Xpeng Inc. (NYSE:XPEV) is gearing up for significant expansions amid a “bloody sea” of competition in the Chinese electric vehicle (EV) market.
What Happened: On Sunday, Xpeng announced plans to hire 4,000 employees in 2024, representing a 25% increase in its workforce, Reuters reported. This move comes as the company prepares to invest heavily in artificial intelligence (AI) to bolster its position in the cutthroat Chinese EV market.
In a letter to employees, the company’s CEO, He Xiaopeng, revealed that Xpeng will allocate 3.5 billion yuan ($486.36 million) for AI research and development for intelligent driving. This investment is part of a larger strategy that includes launching approximately 30 new or revised products within the next three years.
Despite the challenging macroeconomic climate and a downturn in demand, particularly for homegrown brands, Xpeng remains optimistic about its prospects. Xiaopeng sees 2024 as a pivotal year for Chinese auto brands, expressing confidence that Xpeng will enter a high-speed positive cycle by the fourth quarter.
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While Xpeng is expanding its operations, other Chinese EV manufacturers are cutting costs to cope with the market’s challenges. Tesla Inc. (NASDAQ:TSLA) has been leading renewed discounting efforts to stimulate demand in the Chinese EV market.
Why It Matters: This development comes on the heels of Xpeng’s Vice Chairman and Co-president, Brian Gu, touting the newly launched X9 model as a potential “game-changer” for the EV industry. The X9, an EV with seven seats, was launched on Jan. 1, employing the SEPA2.0 architecture for the Chinese market. The vehicle is priced between 359,800 yuan ($50,360) and 419,800 yuan ($58,760), with deliveries commencing immediately.
Furthermore, Xpeng’s expansion plans contrast with those of its rivals, such as Nio Inc. (NYSE:NIO), which announced a 10% reduction in its workforce to improve efficiency amid growing competition in November.
Amid these developments, China’s growing clout as a vehicle exporter is causing friction abroad. The Chinese commerce ministry recently announced plans to encourage the new energy vehicle industry to respond to foreign trade restrictions and cooperate with overseas firms amid a European probe into Chinese subsidies for the sector.
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