Q1. Why do you have a sell rating for XPeng
A: The first reason is its market position as its flagship model P7 has high similarity with Tesla model 3. The sales for P7 is weak previously at around 3,000 units monthly and we don’t see the steady sales ramp up for its sales. So my biggest concern is its market position. Secondly, although XPeng has first move advantage in terms of autonomous driving, we don’t consider it as a significant sales driver at current stage.
 
Q2. Do you have any concern on Xpeng and other companies in terms of chips supply shortage? How much effect will chips shortage have on auto makers?
A: I think the effect is about 5% of the total sales volume in 2021 in China market, but it is likely to recover in the second half of the year. I see the chip supply shortage problem, but for Nio, Li Auto and Xpeng, the impact might be relatively small as their sales volume is small.
 
Q3. What about the other cost pressures that you will be concerned about for the auto recovery in China?
A: We see the economy is recovering so the price of raw materials, commodities and chips is increasing which will bring pressure on the total cost.
 
Q4. There is concern about that Tesla might be affected by the protest related to braking failure at the Shanghai auto show. And now we heard the state media says that Tesla needs to take care of customers’ right. Is that a worry for Tesla in terms of domestic competition?
A: You can see the tech issues is very common for the EV makers at current stage, so I think what those EV makers have to do is to improve quality and service provided to the customers. I don’t think it is a big issue for Tesla, that government will still support EV auto makers at current stage. So if auto makers could bring in new technology, this kind of accidents might be controlled but not fully avoided.
 
Q5. Report of CICC says partnership with HUAWEI for developing high-end self-driving EV brands that would boost growth. What are your thought?
A: Vehicles developed on HUAWEI technology is very impressive in terms of autonomous driving and the price is also very high. In my opinion, autonomous driving could help to attract new customers, but it may not be a significant sales driver at current stage. And HUAWEI may not be a game changer at 2021 as competitors also launched models with high level autonomous driving ability at the Shanghai auto show.