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XPeng Inc. (NYSE: XPEV) This fall 2021 earnings name dated Mar. 28, 2022
Company Contributors:
Alex Xie — Head of Investor Relations
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
Dennis Lu — Vice President of Finance
Analysts:
Tim Hsiao — Morgan Stanley — Analyst
Jeff Chung — Citi — Analyst
Ming Hsun Lee — BofA Securities — Analyst
Nick Lai — J.P. Morgan — Analyst
Bin Wang — Credit score Suisse — Analyst
Xinchi Yin — CITIC Securities — Analyst
Jin Chung — CICC — Analyst
Presentation:
Operator
Hiya, women and gents, thanks for standing by for the Fourth Quarter and Fiscal Yr 2021 Earnings Convention Name for XPeng Inc. Right now, all individuals are in a listen-only mode. After administration’s remarks, there can be a question-and-answer session. Immediately’s convention name is being recorded.
I’ll now flip the decision over to your host, Mr. Alex Xie, Head of Investor Relations of the corporate. Please go forward, Alex.
Alex Xie — Head of Investor Relations
Thanks. Hiya, everybody and welcome to XPeng’s fourth quarter and monetary yr 2021 earnings convention name. Our monetary and working outcomes have been issued by our newswire providers earlier at this time and can be found on-line. You can too view the earnings press launch by visiting the IR part of our web site at ir.xiaopeng.com. Contributors on at this time’s name from our administration will embrace Co-Founder, Chairman and CEO, Mr. He Xiaopeng; Vice Chairman and President, Dr. Brian Gu; Vice President of Finance, Mr. Dennis Lu; Vice President of Company Finance and Investments. Mr. Charles Zhang and myself.
Administration will start with the ready remarks and the decision will conclude with a Q&A session. A webcast replay of this convention name can be out there on the IR part of our web site. Earlier than we proceed, please observe that at this time’s dialogue will comprise forward-looking statements made underneath the Secure Harbor provisions of the U.S. Non-public Securities Litigation Reform Act of 1995. Ahead-looking statements contain inherent dangers and uncertainties. As such, the corporate’s outcomes could also be materially completely different from the views expressed at this time.
Additional info concerning these and different dangers and uncertainties is included within the related public filings of the corporate, as filed with the U.S. Securities and Trade Fee. The corporate doesn’t assume any obligation to replace any forward-looking statements besides as required underneath relevant legislation. Please additionally observe that XPeng’s earnings press launch and this convention name contains the disclosure of unaudited GAAP monetary measures, in addition to unaudited non-GAAP monetary measures. XPeng’s earnings press launch incorporates a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP GAAP measures.
I’ll now flip the decision over to our Co-Founder, Chairman and CEO, He Xiaopeng. Please go forward.
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
[Foreign Speech] Hello, everybody. We closed 2021 with one other report quarter of deliveries. We delivered 41,751 models within the fourth quarter alone, rising 222% year-over-year. And our whole deliveries for the total yr of 2021 elevated by 263% in contrast with 2020 and reached 98,155 models, making us the highest ranked rising EV maker in China. Our 2021 full-year income exceeded RMB20 billion.
[Foreign Speech] Heading into 2022, we’re experiencing even larger demand for our merchandise, which proceed to outpace our manufacturing. To expedite supply of huge quantity of order backlog carried over from 2021 and our newly-acquired orders early this yr, we accomplished expertise upgrades of our Zhaoqing plant throughout scheduled downtime over the Chinese language New Yr vacation. By adjusting our gross sales and supply schedules, new orders that got here in late February and the primary half of March picked up shortly and have returned to the identical strong degree as the height season in final December.
Ranging from March ’21, we raised the costs throughout our product line up by RMB10,000 to RMB20,000, every so as to cross via the rise in value of batteries and uncooked supplies. In opposition to the backdrop of upper oil costs, driving electrical autos sometimes brings rising value benefits over ICE autos, permitting for better development alternatives within the mid-to-high-end BEV market, which is the goal section for our good EVs.
