Xpeng Consolidates Four Product Lines Into Two to Cut R&D Costs as Deliveries Slide

• Xpeng has consolidated its 4 product lines into 2 to focus R&D resources and reduce costs.
• The restructuring comes as Xpeng's deliveries fell 10.49% in the first 8 months of the year, while rising R&D spending continued to weigh on earnings.

Xpeng (NYSE: XPEV) has reportedly consolidated its product lines from 4 to 2, seeking to cut research and development spending while expanding its vehicle lineup.

The Chinese EV maker recently merged its I and F product lines into the G line, leaving only the G and D lines, local media outlet 36Kr reported on Monday, citing several industry sources.

Previously, the G line primarily handled large SUVs including the GX and G9L, while the F line covered products including P-series sedans. The I line was responsible for overseas products, and the D line oversaw the Mona series.

Following the restructuring, the Mona series remains under the D line, while all other products fall under the G line, according to 36Kr.

The change concerns internal product management and R&D responsibilities, rather than a reduction in the company's vehicle lineup to 2 models.

The restructuring also involves changes in management responsibilities. The former head of the F line now oversees product definition for the G line, with no change in rank, the report said, citing an industry source close to Xpeng.

The former head of the I line has shifted to overseeing Xpeng's overseas affairs, excluding vehicle sales in overseas markets, according to the report.

Consolidating the product lines could help focus R&D resources, lower costs and reduce internal competition between models with overlapping positioning and pricing, the report noted.

The restructuring comes as Xpeng rolls out new models at a rapid pace while delivery growth remains under pressure.

The company delivered 243,111 vehicles in the first 8 months of the year, down 10.49% from a year earlier, according to data compiled by CnEVPost.

Xpeng delivered 39,107 vehicles in August, up 3.71% year-on-year and 2.84% from July. Although monthly deliveries have risen year-on-year for 3 consecutive months, the gains have yet to make up for the shortfall earlier in the year.

The pressure to translate investment into returns is also evident in its financial results. Xpeng posted a second-quarter net loss of 1.34 billion yuan ($199 million), widening from 480 million yuan a year earlier but narrowing from 1.78 billion yuan in the first quarter.

R&D expenses rose 32.1% year-on-year to 2.91 billion yuan in the same period, mainly due to increased spending on new models and AI-related technologies. Deliveries rose just 0.1% to 103,295 vehicles.

Vehicle margin was 12.1% in the second quarter, flat from the first quarter but below 14.3% a year earlier. Xpeng attributed the year-on-year decline to model transitions.

Services and other businesses supported overall profitability, lifting the company's second-quarter gross margin to 20.7% from 17.3% a year earlier.

Xpeng is continuing to expand its lineup alongside the internal restructuring.

The company launched the G9L flagship 5-seat SUV on September 17, complementing the 6-seat GX to serve different family needs.

The Mona series is also expanding. Deliveries of the Mona L03 began in July, and chairman and CEO He Xiaopeng said on an earnings call in August that the Mona L05 SUV was scheduled to launch in China in the fourth quarter.

With these new models, Xpeng aims to exceed 60,000 single-month deliveries in the fourth quarter, Mr. He said at the time. That target is about 53% above its August delivery level.