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On October 9, Xiaopeng announced that the head of the purchasing department was suspended and a number of employees cooperated with the investigation. People familiar with the matter said that the incident began with Xiaopeng's internal supply chain anti-corruption, involving a number of levels, as well as police involvement. At the internal meeting on the same day, Li Feng, the head of the procurement department, was suspended, and a number of employees were named to cooperate with the investigation, which was higher than the number at the beginning of the year.

In response to the above news, Xiaopeng Motor responded that the company's action is a normal anti-corruption behavior, for corruption, found together, error correction together, will not tolerate, the incident involves a small area, does not affect business, production links.

Data show that before Li Feng was suspended, he was vice president of Xiaopeng Automobile, in charge of supply chain business, and reported directly to he Xiaopeng, chairman of Xiaopeng Automobile and CEO. He Tao, co-founder and senior vice president, was originally in charge of the business, but after Xiaopeng's initial public offering failed, Xiaopeng began an internal organizational restructuring, and he Tao's business was integrated and decentralized. At the end of 2022, Xiaopeng Automobile adjusted its supply chain business department, merging the original supply chain service department, marketing service procurement department and parts procurement department into a procurement department, with the aim of improving the refinement level of cost control and the compliance ability of the financial system. To achieve cost reduction and efficiency. Since then, the department has been headed by Li Feng, vice president of Xiaopeng Automobile, in charge of the purchasing department of the company.

In May this year, Li Feng also attended the supply chain-oriented Xiaopeng Automobile Global Partnership Conference with he Xiaopeng and Wang Fengying, president of Xiaopeng Automobile.

Insiders revealed that the internal anti-corruption is related to the high cost of purchasing parts and components of Xiaopeng. Xiaopeng automobile executives have said publicly many times that the cost is higher and the product needs to be better reduced. It is reported that before Wang Fengying took office, the purchase price of Xiaopeng car parts was generally higher than that of its peers. Not long ago, he Xiaopeng also said at the press conference of changing the G9 that in the cooperation between Xiaopeng and Volkswagen, Volkswagen China CEO Bedri told the G9 that the cost of many parts was too high.

Since October last year, Xiaopeng has begun to make a series of changes, including a comprehensive adjustment of the internal organizational structure, financial system and marketing system. In addition, Xiaopeng has also set up a new financial platform to improve the refinement of cost control and the compliance of the financial system.

Major personnel adjustments have also taken place, including Wang Fengying, former general manager of the Great Wall, who joined Xiaopeng Motor as president in January this year, responsible for Xiaopeng Motor's product planning, product matrix and sales system, and reported to he Xiaopeng. Wang Fengying's parachuting is seen as Xiaopeng's self-help during a critical period of organizational change. After its performance, Xiaopeng also carried out internal reforms, including budget cuts and corruption. According to a previous report in the 21st Century Economic Review, employees in the purchasing business at that time were taken away by the police for investigation, involving supplier contracts, and travel budgets were also being tightened. At the same time, Xiaopeng Motor has also launched a number of measures to reduce costs and increase efficiency internally, and the word "cost reduction" has been constantly mentioned by he Xiaopeng.

As early as last year, he Xiaopeng issued a full-staff email to adjust the company's organizational structure, and the company generally implemented business Business Unit (business unit), so as to promote the company to reduce costs and increase efficiency. At the earnings call in the third quarter of the same year, he Xiaopeng said that reducing costs, producing more products with lower R & D investment, reducing marketing expenses and reducing capital expenditure will be Xiaopeng's future priorities.

According to the financial report, Xiaopeng's total income in the first half of 2023 was 9.096 billion yuan, down 38.92% from the same period last year; the net loss was 5.142 billion yuan, up 16.81% from the same period last year; and the gross profit margin suffered a "Waterloo", with a gross profit margin of-1.43% in the first half of the year. It is the only company with a negative gross profit margin among "Wei Xiaoli". What is even more frightening is that its car gross profit margin has fallen to-5.90%. It is understood that Xiaopeng's gross profit margin has been declining since 2022Q1, with Xiaopeng's gross profit margin of-2.5% in the first quarter and-8.6% in the second quarter of this year.

Judging from the financial report data, reducing the cost is indeed Xiaopeng's top priority. At the earnings call in the second quarter of this year, he Xiaopeng said bluntly that the company's overall cost is expected to be reduced by 25% in 2024, and that the company is carrying out a "full-process cost reduction" and break even by 2025.

As of press time, Xiaopeng Motor closed at HK $66.05 per share, with a total market capitalization of 114.4 billion yuan.

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