This market additionally characteristic a really — an unlimited array of shoppers, who connect extra significance to EV high quality and expertise. Subsequently 2022 can be a vital yr for every EV maker to validate their merchandise competitiveness. Wanting forward, as we pursue speedy expertise and product iterations, we’ll proceed to strengthen the general competitiveness of our merchandise. I’m assured that our gross sales efficiency will proceed to steer the {industry}.
[Foreign Speech] Despite the fact that, we skilled some hiccups by way of our gross sales deliveries in sure areas of China, however due to our expertise improve in our Zhaoqing plant, in addition to our newly-acquired giant quantity of orders, we anticipate to welcoming a brand new degree of huge orders in March, which can be just like our peak degree final yr and that can assist us undoubtedly to reinforce our market share and keep our management place.
[Foreign Speech] Our confidence in regards to the gross sales quantity potential of our core EV merchandise has prolonged into 2022. We delivered over 60,000 P7s in 2021 putting it within the prime 3 Class B EVs and above by gross sales quantity, making it an undisputable blockbuster fashions and setting P7 as a brand new benchmark good EV in China. With the construct up of P7s manufacturing capability and fame, one in all our targets in 2022 is to exceed 10,000 P7 deliveries in a single month.
[Foreign Speech] We formally commenced the mass deliveries of our P5 household sedan mannequin within the fourth quarter of 2021, delivering shut to eight,000 models in its preliminary quarter debut. With provide chain enchancment in our Metropolis NGP launch, we are able to anticipate a extra constant ramp up in gross sales quantity of the P5. As provide chain constraints ease off within the coming months, I’m assured, the P5 month-to-month gross sales quantity will start to strategy that of the P7 within the second half of the yr.
[Foreign Speech] Subsequent EV mannequin in line for us is our flagship SUV mannequin, the G9. As P3 manufacturing automobile has efficiently wrote off the manufacturing traces and we’re on observe to formally launch the G9 within the third quarter. The G9 represents essentially the most superior expertise XPeng has ever developed, constructing on years of in-house developed software program and core {hardware}. Consequently, the efficiency of our G9 is head and shoulders above well-liked SUV fashions in the identical class. I firmly imagine that G9 will turn out to be a blockbuster mannequin within the medium-to-large measurement good electrical SUV market.
[Foreign Speech] Moreover, we plan to launch the primary manufacturing mannequin constructed on our two newly established good EV platforms respectively in 2023. These two new platforms comprising a platform tailor-made for C class autos and the opposite for B class autos will inherit and additional advance XPeng’s strong capabilities in aesthetic design, electrification and good expertise, thus strengthening our product portfolio’s aggressive benefits.
As well as, as we try to make our platforms extra scalable, by using extra highly-integrated design and state-of-the-art manufacturing processes comparable to extremely giant built-in die casting expertise. The brand new platforms may even enact highly effective value management talents, in addition to assist us deal with a broader buyer base within the mid-to-high-end market segments, which have large development potential going.
[Foreign Speech] Subsequent, I wish to share some replace on R&D of our good EV expertise. For our P7 and P5 fashions delivered within the fourth quarter, the connect price of the XPILOT 3.0 software program was shut to twenty%. Presently, the progress on the R&D of our Metropolis NGP, the important thing operate of XPILOT 3.0 which is principally deployed on P5, is effectively superior. It’s beta model is present process a quick iteration course of making steady enchancment in security and consumer expertise. We additionally plan to finish the event of our Metropolis NGP in second quarter of this yr and plan to rollout in cities by batches as soon as we obtain the approval of the Metropolis HD map.
The XPILOT 3.5 that’s constructed on our next-generation expertise structure has introduced a lot larger than anticipated efficiency within the metropolis driving eventualities. We’re extraordinarily happy with this. notably, amongst our mass produced P5, the variety of driver interventions per 100 kilometers for Metropolis NGP is approaching that of freeway NGP and the extent of its general consumer expertise may be benchmarked in opposition to home prime degree taxi gamers and in some respect, we have already got caught up and even exceeded these firms’ performances.
[Foreign Speech] Given the underlying subsequent technology expertise structure of our XPILOT 3.5 and our shut loop of knowledge, we plan to formally launch the XPILOT 4.0 in 2023 to ship superior driving help experiences, spanning full eventualities of each highways and metropolis roads. Concurrently, we plan to progressively converge our autonomous driving {hardware} and software program platform that permits superior driving help techniques for our future automobile fashions. There can be a minimum of 4 fashions, together with each new fashions and facelift variations of current fashions to help the XPILOT 4.0 in 2023.
