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A Chinese rival to Tesla said it was increasing investment and hiring thousands of new staff to survive a “bloody sea” of competition.
He Xiaopeng, chief executive of Xpeng, said the Volkswagen-backed company would add 4,000 staff and invest Rmb3.5bn ($486mn) in autonomous driving and artificial intelligence technologies.
However, Guangzhou-headquartered Xpeng “will buck the trend” during a year that was a “knockout round” for Chinese carmakers, He said in a letter to staff published by local media. “Many business partners are pulling back and are afraid to invest . . . This is an opportunity for our development,” He said.
He added that Xpeng, which was founded in 2014, had been in a “bloody sea” of competition since its founding 10 years ago. “We believe persistence will bring success in the end,” he said. Xpeng did not immediately respond to a request for comment on the letter.
He’s letter comes at a time Brussels and Washington are increasingly concerned about excessive electric vehicle manufacturing capacity in China. The FT reported that US officials have warned China that Washington and its allies will take fresh action if Beijing tries to ease its overcapacity problems by dumping products on international markets, including EVs and lithium batteries.
China’s auto exports hit a record 4.9mn last year, up from 1.1mn the year prior, as the nation overtook Japan as the world’s biggest car exporter. Of that, only about 1.2mn were EVs — 29 per cent of which were Tesla vehicles — while the remaining 75 per cent were internal combustion engine cars, according to data from Shanghai consultancy Automobility.
The capacity utilisation rate of China’s auto manufacturing sector has hovered around 70 to 75 per cent in recent quarters, below the range of 76 to 82 per cent that prevailed before 2020, according to Gavekal Research, a Beijing research group.
The push towards exports came as Chinese EV production rose 38 per cent to 9.5mn cars last year. While the pace of growth has slowed, the share of EVs among new car sales rose from 26 per cent in 2022 to 32 per cent last year.
The slowing pace of sales growth has fuelled expectations among auto executives for a wave of consolidation that will leave only a handful of companies in the world’s largest car market.
Wang Chuanfu, the founder of the world’s biggest EV maker BYD, was more positive about the market outlook, telling a conference on Sunday that the penetration rate of Chinese EV sales would hit 50 per cent this year, according to local media.
Beijing has signalled an increasing willingness to intervene in the EV market following a series of western complaints, as well as domestic concerns over the EV sector displaying signs of a boom-and-bust cycle that has beset Chinese industrial development for decades.
Xin Guobin, vice-minister of industry and information technology, warned in January that Beijing would take “forceful measures” to address “blind” construction of new EV projects by some local authorities and enterprises. He also warned about insufficient external consumer demand.
Earlier this month, China’s commerce ministry and eight other agencies announced plans to support the “healthy development” of the country’s overseas EV expansion, including co-operating more with foreign partners and utilising free trade deals. Experts said this was a further sign that Beijing wanted to allay international concerns over a wave of Chinese EV exports.