XPeng (XPEV) Q4 2022 Earnings Call Transcript

XPeng (XPEV 2.87%)
Q4 2022 Earnings Call
Mar 17, 2023, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello, ladies and gentlemen. Thank you for standing by for the fourth quarter and fiscal year 2022 earnings conference call for XPeng Inc. At this time, all participants are in a listen-only mode. After management's remarks, there will be a question-and-answer session.

Today's conference call is being recorded. I will now turn the conference over to your host, Mr. Alex Xie, head of investor relations of the company. Please go ahead, Alex.

Alex Xie -- Head of Investor Relations

Thank you. Hello, everyone, and welcome to XPeng's fourth quarter and fiscal year 2022 earnings conference call. Our financial and operating results were issued by newswire services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at ir.xpeng.com.

Participants on today's call from our management will include 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 corporate finance and investment, Mr.

Charles Zhang; and myself. Management will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S.

Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U.S.

Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law. Please also note that XPeng's earnings press release and this conference call include the disclosure of the unaudited GAAP financial measures, as well as unaudited non-GAAP financial measures. XPeng's earnings press release contains a reconciliation of the unaudited non-GAAP financial measures to the unaudited GAAP measures.

I will now turn the call over to our co-founder, chairman, and CEO, Mr. He Xiaopeng. Please go ahead.

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] Hello everyone. In 2022, XPeng delivered more than 120,000 electric vehicles, a year-over-year increase of 23% and ranking No. 10 among emerging EV makers in China as measured by vehicle insurance registration volume. Throughout the year, a challenging macro environment and increasingly intense competition in the NEV market placed pressure on our performance.

Amidst this pressure, we saw an opportunity to become a first mover in tackling the challenges faced by industry and examine inhibitors to our business growth at the same time. At the end of last year, I rapidly and decisively conducted a review of our strategies and implemented a series of significant adjustments to our organizational structure with a focus on improving areas of weakness. We have decided to start the change with ourselves and revamp the business with a start-up mindset on an elevated platform with new angles. I believe XPeng is approaching an inflection point as we have clearly identified what our goals are and what our strengths and weaknesses are.

We're now building recovery momentum in ourselves and market share expansion. As we do this, we're placing a high premium on improving our organization and cost efficiency to fortify our strong foundation and better position our company for sustainable growth over the long term. Our overarching goal is to make XPeng a leader in the Chinese EV market and ultimately win the global EV race. [Foreign language] What excites me is that our strategic adjustment has induced meaningful results in the first quarter of this year, which gives me confidence that we will achieve sustainable and greater breakthroughs in the next few quarters.

My first step to the organizational restructure started with changes and upgrades in our top leadership. Ms. Fengying Wang has joined our team as president of the company, bringing us more than 30 years of experience in the automotive industry. Fengying is taking full responsibility for our product planning and sales operations and is also in charge of our product platform management scheme.

Her extensive industry experience, in-depth market insight, and strong execution capabilities will help our product capture customer demand more accurately, while greatly improving efficiency in our sales and services divisions. At the same time, the adaptations to our management organization are geared toward a flatter and more concentrated structure. Since February, all design, R&D, production, supply chain, and organizational management functions directly report to me. I believe that these shifts will significantly improve our planning capabilities and lift the efficiency of our decision-making and execution in the coming months.

More importantly, these adjustments have effectively refreshed our execution and competitiveness. For the foreseeable future, I will remain focused on lifting the labor efficiency across our organization by multiple times so as to generate increased customer value with the same headcount and greatly reduce costs across a full range of processes through technology and management innovation. [Foreign language] With regard to our product planning and design, we concentrate on customer perceived value and product differentiation in our innovation. We'll make substantial changes to future products model configuration, mix, whole vehicle, modularized design, and consistency in smart features.

In terms of interior and exterior styling and design, to meet XPeng customers' high standards for aesthetics, I am directly running the styling design division and building three teams that compete with each other to generate creative ideas. These initiatives will continuously improve our interior and exterior styling and space design capabilities. At the same time, I incorporated the net promoter score, or NPS, into the core performance indicators for a variety of business functions and requires feedback collection on a monthly basis. The NPS performance evaluation will anchor the transformation of our product planning, design, and development toward a customer-centric pathway.