With that our XPILOT 4.0 will boast a transparent subsequent technology leap in opposition to different mass produced superior driver help techniques. Merely put, underneath the premise of providing superior security, the XPILOT 4.0 will characteristic a extra complete set of use eventualities, even wider geographical protection and a greater human automobile interface and in-vehicle expertise for each drivers and passengers.
Along with that, we’ll management the price of our manufacturing. We imagine that our XPILOT 4.0 has the potential to unfold excessive degree superior driver help system to a good broader buyer base, accelerating the transformation from human driving to the period of superior driver help driving. When this turns into actuality sooner or later, the connect price of the XPILOT software program will naturally be considerably larger than its present degree.
[Foreign Speech] We’ll proceed to advance an improved product efficiency. Additionally, we’ll proceed to be dedicated to our in-house full stack software program improvement and a platform structure strategy to develop and improve our clever techniques and powertrain techniques for good EV. Making use of a platform structure strategy to our system administration will propel improvements in our powertrain manufacturing methods and processes, in addition to a bond value construction.
I’ve confidence in our means to attain structural enchancment of gross margin for our new fashions, together with G9 and in the end enhance general gross margin. Our medium and long-term targets is to extend the extent of our general gross margins above 25%. On the identical time, we’ll stay devoted to our imaginative and prescient and execute on our founding technique and operational literacy to constantly — to repeatedly increase operational effectivity. Going ahead, as we obtain economies of scale, whereas bettering working leverage, I imagine our working expense ratio will proceed to development downward.
[Foreign Speech] With that overview, I would love — now I wish to stroll you thru a number of of our strategic initiatives and expectations transferring ahead. [Foreign Speech] We’ve quickly expanded our gross sales and providers community. As of the top of 2021, expense bodily gross sales community comprised 357 shops throughout 129 cities, of which 209 have been immediately operated by us and 148 have been franchise shops. Specifically, throughout 2021. we strategically elevated our funding in gross sales channels in decrease tier areas so as to faucet into pent-up demand and seize the good development potential we see in non-tier 1 cities.
Because of this, we closed the yr with our non-Tier 1 gross sales shops accounting for near 80% of whole expense shops and most of these efficiency and gross sales have been achieved through the second half of the yr. Whereas we drove speedy community growth all through 2021, our month-to-month single retailer gross sales elevated considerably on a sequential order foundation, reflecting our gross sales mannequin functionality to make systemic enhancement, in addition to maintain effectivity enchancment. For 2022, we’ll proceed to strengthen our gross sales community growth and improve identical retailer efficiency.
[Foreign Speech] Concerning our supercharging community, XPeng branded supercharging amenities that includes large protection and a greater consumer expertise have already turn out to be a essential consider XPeng’s aggressive edge. As of January 17, 2022, the variety of XPeng branded supercharging stations elevated to 813 protecting 337 cities nationwide.
Starting within the second half of 2022, we’ll deploy next-generation high-capacity supercharging to additional shorten customers charging classes considerably. We additionally plan to intensify efforts in deploying supercharging stations alongside high-speed expressways to carry customers higher, safer, lengthy distance touring experiences with XPeng’s autos.
[Foreign Speech] Together with these upgrades, we’re actively progressing our abroad growth initiative. To this finish, we introduced in February 2022, we had established partnerships with top-tier European sellers. By leveraging the well-established market presence of revered abroad sellers, we try to construct our worldwide enterprise improvement capabilities and have established the primary branded European retail expertise shops for our good EVs in Stockholm, Sweden. We additionally plan to undertake a novel direct plus franchise retail mannequin, which is what we’re doing proper now in China to increase our gross sales and repair community in Europe.
[Foreign Speech] On February ninth of this yr, XPeng have been included within the Shenzhen and Shanghai Hong Kong Inventory Join packages. We formally grew to become the primary rising EV maker inventory to be assessable for direct funding by certified traders in Mainland China. We’re delighted to share the expansion alternatives within the good EV {industry} with broader investor base from our dwelling nation. Shortly thereafter, on March seventh, XPeng was added to the Dangle Ship TECH index amongst 30 constituent shares as one in all consultant shares for the autonomous tech theme.
