What Has He Xiaopeng Learned After 11 Years of Making Cars?

On August 26, the second episode of Luo Yonghao's video podcast program "Luo Yonghao's Crossroads" was launched. Following Li Xiang, the founder of Li Auto, He Xiaopeng, the CEO of XPeng Motors, participated in the program as the guest of the second episode. The two leaders of the new car-making forces took the stage consecutively to engage in an in-depth conversation with Luo Yonghao, and the public inevitably compared their conversation styles.

Compared to Li Xiang's four-hour candid disclosure of his growth journey, He Xiaopeng appeared more reserved in the first half of the interview, tactically avoiding many somewhat sensitive questions. This diminished the overall excitement of the interview itself and made He Xiaopeng's image somewhat vague. Especially since Luo Yonghao, as an experienced interviewer, often talked at length about his own experiences, He Xiaopeng did not interrupt but was happy to listen.

However, this three-hour conversation still revealed many new things, such as He Xiaopeng’s thoughts on financial freedom and his attitude toward money, company management and his own quick temper, and of course, technology. When the topics turned to flying cars, autonomous driving, and AI, it was clear that He Xiaopeng was in his comfort zone. Most car company leaders pride themselves on being tech guys, and He Xiaopeng is no exception. He said he is always building a “slow company,” starting with technology, then focusing on users, and only finally considering the business model.

It is worth noting that the recording of this episode should be on August 7th, after the debut event of the all-new XPeng P7. As the car manufacturing industry enters the second half, NIO, XPeng, and Li Auto each face new challenges: NIO's profitability issues, Li Auto's breakthrough in pure electric vehicles, and for XPeng, after achieving volume sales with the 120,000 yuan MONA, where is the next product growth point? After lowering prices, how can the brand be elevated again? XPeng is also the quietest among the three emerging forces, possibly due to He Xiaopeng's personality, which is more restrained than Li Xiang and more distant than Li Bin. Similarly, XPeng lacks the controversy of Li Auto and doesn't have the high user loyalty of NIO. The episode was released a day before the launch of the XPeng P7, giving He Xiaopeng the needed buzz.

According to data provided by Newrank’s monitoring tool “ShengLiangTong,” on August 27, the number of online posts related to “He Xiaopeng” surged from 308 on August 26 to 1,884, even surpassing the 819 posts generated by the launch event of the all-new XPeng P7. Online engagement also rose to 266,000, exceeding the 164,000 recorded on August 7.

What was He Xiaopeng like when he was young?Thinking about financial freedom

He Xiaopeng from Hubei did not talk much about his early experiences. Public records show that he graduated in 1999 from the South China University of Technology with a degree in computer science and joined AsiaInfo Technologies, where he held positions such as technical manager, testing manager, and project manager.

When he was young, He Xiaopeng had already realized that working for others would never lead to financial freedom. He mentioned that during university, he had envisioned three paths to wealth: buying lottery tickets, purchasing property, or finding a good company to get stock options. The lottery depended on luck, property was unaffordable, and although he got stock options, the share price fell below the issue price. He Xiaopeng ultimately discovered that the fourth path—entrepreneurship—was the most feasible.

He revealed to Luo Yonghao that before creating UC Browser, he co-founded a company called Longyuan (LY) as a follower entrepreneur. The well-known UC was his second venture, which took place in 2004 when the Chinese internet was in its early stages, and He Xiaopeng was 26 years old. Ten years later, UCWeb was fully acquired by Alibaba for over $4 billion, granting He Xiaopeng, who was not yet 37, financial freedom.

It was also from UC that He Xiaopeng began to interact with capital. Luo Yonghao asked him a very specific and realistic question—how much money did he, as the first founder, earn after UC's inception? He Xiaopeng merely stated that they avoided issues related to the unequal distribution of power, money, and responsibility, and began to evade the question. He talked about the importance of partnership relations and team collaboration during the growth phase of a company, and he described UC's development history and transformation. His response was steady but dull, a reflection of a middle-aged man.

He Xiaopeng is more adept at technology. Reflecting on his entrepreneurial journey, he stated that he always considers technological changes first, then seeks user needs, accumulates users, and finally envisions a profit model. When running a business, one undergoes a prolonged period of losses. The advantage is that technology is constantly evolving, and throughout the journey, there is no room for complacency. "In the tech industry, there's no such thing as resting on one's laurels."

After selling UC, He Xiaopeng suddenly found himself with a huge fortune and began facing a dilemma—how to spend it. Most investments made without proper understanding ended in failure. He Xiaopeng later concluded that one should not spend money in fields they do not understand. However, the process of learning to view money more scientifically is a life experience, and he needed to undergo what is known as the growth of his personal nature.

Entering the "endless hell" of car manufacturing

In 2014, XPeng Motors was founded, originally named Orange Car. He Xiaopeng, who was serving as the President of Alibaba Mobile Business Group and Chairman of Alibaba Games, participated in the automotive field as an investor. He did not choose the automotive industry at the beginning; transitioning from software to hardware was full of challenges. The manufacturing industry, especially automobile manufacturing, is capital-intensive and does not allow for rapid iteration like the internet. However, he believes that smart cars are the future, which is also the field he is most interested in.

More than one founder of new car brands has stated that entering the automotive industry was based on the illusion brought by electric vehicles. He Xiaopeng was one of the first Tesla owners, and after experiencing the driving charm of electric vehicles, he had a similar thought—one could create a car with an excellent experience without spending ten to twenty years in the automotive industry. He Xiaopeng now recalls that if it weren't for the illusion that making cars was simple, he wouldn't have had the courage to enter this field.