I believe our new products, our OTAs, and new services to come will demonstrate substantial progress. [Foreign language] In terms of branding and marketing, we'll harness our core differentiation in autonomous driving to the full extent and enhance customer perception. We are broadening our addressable market, expanding our penetration from Tier 1 and Tier 2 cities, to Tier 3 and Tier 4 cities. So, far we have completed a preliminary merge between our branding and marketing teams and refreshed our overall strategy.

This will help us improve the quality, effectiveness, and flexibility of marketing activities in an effective way going forward, while significantly reducing marketing expenses. We have already flattened out the management hierarchy in our sales network. Furthermore, we are enhancing our network coverage, increasing competitive capabilities in our front-line sales staff and developing XPeng's powerful, data-driven sales touch points in order to achieve significant strides in sales growth. [Foreign language] On March 10th, we officially launched the new P7i sports sedan, which is an upgraded version of our highly successful P7 model.

Deliveries to customers also commenced in this month. Pleased to see our in-store traffic and test driving volume both hit new heights in recent months following the P7i's launch. This new product's smart features, styling, design, and performance, among other clear advantages in rivalry with similar products, were well received among customers. Amid the market's prevailing weakness in new order intake, our result outperformed the market.

Our new order intake in February increased 100% over the previous month. With the strong momentum of P7i orders, following its official launch, we expect to see a considerable month-on-month growth of total new order intake in March. This marks an initial success, following our comprehensive transformation, which is also boosted our company morale. [Foreign language] Our second new product model coming up this year, the G6, will make its debut at the Shanghai Auto Show.

Its official launch and vehicle deliveries will occur around the end of the second quarter. The G6 will bring the most advanced electrification and smart mobility technologies to the 200,000 to 300,000 yuan-priced NEV SUV market. With unrivaled interior space, range, styling, and interior decoration, we believe the G6 will become the top-selling model in its market segment. Following the ramp-up of G6 mass production, we expect G6 monthly sales target to be two to three times that of its P7 predecessor sales.

In addition, in the second half of 2023, we'll launch a brand new BEV 7-seat MPV. This new MPV model is designed to cater to customer cohorts that demand larger interior room while serving the needs of our family customers for a human-machine Copilot. [Foreign language] Recently, ChatGPT 4.0 and other AI-based applications have created a buzz among hundreds of millions of users on the massive potential of generative AI models. I am also very excited about this.

It represents a brand new phase of artificial general intelligence which on premise -- with on premise deployment that does not rely on cloud end, which not only redefines the pathway to realize autonomous driving, but also increases its efficiency. Given this development, there is an even higher possibility that autonomous technology further advances from L4 to L5. We expect to incorporate GPT technology deeply into XPeng's business across the board to create groundbreaking user experiences and exceptional improvements to our operational efficiency. [Foreign language] In late March, we began accelerating the rollout OTA rollout of City NGP, compatible with multiple models in several cities, including Guangzhou, Shenzhen, and Shanghai.

Through City NGP's OTA, we took the lead in mass producing the transformer-based BEV time-series network, or XNET in China, which achieved a milestone in deep-learning algorithm development and application. In the second half of this year, XNGP, powered by XNET's deep-learning algorithms, will no longer depend on a high-definition map. That said, XNGP will be supporting drivers on more urban roads across over 10 cities in China. Results from our testing showed the new version of XNGP outperformed peers' actual on road performance in the United States.

This leads us to believe XPeng's autonomous technology and its customer adoption is approaching a pivotal turning point. [Foreign language] We have built notable leadership in smart technologies, as well as customer adoption of smart technologies compared with peers. We're driving our technology roadmap and commercialization pathway to cross over the inflection point and reach an accelerated growth curve. While keeping high safety standards remains a top priority of our technology advancements, we'll also be focused on rapid development to improve scenario coverage, user experience, and software and hardware cost optimization.

In terms of scenario coverage, we have expanded the usage of the advanced technology from highway scenarios into city scenarios, where ADAS are used at high frequency and even become an essential driving tool. Going forward, we'll strive to further broaden ADAS usage to more end-to-end driving scenarios, such as internal compound ways and nonpublic roads, and expand our geographical coverage from three cities to more major cities nationwide beginning in the third quarter. In terms of user experience, we have achieved an important psychological barrier for customers to use autonomous driving to relieve drivers. That is, drivers can let the machine safely take the wheel, resting assured that they are acting only as a supervisor.