[Foreign Speech] Wanting again on 2021, now we have confronted challenges stemming from industry-wide semiconductor and battery cell shortages. We wish to categorical our sincerest gratitude to our wonderful provide companions for his or her nice effort of XPeng — for his or her nice help for XPeng. Amidst the challenges, we developed and certified a whole lot of other provide options to safeguard and stabilize our provide chain.
Coming into 2022, the continued chip scarcity and surge in value for uncooked battery supplies continues to current a problem for the entire {industry}. However, these near-term obstacles can not cease the long-term journey we’re on the place good EVs are accelerating the disruption of ICE autos at an unprecedented pace and I imagine that is going to be a great expertise for us to proceed to reinforce our capabilities. I imagine our means to swiftly develop various provide options coupled with concerted effort with our suppliers will assist us overcome these challenges.
[Foreign Speech] As now we have been striving to navigate market dynamics amidst obstacles within the provide chain, the influence of COVID-19 recurrence and the seasonality components, we anticipate our good EV deliveries to succeed in roughly 33,500 to 34,000 within the first quarter of 2022. And our whole revenues to be between roughly RMB7.2 billion to RMB7.3 billion.
[Foreign Speech] Thanks, everybody. With that, I’ll now flip the decision over to our VP of Finance. Mr. Dennis Lu to debate our monetary efficiency for the fourth quarter of 2021.
Dennis Lu — Vice President of Finance
Thanks, Xiaopeng and hey, everybody. Now, I wish to present a short overview of our monetary outcomes for the primary quarter of 2021. I’ll reference RMB solely in my dialogue at this time until in any other case acknowledged. Our whole revenues have been RMB8.6 billion for the primary quarter of 2021, a rise of 200% year-over-year and a rise of fifty% quarter-over-quarter. Income from automobile gross sales have been RMB8.2 billion for the primary quarter of 2021, a rise of 199% year-over-year and a rise of fifty% from the final quarter, primarily attributable to larger automobile deliveries, particularly for the P7 and P5.
Our gross margin was 12% for the primary quarter of 2021 in contrast with 17% for a similar interval of 2020 and 14.4% for the final quarter. Full yr gross margin reached 12.5%, a rise of seven.9 proportion factors year-over-year. Car margin reached to 10.9% for the primary quarter of 2021 in contrast with 6.8% for a similar interval of 2020 and 13.6% for the final quarter.
The quarter-over-quarter margin discount was primarily attributable to product combine adjustments. R&D bills have been RMB1.5 billion for the fourth quarter of 2021, a rise of 216% year-over-year and a rise of 14.8% quarter-over-quarter, primarily because of, one, the rise in worker compensation as we expanded analysis and improvement workers, and two, larger bills referring to the event of recent autos to help future development.
SG&A bills have been RMB2 billion for the primary quarter of 2021 and elevated 120% year-over-year and a rise of 31% quarter-over-quarter. The year-over-year improve was primarily because of, one, larger advertising and marketing and promoting bills to help automobile gross sales, and two, the growth of our gross sales community and related personnel value and fee for franchised retailer gross sales. The quarter-over-quarter improve was primarily pushed by the growth of our gross sales community and extra gross sales fee in step with the upper automobile gross sales.
[Indecipherable] loss from operation was RMB2.4 billion for the fourth quarter of 2021 in contrast with RMB1.1 billion for a similar interval of 2020 and RMB1.8 billion for the final quarter. Honest worth acquire on our long-term investments was RMB0.6 billion for the fourth quarter of 2021, affecting the honest worth evaluation –on our evaluation on HT Flying Automobile Incorporation or Huitian after its Collection A capital funding. As of December 31, 2021, we invested roughly RMB0.6 billion and owned roughly 18.8% of the fairness curiosity in Huitian.
