Xpeng Motors is moving a step forward after announcing a stellar 2019 start by launching a pilot ride-hailing service, Pengster. Will it beef up competition or simply move mobility a nudge up? We’ll know eventually. In the meantime, Xpeng Motors is about to roll out ride hailing in the world’s biggest mobility market.
Step 2, Xpeng Motors Now Targets Ride Hailing
After a very successful year so far for Xpeng Motors, the startup kicked off its ride-hailing trial operation on May 16 in Guangzhou. The Alibaba-backed startup received its ride-hailing operation license from the Guangzhou authorities earlier this week. This comes after BMW announced it had secured its ride-hailing permit for Chengdu, making it the first global carmaker to get a license to operate a ride-hailing service in China.
Why are EV makers like Xpeng eager to forge into the ride-hailing market where the big industry leaders are still making losses? According to an anonymous employee: “It will be an important component to Xpeng’s future smart mobility ecosystem, with cars as the entry point to the broader service offering.” The ride-hailing service would enable the EV maker to gain important operational experience from diversified scenarios, promoting its cars to a larger potential customer base and improving user experience.
To say that Xpeng Motors is on a roll is not an overstatement. The company is pragmatically checking the boxes on all the steps to a bright future, and in a pragmatic way in order to grow into a financially healthy mobility provider. Auto Shanghai 2019 also showed Xpeng is part of a new wave of startups that are cautious, pragmatic/realistic, and generally won’t repeat the same lavish mistakes their predecessors made.
Earlier this year, Xpeng Motors advertised a few job openings for fleet managers, operation, and business development specialists on its site in anticipation of the new step. Its chauffeur-driven ride-hailing service will be run by dedicated licensed drivers, only using its Xpeng G3 SUVs. The trial started in Guangzhou where it’s headquartered with several hundred cars, expanding to about 2,000 vehicles by the end of 2019. Will it expand into other Chinese cities? It will depend on a combination of factors: demand, licensing, and its capacity. Xpeng Motors says its long-term goal is to “build a smart mobility ecosystem with truly intelligent products, the best user experience available, and value-added services for customers.”
So far, Xpeng Motors raised over 10 billion yuan ($1.445 billion) from investors such as Alibaba and private equity firms such as IDG Capital, Primavera Capital, Morningside Venture Capital, and Xiaomi Corp founder Lei Jun. The startup’s ride-hailing operation, equipped by its own fleet and vehicles, is very different from Uber’s and that of Didi’s. So the questions is, is it painting a complete picture of the situation by only focusing on profitability when so many startups still defy that logic? Perhaps, but ultimately we’ll judge its effectiveness in years to come. But it’s logical for an EV maker to run a virtual moving showroom where it can gather feedback from its ride-hailing fleet. Xpeng Motors says it does not spend as much money on marketing or retail stores as other OEMs do, and this is an effective way of promoting its vehicles.
Xpeng’s mobility move with this pilot project comes as a growing number of carmakers are exploring the same or similar strategies. It is a challenging move for new EV startups, as it requires manufacturing and delivery capability to meet the demand of a running fleet. In April alone, Xpeng delivered 2,200 units, the highest among any EV startups in China, according to CPCA data.