associated with a boost in home value of about 2% for homes of average value,” the report said.
In the decade between 2010 and 2020, wildfires lashed 715,000 acres per year on average in California, 81% more than the 1990s. At the same time, the fires destroyed more than 10 times as many structures, with over 4,000 per year damaged by fire in the 2010s, compared with 355 in the 1990s, according to data from the United States Department of Agriculture cited by the report.
That was due in part to a number of particularly large and destructive fires in 2017 and 2018, such as the Camp and Tubbs fires, as well the number of homes built in areas vulnerable to wildfires, per the USDA account.
The Camp fire in 2018 was the most damaging in California by a wide margin, destroying over 18,000 structures, though it wasn’t even in the top 20 of the state’s largest fires by acreage. The Mendocino Complex fire earlier that same year was the largest ever at the time, in terms of area, but has since been eclipsed by even larger fires in 2020 and 2021.
As the threat of wildfires becomes more prevalent, the downward effect on home values has increased. The study compared how wildfires impacted home values before and after 2017, and found that in the latter period studied—from 2018 and 2021—homes farther from a recent wildfire earned a premium of roughly $15,000 to $20,000 over similar homes, about $10,000 more than prior to 2017.
The effect was especially pronounced in the mountainous areas around Los Angeles and the Sierra Nevada mountains, since they were closer to where wildfires burned, per the report.
The study also checked whether insurance was enough to offset the hit to values, but found its effect negligible. That was true for both public and private insurance options, even though private options provide broader coverage than the state’s FAIR Plan, which acts as an insurer of last resort and provides coverage for the structure only, not its contents or other types of damages covered by typical homeowners insurance.
“While having insurance can help mitigate some of the costs associated with fire episodes, our results suggest that insurance does little to improve the adverse effects on property values,” the report said.
While wildfires affect homes across the spectrum of values, many luxury homes in California tend to be located in areas particularly vulnerable to the threat of fire.
“From my experience, the high-end homes tend to be up in the hills,” said Ari Weintrub, a real estate agent with Sotheby’s in Los Angeles. “It’s up and removed from down below.”
That puts them in exposed, vegetated areas where brush or forest fires are a hazard, he said.
While the effect of wildfire risk on home values is minimal for now, it could grow over time, the report warns. “This pattern may become stronger in years to come if residential construction continues to expand into areas with higher fire risk and if trends in wildfire severity continue.”