Internet loss was RMB1.3 billion for the fourth quarter in contrast with RMB0.8 billion for a similar interval a yr in the past and RMB1.6 billion for the final quarter. As of December 31, 2021, our firm had money and money equivalents, restricted money, short-term deposits, short-term investments and long-term deposits in whole RMB43.5 billion. We achieved a constructive working money movement within the second half of 2021 and within the fourth quarter of 2021, our working money influx was RMB1.3 billion.
To be aware of the size of our earnings name, I’ll encourage listeners to confer with our earnings press launch for the 2021 full-year monetary outcomes and additional particulars. This concludes our ready remarks, we’ll now open the decision to questions. Operator, please go forward.
Questions and Solutions:
Operator
[Operator Instructions] Your first query comes from the road of Tim Hsiao.
Tim Hsiao — Morgan Stanley — Analyst
[Foreign Speech] So my first query is in regards to the value hike as a result of that’s been [Indecipherable] the costs. May we get a tough stance about how the corporate laid the inspiration of RMB10,000 to RMB20,000 or [Indecipherable] value hikes? What sort of value inflation in batteries, uncooked materials, chipsets had been pricing? So is value improve simply the correct quantity to cowl the contracts or additionally precise expense adjustment of extra value hikes within the provide chain later this yr?
Dennis Lu — Vice President of Finance
[Foreign Speech] Let me simply reply your questions concerning the value realignment. Really, we elevated our value at about RMB10,000 to RMB20,000 for the entire automotive life in March 21 — ranging from March 21. This displays the projected parts, particularly on the battery value improve. We haven’t finalized the battery value negotiation with our suppliers, however our quoting to churn and in addition the parts, we anticipate we may have the fee improve within the uncooked materials in addition to the battery. So, we technically priced the — elevated the value to cowl the fee improve. Lastly, predominant driver of the value improve to mainly to cowl the potential value improve for our parts value.
Tim Hsiao — Morgan Stanley — Analyst
[Foreign Speech] So my second query is about XPILOT connect price as a result of I feel through the presentation, the Chairman has talked about — simply talked about about 20% connect price of XPILOT is seen to honest comparatively low [Indecipherable] fashions we noticed through the previous quarter. However and we anticipate extra significant improve within the adoption price of XPILOT and what could be extra perfect connect price in your view in subsequent one to 2 years? It appears possible you are taking as much as 50%?
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
[Foreign Speech] Sorry, my finish of the connection will not be excellent, however I get the gist of your query. So, right here is my response. Now, regarding the connect price of XPILOT 3.0 really all of it is dependent upon the chip provide. So, when the provision recovers to the traditional degree, we imagine that the connect price will improve as effectively. I even have extra confidence within the connect price enchancment of XPILOT 4.0 as a result of in keeping with our information, our consumer’s habits and their satisfaction price of utilizing our XPILOT is definitely very excessive as they get used to really having the navigation help in keeping with our — I imply, with the assistance of our Metropolis NGP operate in our — of their each day life from one vacation spot to a different.
For instance, from their dwelling to their workplaces or from their workplaces to a purchasing extra and so on., that undoubtedly will give them the development of conserving the behavior of utilizing this type of help from the XPILOT. So, by that point, the connect price of our XPILOT can be even larger than the present degree and in my very own understanding, really, the XPILOT 4.0 connect price will exceed 50%, however once more that’s — that really will rely on the long run market statistic and we’ll see.
Tim Hsiao — Morgan Stanley — Analyst
[Foreign Speech]
Operator
And your subsequent query comes from the road of Jeff Chung with Citi.
Jeff Chung — Citi — Analyst
[Foreign Speech] So my first query is in regards to the worst-case situation, this yr’s full yr gross sales quantity and manufacturing capability if we assume an extra disruptions in chip shortages. Second query is in regards to the G9 and P7 GP margins and is it vital for us to additionally set a month-to-month gross sales goal for G9 going ahead?
Dennis Lu — Vice President of Finance
[Foreign Speech] Yeah, let me reply the query for you. Are you able to hear me? So, to start with, we clearly, as our coverage don’t give steerage on the gross sales quantity in addition to Particular person mannequin numbers, however I might say that clearly this quarter signify 1 / 4 that’s within the off-season, in addition to disruption from our COVID measures in China. So, I might most likely take into account applicable base for extrapolating for the total yr. We’re assured with our new mannequin launch, in addition to additional market momentum. The gross sales quantity ought to be larger than within the first quarter. So, that’s the primary reply to your query.
