XPeng: How the Chinese VW partner wants to conquer German roads

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Wings for Europe

: XPeng's P7 electric sports car in September 2023 at the IAA in Munich

Photo: Manfred Segerer / IMAGO

A sleek limousine and a massive SUV appear to float on a carpet of water, a few meters further on a bright green gullwing and a passenger drone are supposed to impress. XPeng loaded in a suburb of Frankfurt am Main; Attack is the order of the day instead of understatement.

“We are down-to-earth,” counters

Markus Schrick

(63). He has already represented Toyota and Hyundai in Germany and worked for Audi in China. Schrick is familiar with Asian car manufacturers. Now he should lead XPeng to success; and the Chinese are acting more aggressively than his previous clients from Japan and South Korea. The cars he brings with him come with all sorts of high-end technology. The P7 sedan and the G9 SUV promise a range of up to 576 kilometers and should be able to recharge their batteries from 20 to 80 percent at fast charging stations within 25 minutes. In this combination, these are exceptional values.

The prices are also set confidently: the P7 starts at 49,600 euros, the G9 at 57,600 euros, and for Schrick that doesn't make the task any easier. Other German bosses have failed in recent months due to high prices and exaggerated expectations from China.

Lars Pauly

(BYD; 54) and

Ralph Kranz

(Nio; 51) only lasted twelve and 19 months respectively. Will culture shock soon hit Schrick too?

The sales professional must balance a dual expectation. There is fear in Europe of the encroaching car tsunami from China. The Transport & Environment Institute has just forecast that a quarter of the electric cars sold in Europe in 2024 will be produced in China - and 11 percent will also come from Chinese manufacturers. By 2027, the Chinese attackers are expected to reach 20 percent. The European Union is therefore considering increasing import tariffs.

How freely can Schrick decide?

The sales pressure from China is also massive. “So far, the collaboration with the headquarters in Guangzhou has been going really well,” says Schrick after six months at XPeng. The bosses gave him and his colleagues a lot of freedom.

But XPeng is doomed to grow. The Chinese newcomer, which was only founded in 2014, sold around 142,000 cars worldwide in 2023, an increase of a good 17 percent. But as the sales figures increased, so did the loss: in 2023, XPeng burned the equivalent of 1.35 billion euros, 160 million euros more than the year before. The stock is also weak: In November 2021, XPeng was worth around $52 billion. Of that, only a good $9 billion remains.

The bosses in China want to quickly increase production capacity to 600,000 cars per year. But since a brutal price war is raging at home, CEO

He Xiaopeng

(46) is trying exports. XPeng has been active in Europe since 2021. The Chinese started in Norway and went to Sweden, Denmark and the Netherlands the following year. In Norway, the brand has a market share of 1.1 percent this year, which is at a similar level to the Volvo offshoot Polestar (1.4 percent). However, its Chinese competitors MG (4.8 percent) and BYD (2.4 percent) are significantly more successful, and in absolute numbers XPeng's success in Norway remains manageable: 135 cars sold in the first two months of 2024.

Nevertheless, we are now “ready for the center of Europe,” says

Wu Meng

, who is responsible for the manufacturer’s international product strategy. Having flown in from Guangzhou, he brought a clear message to Hesse: “Our cars are more efficient and of better quality than others.”

Markus Schrick also considers the P7 and G9 to be more than competitive. However, this does not result in utopian sales targets for Germany, he says. After all, the market is difficult and the already weak demand continued to suffer from the political funding chaos in December. Schrick hopes that the situation will improve again in the next few months: “In hindsight, I’m glad we didn’t bring the start forward.”

Together with sales manager

Fengying Wang

(53), he has developed a “very realistic approach” for the start in Germany, says Schrick: According to the official statement, XPeng wants to achieve a three percent market share in every segment in which it competes in the medium term. “We don’t have to flood the market,” says Schrick, lowering his expectations.

Schrick also wants to avoid the mistakes of other Chinese attackers. In terms of sales, he is initially relying on twelve dealers with 24 locations. By 2026, not only the model range will grow to five cars, but also the sales network: to 60 partners and 120 car dealerships. That would be significantly more than others. Schrick promises retailers a “good double-digit margin”. Getting started with XPeng initially costs car dealership operators no more than 30,000 euros. However, they would then have to invest in the brand.

Volkswagen as a starting aid

The first partners are almost all multi-brand retailers and therefore have experience in introducing new brands. Experience with electric cars and a passion for the fleet business are other factors that Schrick attaches importance to dealers. He has observed how much Nio, for example, lacks success with corporate customers. Schrick is planning for a 70 percent commercial share of sales. “It is clear that we need the right offers for this. We can’t arrive here and be 20 percent more expensive than others.” “Competitive” leasing rates should help.

Schrick attaches particular importance to the service business. Here too, Chinese brands have struggled so far. At MG, the current Chinese leader in Europe, customers repeatedly complain about endless waiting times because of missing parts. This is also why XPeng relies on its own parts warehouse in Germany. “The seller sells the first car, the service sells the next five, six or seven,” believes Schrick.

And if that's not enough, can Volkswagen help? The Wolfsburg-based group took a five percent stake in XPeng last summer for $700 million. VW only wants to sell the planned joint models in China. Schrick still expects ripple effects from the partnership. “That definitely helps us,” he says. “With customers, but also with dealers. The signal is clear: if Volkswagen believes in it, these can’t be the worst cars.”

The drone shown near Frankfurt is unlikely to go on sale initially. “So far everything is theory,” says Markus Schrick. Now it's time for the acid test for the cars. “And it will be really challenging.”