Looking ahead, we expect that, through continuous OTA upgrades, XNGP's driving skills will escalate every year and, in two to three years, reach a level that is equivalent to a human driver with three years of driving experience. We also expect that the number of manual takeovers per 100 kilometers will be reduced to one or fewer. Regarding cost efficiency, we plan to cut XNGP's BOM cost significantly next year and adjust our sales model from one that bundles sales of software and hardware, to one that splits the sales of software and hardware, which is going to enable autonomous driving on all of our new vehicles and allow more customers to use the latest autonomous driving capabilities. In pursuit of breakthroughs in the aforementioned three realms, we will bring great value to our customers and build our competitive edge in technologies, delivering long-term sustainable revenue growth at scale and with improved margin contribution.

[Foreign language] It has been said that the past five-year period was the golden age for new energy vehicles. I believe the next five-year period will be the golden age for autonomous driving. During the five years to come, XPeng's highly advanced autonomous driving technology and our efforts in optimizing our organization and making up for our weaknesses will help XPeng accelerate our ability to gain top market share. [Foreign language] In the face of fierce competition, in addition to our leadership in autonomous driving and aesthetic design, while greatly improving our product planning abilities, marketing efficiency, and organizational capabilities, I believe more powerful cost control will be the core competitive edge that will enable XPeng to secure its leadership in the EV market.

We'll advance the platform-based approach and technology innovation to propel our cost-reduction strategy. Entering 2023, we're applying a full platform engineering approach for our BEV vehicle platform, electrical and electronic architecture, powertrain system, and ADAS software and hardware development. This signals that we are entering a new phase of car-making in a unified system. In this way, we're able to develop products with superior product quality and customer experience at a faster pace and at a lower cost.

In the past, our R&D strengths were primarily manifested by our leading product performance. In the future, our R&D strengths will be underlined by maintaining the leading performance while achieving remarkable cost reductions. We have mapped out our strategic execution roadmap with associated cost reduction, including an over 50% decrease for autonomous driving costs and about 25 decrease for vehicle hardware costs, including powertrain over to 2023 to 2024 periods by means such as technology innovation and optimized configurations. I'm pleased to see that the design, technology, R&D, supply chain, and manufacturing teams are now working in a synergistic way to make our efforts and products more competitive through innovation.

[Foreign language] In terms of cash liquidity, our cash on hand at the end of 2022 amounted to over RMB 38 billion. As we have nearly completed our investment in our two manufacturing bases over the past few years, including this year, our capex will decline substantially. We have also established three powerful vehicle platforms that can support a series of new model launches over the next three years. Our R&D will further concentrate on initiatives that best correspond to with long-term trend and further differentiate our products in terms of customer experience and cost.

We'll also pursue improvements in operating efficiency throughout the entire process. For example, within our sales operations, we strive to improve same-store efficiency by optimizing our store network. We believe these cost optimization efforts will strive to deliver a material results beginning in the coming several months, including in the second half of this year. [Foreign language] It has always been my intention to build a successful company that can grow in scale instead of a small company in a niche market, or just any generic company out there.

Expanding our scale and market share to achieve economy of scale in both software and hardware is the primary goal in our long-term strategy. Although the product and management adjustment cycle in the automotive industry is more difficult than other industries and takes a longer period of time, we're still willing to sacrifice short-term sales and more patiently pursue greater victories in the medium and long term. [Foreign language] Excitingly, as we rapidly implement adjustment and changes to our management. In addition to instituting a host of upgrades and iterations in our product portfolio and marketing capabilities, we have seen encouraging changes and positive results.

I'm firmly convinced that beginning in the third quarter of this year, XPeng's monthly sales number will achieve significant growth, both sequentially and year over year, as well as be much higher than the industry's average growth rate. [Foreign language] I would reiterate that our current focus is on building and improving our capabilities in organization, product design, marketing, and cost control. Continuous efforts in refining management and accelerated new product launches in the era of autonomous driving will lead us to the next level of exponential growth. We'll continue to strive for this goal.

Lastly, we expect our total vehicle deliveries to be between 18,000 and 19,000 units in the first quarter of 2023 and revenue to be between RMB 4 billion and RMB 4.2 billion. Thank you, everyone. I'll now hand over to our finance VP, Dennis Lu.

Dennis Lu -- Vice President, Finance

Thank you, Mr. He, and hello, everyone. Now, I would like to provide a brief overview of our financial results for the first quarter of 2022. I will reference RMB only in my discussion today unless otherwise stated.

