The global auto industry will shrink to just 10 companies in the next decade as fierce competition in China’s electric car market spills over onto the global stage, said Elon Musk’s Tesla rival, the Chinese.
Brian Gu, vice chairman of Guangzhou-based Xpeng, said that for the Chinese company to be one of the last automakers, it must sell at least 3 million cars a year, supported by global exports. said there was a need. Toyota, the world’s largest automaker, will sell 10.5 million cars in 2022, while Tesla will sell 1.3 million.
This warning marks a historic milestone for the global automotive industry. China overtook Germany last year and is poised to overtake Japan as the world’s largest auto exporter. At the same time, slowing growth and fierce price competition in China, the world’s largest auto market, are pushing low-cost automakers to the brink of collapse.
“To be in that ‘three million club’, you have to be a global player, not just a Chinese player. ,” Gu said in an interview with the Financial Times.
“In five to ten years, the market will become more concentrated. [number] The number of players will probably drop to less than 10 on the global stage,” Gu said.
Founded in 2014 and raising $1.5 billion in its 2020 New York IPO, Xpeng faces stiff competition in China.
Sales for the first three months of the year ranked 12th among Chinese electric vehicle manufacturers. The company, which sold more than 120,000 cars in 2022, was hit by a nearly 50% drop in sales in the first quarter of this year after Tesla cut prices. In January, Xpeng was forced to follow suit, and he cut the prices of three of his four models by as much as 13%.
Gu, formerly JP Morgan’s managing director and chairman for Asia, took a defensive tone about the slump in sales, blaming the timing of the company’s new model launches. But he expects the market to stabilize in the second half of this year.
“I think we are facing a very competitive situation this year,” he said. “clearly [price-cutting] pressure . . . This creates not only competition, but hesitation among consumers. ”
Gu admitted that deteriorating US-China relations have complicated the company’s plans to expand overseas.
Xpeng, which has invested heavily in autonomous driving with the backing of Alibaba, is targeting growth in Europe this year but has no immediate plans to sell cars in the United States.
Entry into the U.S. for Chinese brands “may be difficult today,” Gu said.
Despite the challenges, Gu said he believes the company has “many growth opportunities outside of China.”
Xpeng, like all Chinese electric car makers, relies on US chip designers such as Nvidia and Qualcomm for advanced semiconductors. This has raised concerns that Chinese automakers could be exposed as the US government expands restrictions on China’s access to cutting-edge US chip technology.
“So far, no partnership has been affected by political upheaval,” he said, adding that “the whole industry in China will find a solution” if restrictions start to affect the company. rice field.
Domestically, Xpeng is also hitting speed bumps. Last September, a customer complained about the automaker’s “confusing” models. The company has been forced to rename its luxury sport utility vehicle less than 48 hours after its launch.
Shortly after the naming dispute, Xpeng began restructuring. The company hired Wang Fengying, the former CEO of Great Wall Motors, as co-president, helping Great Wall Motors to export its first domestic car to China.