In 2017, a friend told him that the integration of automobiles and AI was about to begin, and if he didn't get involved soon, he would miss the opportunity. After much consideration, He Xiaopeng felt that he was neither suited for investing nor for lying flat or immigrating; entrepreneurship was still the right path for him. That year, he officially joined XPeng Motors and personally took part in making cars.

This journey is already a well-known story. First-time entrepreneurs tend to underestimate the difficulty of getting things done, and He Xiaopeng has stated in several interviews that building cars is like swimming in a sea of blood, "It's too tough." He found that in a startup company, the most painful thing is that despite listening to a lot of advice and reflecting on many lessons, one still cannot avoid the pitfalls that predecessors have stepped into. History repeats itself over and over, and people make the same mistakes in different environments. Entrepreneurs may appear calm and unruffled, but it is only because they have stumbled many times and endured countless hardships that the experience has been etched into their bones.

The failure of the XPeng G9 in 2022 is still fresh in memory. He Xiaopeng emphasized the dangers of blindly delegating authority, believing that founders must be deeply involved on the front lines. He experienced the significant differences between the automotive industry and the internet: "In internet companies, different business units don't need to intersect much, but it's different with automobiles. Developing a car takes four to five years initially, involves hundreds of professions, and requires investments of billions. If one aspect doesn't align well, it becomes a problem."

Whether it is manufacturing, experiencing, or consuming, there is a significant time difference between automotive products and internet products. He Xiaopeng, who comes from a software background, has long ingrained the concept of rapid iteration and ultimate experience into his muscle memory. However, applying this to the hardware world can easily lead to misdirection. He Xiaopeng constantly compares the differences between the two industries and experiences the distinctions between software and hardware manufacturing in practice. These differences permeate the organization within XPeng Motors, where the team consists of relatively conservative traditional automotive industry personnel and aggressive, efficient individuals from an internet background. Working together, He Xiaopeng candidly admits that conflicts and ideological differences still exist, and coordinating both sides is a significant challenge.

Having taken quite a few detours, he is gradually returning to reality. In the second half of last year, XPeng launched two low-cost models, MONA M03 and P7+, which drove rapid sales growth. This year, XPeng's second-quarter financial report shows that the operating loss in the second quarter continued to narrow to 930 million yuan, a year-on-year decrease of 41.9%. He Xiaopeng has promised that XPeng Motors will achieve its first quarterly profit in the fourth quarter of this year.

Despite He Xiaopeng claiming that car manufacturing is extremely challenging, he also experiences a kind of enjoyment he has never had before.

He mentioned multiple times that the physical world has an intuitiveness different from the internet. The interactions and entertainment experiences created by software are built on imagination, while hardware innovation is based in the real physical world and directly engages the body. When the former internet super product manager stepped into the physical world, he stated: "Being a product manager in both the physical and digital worlds allows one to attempt to make small changes and innovations in a person's multiple senses, not just the five senses. This feeling is particularly great, and as a product manager, it's the most thrilling."

He radically believes that car manufacturing is an elimination game, and the results will be evident in 3 to 5 years. By then, only five domestic car companies will remain. Currently, no one has secured a ticket, including Tesla. However, this also means the industry is becoming "more perilous and also more interesting." He hopes that more naive and honest entrepreneurs (like himself) will stay in the industry.

Xiaopeng's Emotion Management and Organization Management

After 11 years in car manufacturing, He Xiaopeng has gained firsthand experience in the manufacturing industry and learned to restrain his emotions in organizational management. He candidly admits that he is actually a person with a hot temper, but he appears somewhat gentle in contrast to the even more fiery-tempered Wang Fengying, the president of Xpeng Motors. He reminds himself to control his temper as much as possible to avoid making wrong decisions due to emotions.

An interesting point is that when they first started the business, the honest He Xiaopeng and his co-founders were concerned about their lack of social experience. To avoid making decisions on the spot, they referred to themselves as vice presidents when meeting investors and discussing business collaborations. This shows that the initial team dynamics were quite equal. He Xiaopeng did not elaborate on how he became the leader, but he aspired to create an open and egalitarian company, which seems to be a common trait of internet companies. At the very least, they aimed for equality in titles, avoiding terms like "chief," "director," or "manager," and even reverting to school-like titles. Within the company, He Xiaopeng is referred to as "Senior Brother," with the management team following as "Second Brother," "Third Brother," "Master," and "classmates."

However, the car industry is so large that it requires extreme collaboration among various departments. The production and manufacturing workshops, in particular, often need to be managed in a semi-militarized manner. As the main decision-maker, he is responsible for the outcomes and must ensure that execution remains precise. The internal hierarchy is inevitably one where superiors oversee subordinates. When it comes to matters like losing temper and scolding, it's hard to maintain an open and equal environment. He Xiaopeng revealed that he installed double-layer glass in his office: one to block the sound of Wang Fengying scolding from outside, and the other to block his own scolding from inside, so it wouldn't affect the work of those outside.

Having experienced the growing pains of management, He Xiaopeng is no longer the young man from twenty years ago who worried about his lack of social experience. Although he claims he's only become a bit more astute over the years, he now understands human nature. He wrote on Weibo, "It's important to follow your heart in doing things, but if you can still hold onto your true self after witnessing countless losses, that's self-rebirth."