Our total revenues were RMB 5.1 billion for the first quarter of 2022, a decrease of 39.9% year over year and a decrease of 24.7% quarter over quarter. Revenues from vehicle sales were RMB 4.7 billion for the first quarter of 2022, a decrease of 43.1% year over year and a decrease of 25.3% from the last quarter. The year-over-year decrease was mainly attributable to lower vehicle deliveries for the G3 and P7, while the quarter-over-quarter decrease was mainly due to lower vehicle deliveries for the P5 and P7, which is partially offset by the newly launched G9. Gross margin was 8.7% for the first quarter of 2022 compared with 12% for the same period of 2021 and 13.5% for the last quarter.

Vehicle margin was 5.7% for the first quarter of 2022 compared with 10.9% for the same period of 2021 and 11.6% for the last quarter. The year-over-year and quarter-over-quarter decreases were mainly strengthened by the increased sales promotion. R&D expenses were RMB 1.2 billion for the first quarter of 2022, a decrease of 15.3% year over year and a decrease of 17.9% quarter over quarter. The year-over-year and quarter-over-quarter decrease was mainly in line with timing and progress on new vehicle programs.

SG&A expenses were RMB 1.8 billion for the year first quarter of 2022, a decrease of 12.9% year over year and an increase of 8% quarter over quarter. The year-over-year decrease was mainly due to the decrease of the commission paid to the franchise stores associated with lower vehicle deliveries. The quarter-over-quarter increase was mainly attributable to higher marketing, promotional, and advertising expense to support vehicle sales. As a result, the foregoing loss from operations was RMB 2.5 billion for the first quarter of 2022 compared with 2.4 billion for the same period of 2021 and RMB 2.2 billion for the last quarter.

Net loss was RMB 2.4 billion for the first quarter compared with RMB 1.3 billion for the same period a year ago and RMB 2.4 billion for the last quarter. As of December 31, 2022. Our company had cash, cash equivalents, and restricted cash, certain deposits, certain investment, and time deposits in total, RMB 38.3 billion. To be mindful for the length of our earnings call, I will encourage listeners to refer to our earnings press release for further details of our financial results for the fourth quarter and full year 2022.

This concludes our prepared remarks. We will now open a call to questions. Operator, please go ahead.

Questions & Answers:

Operator

[Operator instructions] Our first question will come from Tim Hsiao of Morgan Stanley. Please go ahead.

Tim Hsiao -- Morgan Stanley -- Analyst

[Foreign language] So, my first question is about the competition because the market with pricing -- price segment of RMB 200,000 to RMB 350,000, or $30,000 to $50,000, has XPeng on the stronghold and a key volume driver. However, if you look at what happened over the past few quarters, I mean Tesla, EV start-up, BYD, and even traditional carmakers, EV brands are getting more aggressive in this pricing segment. And I think yesterday, BYD just upgraded its Han EV and Han DMI to focus on the 200,000-plus market, and Tesla might consider having another round of price cuts. So, how do you think about the competitive landscape in this pricing segment? And how could XPeng make sure that its upcoming models, including G6 and the model next year, could stand out in the crowd of competitors? Will we be more pricing aggressive with more minimal cost down in the following quarters? So, that's my first question.

Thank you.

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] Thank you for your question. It's a very good one. Basically, we expect the market to experience a series of price cut by different OEMs in the coming couple of years because of the very intensified competition or competitive landscape in the current market, especially for traditional OCE carmakers because we expect to see a lot of oversupply to the capacity and the market, as well as some reduction in raw material pricing, which will lay a good foundation for a different price cut to be expected in the near future. And as a result, different brands and different players in the market will launch a series of price cuts in order to expand their market share.

Now, as I mentioned in the prepared remarks that the current first priority for XPeng is to optimize our organization as well as to expand our scale. And in addition to that, we also will continue to improve our autonomous driving capabilities, as well as optimizing our design language. Now next to it, we also will prioritize the cost optimization. In the past, we mainly focused on the development of the functionalities and the overall performance of our products.