Second query is that, on G9, we do have excessive hopes. This can be blockbuster in its class, which is the premium SUV class and you might additionally discover benchmarking — benchmark fashions in that class and we expect it ought to be one of many prime gamers in that class. After which I feel — in that being — I feel it ought to strategy it is likely to be the P7 degree.
The third query is whether or not the P7 and G9 interchangeable from a provide chain perspective, I feel we hope by the point that G9 is began, quantity supply in the direction of the second half or the fourth quarter, the provision chain situation will get alleviated, however I feel proper now each fashions representing excessive gross margin merchandise for us within the excessive teenagers. So I feel for us, these are fashions that we’ll clearly be sure that it has sufficient chip suppliers for manufacturing.
Jeff Chung — Citi — Analyst
[Foreign Speech] So, it’s above the order backlog. After we raised the MSRP value, we noticed a big surge in new orders. So, roughly talking, proper now the ready time to get a automotive starting from 16 months to twenty months, which suggests round 4 to 5 — I imagine for the order backlog. So, I simply wish to make clear on these numbers. Thanks.
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
[Foreign Speech] I feel there’s a combine of fine and dangerous information with what’s taking place proper now. Clearly, the dangerous information is the resurgence and recurrence of the pandemic, which actually have an effect on our provide chain, particularly in cities comparable to Shanghai as a result of that is actually the headquarter of all the key suppliers of our firm. And the nice aspect of the story is that we are literally bettering our general functionality in enhancing our battery cell provide and so clearly there’s numerous disruption within the — interruption out there and in addition there’s numerous danger, however we’ll do our greatest and be absolutely dedicated to hurry up the supply instances — lead time. [Foreign Speech] General, I imagine that the precise end result could be higher than anticipated.
Alex Xie — Head of Investor Relations
Subsequent query please.
Operator
And your subsequent query comes from the road of Ming Lee with Financial institution of America.
Ming Hsun Lee — BofA Securities — Analyst
[Foreign Speech] So, my first questions is concerning the battery provide state of affairs. Presently, you may have three suppliers, however you’re nonetheless looking for LFP battery provider. So, you additionally [Indecipherable] the present state of affairs. Now with the deal [Indecipherable]. [Foreign Speech] So my second query is concerning the brand new platform in your capability breakdown for [Indecipherable] sooner or later. Thanks. That’s my query.
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
[Foreign Speech] In response to your first query, to start with, we’re very completely different from different new vitality automobile makers in a way that we really collaborated with a number of suppliers of batteries. And so, prior to now what we skilled is that there was numerous demand LSP batteries [Technical Issues] so prior to now what we skilled that the market demand for — LSP demand really has surpassed our provider’s capability for batteries provide. In order that’s why we skilled numerous challenges within the provide chain. However going ahead, we even have been capable of steadily alleviate this drawback and we’re very assured that we are able to proceed to enhance the state of affairs. And for the second half of this yr and for the approaching yr, we’re very assured that the general provide chain shortages may be relieved to a sure extent.
After which, in response to your second query, mainly we differentiate the idea of deliberate capability and the precise deliveries of our — or the precise carried out or executed capability. And so we do have deliberate capability for a single plant of ours and thru a number of shifts of working, we are able to really maximize these capability. And so what we’re doing proper now’s that we try to coordinate completely different crops in producing completely different fashions on completely different platforms as a result of we haven’t been capable of — we’re not ready to announce the precise quantity by way of the capability of every single plant but. I can simply offer you a tough concept that the only plant capability will surpass 0.5 million.
Ming Hsun Lee — BofA Securities — Analyst
[Foreign Speech]
Alex Xie — Head of Investor Relations
Subsequent query please.
Operator
Your subsequent query comes from the road of Nick Lai with J.P. Morgan.
Nick Lai — J.P. Morgan — Analyst
[Foreign Speech] My query is actually in regards to the money. By the top of final yr, we’ve add about RMB33 billion money on stability sheet and the way ought to we take into consideration the usage of money by way of capex, R&D spending and op margins? That’s the primary query.
