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There is ‘very strong momentum’ for electric vehicles in China, XPeng president says

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XPeng President and Vice Chairman Brian Gu joins Yahoo Finance Live to discuss the outlook for XPeng and its growing presence in the EV market in China.

Video Transcript

- Shares of XPeng rose a bit yesterday. They continue their uptrend today. That's after the company reported numbers that beat estimates. Actually now, they've turned lower a little bit today. But we saw deliveries rise 14% higher than the upper end of the company's outlook that it gave back in August. And Brian Gu is joining us now. He's XPeng President & Vice Chairman. Brian, it's good to see you. One of the ways that you all were able to beat in terms of deliveries is you were able to get semiconductors into your vehicles, which, as we know, has been challenging for a lot of automakers. Talk us through your supply chain and how you have been able to manage through this period of time.

BRIAN GU: Well, I think the supply chain shortage is impacting the entire sector, and we have not really escaped that either. But, you know, what we said last time was that, you know, we have been trying to really hard to be nimble around the supply chain, try to find alternative source of suppliers and same time trying to, you know, really make early sort of inventory decisions that give us a bit of breathing room.

But still, I think, you know, we're faced with a very challenging supply chain dynamic in this sector not just for the last quarter, but also for this quarter as well as the next few quarters to come as well. So we have to be, you know, doing the same very, very, you know, significant focus and nimbleness to tackle that problem.

- Brian, since we last spoke we had-- we got the approval of an infrastructure package here in the United States. We'll see a lot more superchargers. I mean, a lot more charging stations rolled out. I'm sure that will support the growth of the electric vehicle market. Talk to us a little about what you're seeing in China in terms of the Chinese infrastructure for electric vehicles.

BRIAN GU: Well, I think the China government-- Chinese government has been very supportive of the development of new energy vehicle sector. And the same time, I think you saw the consumer enthusiasm embracing new energy and smart vehicles has been really picking up quite robustly. So I think overall, you know, you'll see the big investment dollars pouring into the infrastructure sector, both from the government, as well as from the private sectors.

So I think, for us, we actually also invest in our own, you know, infrastructure for example, a supercharging network that's self-branded, only caters to our drivers. At the same time, I think we are relying on infrastructure sets supported by the government on highways and state-funded infrastructure grids. So I think overall, there is a very strong, I would say, momentum to push for the growth of the sector here in China.

- And Brian, sort of shorter term in China because the infrastructure stuff is a longer term buildout. I'm curious what you're seeing in terms of demand because of the continuing lockdowns and sort of sometimes tough conditions in China tied to the COVID pandemic. In other words, do you think that demand for your vehicles would be even higher or can be much higher when we come out the other side of all of this?

BRIAN GU: Well, I certainly believe that you know we have a strong consumer demand for smart new energy vehicles, especially last quarter you saw actually a number of cases where you know cities has been locked up because pandemic outbreaks impacted our sales, our services and our delivery capability. So if you remove those factors, I think our numbers will be even higher for these cities. So looking forward-- so if we remove the impact of the pandemic for our operations, I think there's definitely going to be even more upside for our growth.

- Brian, seems as though every time we talk to you there is a lot going on at a new model, more supercharger stations, technology upgrades. How would you compare and contrast your culture and XPeng compare to some of the US automakers?

BRIAN GU: Well, I think you know our culture can be defined as a tech-driven culture. It starts from our founders. There are both internet, auto innovators and also I think our organization is dominated by the sort of a focused staff. So for example, right now as late as the end of the third quarter, we have over 4,000 R&D staff in our organization, which is doubling the number of R&D that's starting of this year. So it's very much R&D and technology driven culture. At the same time, I think being a Chinese entrepreneur in this very dynamic market, you have to be very nimble and also be really entrepreneurial in response to the opportunities. So I think in some ways, I think we have a very young technology and entrepreneurial culture compared to some of the traditional OEMs that you've seen although globally.

- And speaking of comparisons and competition, you guys are just coming out with your nine SUV, which is a little bit of a larger SUV. You could say it's more of a direct competitor to the S made by Neo and to the Model Y made by Tesla. What can you tell us about early signs of demand for that and how you think it's going to do versus those other vehicles?

BRIAN GU: Well, we unveiled the-- the design of nine last week at the Auto Show. And here in China, it has caused rave reviews and I think the feedback has been tremendous. But, we haven't really revealed a lot of the details of the product, which we think will be the technology leader when it launches in the second half of next year. It will have the-- I would say the cutting edge autonomous driving architecture as well as the software packages to really support what we call pilot 4.0, which allows Citywide navigation guy to pilot features, which is pretty much autonomous driving but obviously with drivers behind the wheel.

But also, it will have a supercharging capability that utilize five 800 volts of charging platform and that can really charge our vehicle in up to 200 kilometers of range in less than five minutes. That's also going to be industry leading. At the same time, this product will have an architecture of electric system that really have domain control that can be cutting edge in China coupled with its appearance, which we think is also very attractive. We think this is going to be the flagship product that really going to drive ourselves by the second half of next year.

- Looking forward to talking to you as you go through that process. Brian, it's always a great to have a conversation with you. Brian Gu XPeng President & Vice Chairman. Thanks for your time.

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