Now, when we expand our price -- our targeted price range to cover more than 250,000 and 300,000 to actually a little bit lower to RMB 200,000, we realized there is actually a lot of room for improvement in terms of cost reduction, for example, just to reduce our overall costs in the R&D sector and also to integrate our software -- I mean, an aspect of our software and hardware design as well. That is why, in the coming future, we will, first of all, prioritize the scale development as well as improving our autonomous technology and overall product quality and performance while improving our cost structure in many new areas, especially to be reflected in our newly launched products to be expected. And also, we will expect some strategic price reduction in the near future as well so as to expand our market share and promote deliveries. Thank you.

[Foreign language] Looking back in 2017, there were about 300 carmaking start-ups and 770 passenger vehicle makers in the market. By now, there's only 50 players left. And in five years' time, maybe there will be less than 25. And in 10 years' time, less than 10, which means that by that time, the annual deliveries of each single carmakers will not be 100,000, you know, 0.5 million, or 700,000.

It needs to be at least 7 million in order to survive, which means that we need to have a solid foundation in terms of our hardware and software capabilities, as well as our cost control capabilities as well in order to just survive in a market in the fears and intensified competition, not, you know, letting alone becoming the winner in the competition. And that is why in the coming five to 10 years, our priority will be to solidify our leadership in our technological R&D capability, as well as our cost control. Thank you.

Tim Hsiao -- Morgan Stanley -- Analyst

[Foreign language] So, my second question is about the sales network. Could you please help to update us the expense of the channel strategy this year? While the Tier 1 and 2 cities, they will stay as strategically critical, the growth in the lower tier cities in China will soon outpace the higher tier cities and become the key growth driver. So, quite a few EV makers are targeting to penetrate into the lower tier cities. And so, how is XPeng going to grow its presence in the lower tier cities? And in the meantime, will the company change its hybrid business model consisting of the direct sales and the dealership? Will be there any mature changes in upcoming quarters? That's my second question.

Thank you.

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] Thank you. Our newly recruited senior management member, Ms. Fengying Wang, actually is way more experienced than me in terms of channel distribution and seems, you know, one month after her enrollment, she already has numerous discussions regarding our distribution channels in our network development. So, for this year, we have several strategies in place already.

First of all, we will maintain our current model of having directly run in franchise stores in order to promote our sales and distribution. However, the maximum franchise stores will increase. And the second point is that we have and will continue to flatten our management structure so as to improve the overall service quality, as well as to improve the profitability and efficiency of our distribution channels. And the third point is that we will actually expand the functionality of those kind of channels to include not only sales purposes or functionality, but also to increase for its function as well so as to provide a more comprehensive set of services to our customers.

Now, one of our upcoming next steps, which I can reveal right now, is that we don't believe that it would be very effective to have a large number of small distributors or small channels. Rather, we prefer to prioritize the development of quality channels to improve our overall service and distribution efficiency. Thank you. [Foreign language] Regarding the second part of your question, which is the channel network in Tier 3, Tier 4 cities, first of all, we will work with our partners to expand the channel and network.

In addition to that, we will also design and curate appropriate products suitable for Tier 3, Tier 4 cities. And we do have some face-lifted products upcoming to be expected. Thank you.

Tim Hsiao -- Morgan Stanley -- Analyst

[Foreign language] Thank you very much for all the insightful updates.

Operator

The next question comes from Paul Gong of UBS. Please go ahead.

Paul Gong -- UBS -- Analyst

[Foreign language] So, my first question is regarding, say, on the arrival of the Ms. Wang Fengying's new role as a president, what has been her biggest criticism on the XPeng Motors for the current situation, and what is her plan to change it?

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] Now, this is a very interesting question. Ms. Wang has been with us -- has arrived for more than one and a half months. Her biggest criticism for the company is twofold.

First one is on the planning side and the other is on sales and marketing. I mean, this is definitely a very positive sign because it is better to see the problems and have solutions rather than, you know, being fully complacent without seeing the root cause of the problems. And so, right now, we are in full force to correct some of the mistakes that we previously had. And personally, you know, I feel a lot of pressure from Ms.

Wang because she is working seven days a week. And right now, we are all following this trend of being very, very diligent at work. So, that is a lot of pressure on me.

Paul Gong -- UBS -- Analyst

[Foreign language] So, my second question is regarding your interest in comment on the ChatGPT application into the smart vehicles. Can you give us some kind of some example? How do you imagine such kind of technologies to be used in the long term in the smart vehicles? And if so, should we pay for certain technology royalty or kind of technology servicing fee on that?