Dennis Lu — Vice President of Finance
Nick. Hello, Nick, that is Dennis. Let me reply to your first query. Yeah, you’re proper, we — really, now we have about RMB43 billion money in hand As of the top of final yr and our — as I discussed that we really WE achieved working money movement breakeven or constructive money influx within the second half of the final yr. So, our plan is to proceed to enhance the effectivity and in addition to enhance the capital spending. So, we’re projecting — we try very arduous to proceed the constructive breakeven working money movement this yr.
And apart from that, we additionally had some spending on the capex. For instance, we proceed to have new undertaking. We’ll the power and tools for the brand new undertaking and we additionally had the funding by way of the capability — new plant capability. In order that’s our plan for the utilization of our money in hand. Working sensible, we’ll attempt to be breakeven constructive and capital expenditure will proceed to enhance the effectivity of spending, whereas supporting the undertaking improvement additionally to help that capability improvement for this yr.
Nick Lai — J.P. Morgan — Analyst
[Foreign Speech] My second query actually a couple of fast replace on [Indecipherable] talked about on the earlier convention name. Thanks.
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
[Foreign Speech] Now, we really plan to check the robotaxi type of functionality and efficiency by This fall this yr on G9. We didn’t really announce or make any assertion concerning attaining degree 4 by 2024. Our estimate is that we are able to really obtain or work in the direction of the aim of autonomous driving by 2026. Now by way of the exploration within the robotaxi mannequin, proper now, we’re — we have to do much more testing to have the ability to discover out the enterprise logic behind robotaxi and to collect extra information from the precise execution of the potential and in addition to grasp higher the regulatory surroundings on this regard. However presently with our observations within the XPILOT improvement in addition to the gathering of the info, we’re very assured and really, very enthusiastic about the way forward for robotaxi. And we estimate that we are able to really obtain a excessive degree of autonomous driving before anticipated.
Nick Lai — J.P. Morgan — Analyst
[Foreign Speech]
Operator
And your subsequent query comes from the road of Bin Wang with Credit score Suisse.
Bin Wang — Credit score Suisse — Analyst
[Foreign Speech] Okay, my query is about new merchandise for 2023 as a result of we really see that now we have acquired some merchandise from the brand new department platform. So it has been one product from every platform or really it’s one product from two platforms. In the meantime, as talked about, in our full value group, the out there for Metropolis NGP has impacted. In case you can replace present P5, P7 and G9 and upcoming [Indecipherable] upcoming Metropolis NGP with the {hardware} improve. Thanks.
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
[Foreign Speech] Hello, that is Xiaopeng, subsequent yr, we plan to launch two new merchandise on two platforms and each of them will help the deployment of XPILOT 4.0. Thanks.
Bin Wang — Credit score Suisse — Analyst
Proper. Thanks.
Operator
Your subsequent query comes from the road of Xinchi Yin with CITIC Securities.
Xinchi Yin — CITIC Securities — Analyst
[Foreign Speech] My two questions is about G9 and the capex. So, the primary query is may you please present extra particulars about G9 and what’s the wheel base of G9 and can there be six-seat model or a seven-seat model? And my second query is about capex. So what’s the capex price range on Guangzhou and Wuhan respectively? What’s the progress updates of two factories? Thanks.
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
[Foreign Speech] Hello, that is Xiaopeng. Now, let me reply to your first query. When it comes to G9, what I can do — what I can announce proper now’s going — G9 goes to be a five-seat medium to giant measurement SUV. It gained’t be a six-seater or seven-seater. And by way of the small print, comparable to wheel base and so on., we’ll really launch — we gives you extra particulars in our official announcement when now we have the data. Thanks.
Dennis Lu — Vice President of Finance
Okay. The second query, that is Dennis Lu, let me deal with this. In our Guangzhou plant, whole capital expenditure is someplace round RMB2.5 billion to RMB3 billion and amongst that the development and the land really is funded by the federal government. And authorities present the mortgage to us for curiosity. And by way of facility, really authorities is funding 50% of your curiosity value. So, we pays 50% of the curiosity value by way of the paydown. The plan is the — by way of the development has been accomplished and now we’re doing the tools and facility for the brand new plant — new manufacturing. So, that is to help the brand new automobile manufacturing.
