By ZHOU Shuqi
Chinese EV startup Xpeng Motor is set to halve its nationwide sales to 12, in only a few months, closing the biggest loss-making stores and recruiting dealerships. Xpeng is shifting away from the direct-sales model, which accounted for about 70 percent of stores at the beginning of this year.
Earlier this year, Xpeng merged its sales forces into a single unit. The original four regions were subdivided into 24, adopting a so-called "Big Boss" approach where regional managers are responsible for sales and profits. If a store is struggling, the BB simply closes it down and sells the whole shebang to a dealership. This radical problem-solving approach divests Xpeng of many headaches.
Xpeng is pushing franchising in third-tier and fourth-tier cities, where local dealerships have connections and sales premises. This means less capital is needed and there's a lot less work to be done.
This trend – dealerships - is the new norm in the EV industry. It must come as quite a surprise to startups that after all their efforts, they'll be selling cars in exactly the same way cars have always been sold.
In EVs' early days, dealerships were not interested, so brands had no choice but to sell through their own channels. And new customers needed to be intensely babied into decisions, with constant reassurances.
But as the market is dominated by EV makers, the drawbacks of the heavy asset operation in the direct-operated model are becoming prominent. Facing fierce competition, a regression to dealerships is a good way to cut costs.