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] Thank you for your question. Now, definitely ChatGPT and related technologies will provide a lot of values for our midterm and long-term development. Now, when we look at autonomous driving technology or capabilities, the lower level or medium level kind of autonomous driving technology always face the conundrum of being not smart enough as human drivers because cars definitely can be very capable as a driving vehicle. But in terms of decision-making, a lot of it comes down to the intelligence level.

So, the fact that AI technology allows on-premise deployment, as well as cloud and connection, will actually be a catalyst in terms of the development of autonomous driving technology all the way from level four to level five. Now in terms of the potential fee or cost of adopting the technology, first of all, we will look at the-near term application in the software side, which will be much sooner than its application on the hardware side because its application in the hardware, we're talking about integrating the software together with the hardware, which is quite a different story from just applying it on the software side. And we mainly will look at some of the key areas in, for example, education and also document processing, language processing, etc. And definitely, we expect to see a lot of variations of related to ChatGPT technology in China.

And we will select the right partners for XPeng in the future according to our developmental pathways. And right now, we are in conversation actually with a lot of potential partners. And the -- you know, in regards to the potential cost, we believe it's quite minimal. Thank you.

Paul Gong -- UBS -- Analyst

Thank you very much.

Operator

The next question comes from Bin Wang of Credit Suisse. Please go ahead.

Bin Wang -- Credit Suisse -- Analyst

[Foreign language] So, I actually got two questions. Number one is the bio cost deduction. You mentioned about 25% cut in the vehicle components cost, which is very amazing. Can you give me more detail about how you can achieve that? For example, do you use the integrate die cast into the cost cutting? And it's very important.

The second question is about G9. G9 actually has been doing not good recently, but previous, you were saying kind of G9 volume would be even higher than P7. How you can maintain the G9 sales momentum? And what's your maintenance status for G9? Thank you.

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] Specifically speaking, the cost reduction target of 25% is not amazing per se, but it definitely indicates that, in the past, you know, we definitely still -- we're not doing good enough. There's not a lot of room for improvement in terms of cost reduction. And right now, we are seeing multiple ways to actually reduce our costs of manufacturing and overall production. For example, as you mentioned, you know, we have some new technologies in our hardware, the integrated stamping techniques that can help us to reduce the cost of manufacturing the whole car.

And also, in terms of pack of the whole vehicle as well, we have some viable methodology that can help us to reduce the cost by about 50% to 60%. In addition to that, in terms of the overall chip and battery, we are now employing or adopting the whole vehicle platform engineering technique that can also help us to drive down costs. So, as a result, there is a mix of methods and a range of ways for us to reduce costs in terms of our powertrain, you know, overall whole vehicle platform, engineering, architecture, scale, and also different configuration as well. So, overall, in the coming period in the second half of the year, first half of next year and also the second half of next year, we have set of different developmental stages goals in terms of our cost reduction, and the effect can be expected.

Thank you. [Foreign language] Now in regards to the deliveries of G9, definitely, in the price range of RMB 300,000. Among all the BEV rivals, there's been a lot of challenges in pushing its sales. However, you know, in the near future, we did have -- we do have several moves in place to boost its sales deliveries.

The first one is that we're ramping up several configurations, and the second one is by implementing the XNGP function on G9, as well as on P7i, which we believe will greatly enhance the attractiveness of G9 as a product. In addition to that, we are now getting a lot of positive feedback from our customers who have received their G9 in terms of the product quality and overall performance. In addition to that, we believe that the launches of P7i, as well as G6, will boost foot traffic in our stores, as well as encourage interest in G9 as well as part of the product line. In addition to that, we are now already seeing, you know, reinvigorated sales or deliveries in March compared to the months before, which was February in the market.

And so, we are still very confident that we can -- you know, we are on the right trajectory to meet our delivery target for G9 for the year.

Bin Wang -- Credit Suisse -- Analyst

Thank you.

Operator

The next question comes from Nick Lai of JPMorgan. Please go ahead.

Nick Lai -- JPMorgan Chase and Company -- Analyst

[Foreign language]

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] I think what you mentioned in your questions might be viable, you know, 15 years ago, which was that, you know, you can basically sell anything as long as, you know, they are cheap enough. However, it might not work today. We still believe that part of quality speaks volume. So, for this year, in terms of our overall marketing and pricing strategy, you know, we have set up different aggressive goals for, for example, the second half of the first quarter, as well as for the upcoming several quarters of the year.