When it comes to Wuhan plant is larger than the Guangzhou plant. So, the overall capital expenditure, the unique undertaking was above RMB4 billion — above barely larger than RMB4 billion and amongst that the federal government will fund the curiosity of the round RMB3 billion and that can be — the curiosity can be funded by the federal government and the remaining can be funded by XPeng itself. The plant is underneath building, together with the tools and in addition the power and the {hardware} to help new manufacturing as we talked about for subsequent yr. In order that’s the standing of the plant building and in addition the capital spending on the plant.
Xinchi Yin — CITIC Securities — Analyst
[Foreign Speech]
Alex Xie — Head of Investor Relations
Subsequent query launch.
Operator
And your remaining query comes from the road of Jin Chung with CICC.
Jin Chung — CICC — Analyst
[Foreign Speech] My first query is about our battery [Indecipherable] however what are the constructive or some destructive results of our a number of suppliers, particularly on our financing requirements and in addition our buy prices? [Foreign Speech] And second query in regards to the gross revenue margin and in addition expense ratios steerage this yr and contemplating the present value and our value — product value improve, how are you going to anticipate our gross revenue margin this yr? And in addition in regards to the expense ratio, our expectation of our R&D and [Indecipherable]
Xiaopeng He — Co-Founder, Chairman, and Chief Govt Officer
[Foreign Speech] Hello, that is Xiaopeng. Let me reply to your first query. Having a number of suppliers for our battery cells undoubtedly offers us numerous worth, primarily in two respects. The primary one is to undoubtedly be sure that now we have sufficient provide and the second is assist us to optimize or improve our value management functionality. Now for the primary profit, as a result of now we have a number of fashions that undoubtedly are actually well-liked out there and we obtained numerous orders final yr, however because of the provide scarcity in batteries, particularly in LFP batteries, we weren’t capable of really fulfill or ship these orders final yr. And the precise gross sales of our fashions or our merchandise containing LFP batteries was really rather a lot smaller than the precise orders that we obtained. And this yr with our concerted effort with our provider companions, we hope that — and we’re very assured that we are able to alleviate the state of affairs this yr.
And the second profit which I discussed earlier is the fee management functionality enhancement. Because the uncooked supplies for batteries and for lots of the core parts proceed to extend, the entire {industry} expertise numerous value improve danger, however due to our a number of provider associate community and this mannequin, we’re capable of really launch this type of stress inside. I feel one quarters to a few quarters’ time and this yr we’ll proceed to — our suppliers to raised management our prices. That’s all, thanks.
Dennis Lu — Vice President of Finance
And for the second, the margin. Firstly, we don’t present the margin steerage for the long run, however in keeping with the data now we have readily available, really, within the first quarter, we used majority of the battery inventory, which we acquired or we bought final yr. So, the fee improve didn’t actually hit us on the full-quarter foundation. So, we anticipate some materials value. Excellent news on the battery and in addition now we have better product combine the P7 — really the combo is larger in quarter 4 final yr. And for the second half as a result of now we have elevated the value after which after we delay that loss value safety orders, most likely beginning in late Could or June, we may have functionality to cowl the fee.
So, all in all, we anticipate the quarter one and quarter two margin could be equal now even barely higher within the quarter 4 margin degree. And for — ranging from June, we — really value would have an effect on the brand new value at which you’d have the ability to cowl the fee. And extra importantly, now we have G9, which can be offered within the second half. So, we anticipate the second half margin could be higher than the primary half. That’s sort of the final evaluation for the margin up to now. Thanks.
Jin Chung — CICC — Analyst
[Foreign Speech]
Operator
As there aren’t any additional questions, I’d like to show the decision again over to the corporate for closing remarks. Since there aren’t any additional questions, I wish to flip the decision again over to the corporate for closing remarks.
Alex Xie — Head of Investor Relations
So thanks as soon as once more for becoming a member of us at this time. When you have additional questions, please be happy to contact XPeng’s Investor Relations via contact info supplied on our IR web site or the XPeng Group Investor Relations.
Operator
[Operator Closing Remarks]
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