Feb 19 2024: Chinese electric vehicle (EV) company Xpeng (NYSE:XPEV) has revealed plans to recruit 4,000 new employees this year and dedicate substantial funds to artificial intelligence (AI) initiatives, aiming to navigate through what it terms as intense competition in the world’s largest automotive market.
The recruitment initiative represents a significant 25% expansion of Xpeng’s workforce, supported by Volkswagen, from its current count of 15,829 employees as of the end of 2022. CEO He Xiaopeng communicated these expansion intentions in a letter addressed to employees on Sunday, the first working day following the Lunar New Year holiday.
Xpeng aims to allocate 3.5 billion yuan ($486.36 million) toward AI research and development to enhance intelligent driving capabilities. Additionally, the company plans to introduce roughly 30 new products or updated models within the next three years.
Despite the challenging macroeconomic environment, He remains optimistic, highlighting 2024 as a pivotal year for Chinese automotive brands, referring to it as the “knockout round.” He anticipates a turnaround in the fourth quarter or possibly earlier, transitioning into a high-speed growth phase.
Xpeng’s ambitious expansion strategy diverges from its competitors, many of whom are focused on cost-cutting measures. Despite renewed efforts to stimulate demand, particularly led by Tesla (NASDAQ:TSLA), the overall market demand in China’s auto sector remains subdued.
In contrast, Nio (NYSE:NIO), another major Chinese EV manufacturer, announced plans in November to downsize its workforce by 10% to enhance operational efficiency amid escalating competition.
With domestic demand showing signs of weakness, Chinese automakers are increasingly eyeing international markets for growth opportunities. However, China’s emergence as a significant vehicle exporter has led to tensions abroad, notably triggering a European investigation into Chinese subsidies for the sector.
In a bid to address such challenges, China’s commerce ministry recently pledged to support the new energy vehicle industry in navigating foreign trade restrictions and fostering collaboration with overseas firms.
Volkswagen (ETR:VOWG_p) had earlier disclosed plans in July to invest approximately $700 million in Xpeng, acquiring a 4.99% stake in the company.
Looking ahead, CEO He Xiaopeng emphasized the importance of 2024, Xpeng’s 10th year, stressing the need for the company’s performance to more than double in order to achieve its ambitious growth targets.