So, we definitely expect a lot of reinvigorated deliveries or sales outcome for the rest of the year.

Nick Lai -- JPMorgan Chase and Company -- Analyst

[Foreign language]

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] Now, in regards to battery supply, first of all, in January last year, we saw this pricing inflation happen to -- in the industry, which really encouraged the development of hybrid vehicles in the market, but not much -- you know, but hurt a lot of development in BEV sector. However, this year we are happy to see that the pricing of batteries have come down. And these newly launched price war in the industry led by a lot of battery makers, especially the leaders, is definitely a very good sign or very beneficial for development of BEVs and can help us to improve our pricing competitiveness as well. Now, so far, based on our conversation with our battery suppliers, we are confident that the price reduction -- the degree of the price reduction, you know, by XPeng supplied by our supplier partners will be more aggressive than the industry average.

And that's just from the outside. Looking internally, we also have discovered different ways to optimize our cost structure to reduce our costs in terms of the powertrain batteries, as well as our pack by, for example, integration as well -- integrating some of the parts, as well as replacing traditional and NCM or NCA batteries with LFP batteries, also by extending the usage or the driving range that you can support per battery by about 10% to 20%. You know, all of these ways can help us to further drive down our battery cost, and you can actually see the effectiveness or outcome in the coming 12 months.

Nick Lai -- JPMorgan Chase and Company -- Analyst

[Foreign language]

Operator

The next question comes from Ming Lee of Bank of America. Please go ahead.

Ming Lee -- Bank of America Merrill Lynch -- Analyst

[Foreign language] So, my first question is regarding the product competitiveness of G6 because management just mentioned they expect G6 in the future. The stabilized monthly sales could be two to three times of P7. But because the G6 is in a similar price segment of P7, so what is the product competitiveness to give you the confidence? [Foreign language]

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] My apologies, I really cannot reveal too many details regarding our yet-to-launch models, but you can expect to learn more about G6 in mid to low April this year in Shanghai Auto Show. But something that I can mention about some highlights of G6 is, first of all, it has a longer driving range supported by our optimized weight of the whole vehicle, you know, driven by our integrated stamping technology, as well as better heat management and wind resistance management technology as well. In addition to that, the interior space of G6 is amazing, especially if you are looking at the second row of the car. The seating area is pretty spacious.

And another characteristic to G6 or highlight is its aesthetic. The design language follow the XPeng style, which is going to be very appealing to our customers. Thank you.

Ming Lee -- Bank of America Merrill Lynch -- Analyst

[Foreign language] So, my second question is related to the battery technology. So, in the future, will you consider to use a different type of battery, for example, like a cylindrical type of battery? And besides that, regarding your current older backlog, G9, you already provide the high-voltage fast-charging battery. What is the -- is that ratio high enough? Or if not high enough, is this because the charging infrastructure is still not enough? Or consumer feel comfortable based on the current -- the normalized battery pack size? [Foreign language]

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

[Foreign language] Regarding G9 and all of our upcoming new models and facelift versions, all of them will be equipped with the fast-charging capabilities suitable for 800 voltage and also silicon carbide fast-charging technology. And we will also expand the construction of this fast-charging infrastructure as well. Now, what I would like to mention is that this fast-charging technology will not only work on the dedicated charging file, but also in the original charging file as well. So, you can actually speed up the charging by using the technology on both charging files.

In addition to that, we also have put in place our modularized optimization technology to optimize the batteries, as well as the chip in the design of those new vehicles. So, we are open to the possibility of adopting cylindrical batteries in the future.

Ming Lee -- Bank of America Merrill Lynch -- Analyst

[Foreign language]

Operator

Due to time constraints for this call, I'd like to turn the call back over to the company for closing remarks.

Alex Xie -- Head of Investor Relations

Thank you once again for joining us today. If you have further questions, please feel free to contact XPeng's investor relations through the contact information provided on our website or the Piacente Financial Communications.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Alex Xie -- Head of Investor Relations

He Xiaopeng -- Co-Founder, Chairman, and Chief Executive Officer

Dennis Lu -- Vice President, Finance

Tim Hsiao -- Morgan Stanley -- Analyst

Paul Gong -- UBS -- Analyst

Bin Wang -- Credit Suisse -- Analyst

Nick Lai -- JPMorgan Chase and Company -- Analyst

Ming Lee -- Bank of America Merrill Lynch -- Analyst

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