For a native of Huangshi – where China’s first national ping pong training centre was founded – and an enthusiastic player since primary school, thrashing me in a best of three match was easy: beating Tesla, even with the home advantage, will be a lot harder.
He Xiaopeng, 41, already owned three Tesla electric cars when he decided to go head to head with Elon Musk’s iconic Silicon Valley company.
Wealthy from selling his business UCWeb browser to Alibaba Group in 2014 for close to US$4 billion, He invested in a Guangzhou-based smart electric start-up Xpeng Motors but decided to go “all in” and join the company full time as CEO in 2017 – similar to Musk’s own trajectory from an investor to company chairman before stepping down in a settlement with the SEC.
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“The car-making business can make you really anxious. Instead of sharing the good news, you tend to talk about the problems, difficulties, unforeseen risks, and delays,” He said in an interview in his office on the fourth floor of the company’s Guangzhou headquarters.
“That’s why it’s important to relax and find happiness,” the 41-year-old said with a grin, perhaps thinking of his next fishing trip aboard his own yacht.
Dressed in a beige cardigan and jeans, He was genuinely amused when I first suggested a table tennis challenge as part of the Post’s series of interviews on Chinese tech leaders. In this series, our reporters engage the newsmaker in an activity or hobby that can show more of the person behind the company, and how their personal passions translate into how they approach their business.
Our conversation moves from his office to the company’s recreational area on the fifth floor, a popular spot during lunch break or after work with facilities such as gym equipment, billiards and table tennis tables, and an adjacent balcony with deck chairs for naps or some sun bathing.
The warm up game quickly exposed my poor ping pong skills, after which He went easy on me, with forehand hits down the centre of the table. Encouragement was prompt whenever I was able to keep the ball within bounds.
“Nice wrist move! You know I was quite professional … OK that was bragging,” he said, not wanting to rub in the fact that he was giving me a thrashing. At 5 feet 7 inches (1.73 metres) tall with close-cropped hair, He admits he is really an amateur when it comes to the game but did place second in the computing department team at college, which was the last time he played frequently.
It was all over in 10 minutes – a landslide victory for the host – so we headed back down to his office. A caricature drawing of He, with exaggerated rosy cheeks, is on the door and shelves at the back display memento’s of his business life – including model cars and a statue of the UCWeb logo.
The strategies used to win at ping pong and succeed in the car business are similar, according to He.
“Ping pong requires strategies. Though I didn’t receive much formal training, I like to observe how professional players make their movements, grip the paddle and switch between push and drive,” he said, referring to being aggressive or defensive in play. “Both ping pong and running a business requires the direct approach to do battle as well as employing unexpected ways to secure victory.”
The hiring of an additional 5,000 staff amid slumping Chinese car sales and tech wide job cuts could be seen as such an unexpected move, though it makes sense in Xpeng’s case because sales of new energy vehicles (NEVs) bucked the trend with a year-on-year increase of 61.7 per cent in 2018 to 1.26 million, according to data from the China Association of Automobile Manufacturers. The rapid growth in NEVs was largely driven by government incentives to encourage a shift away from gas guzzlers.
“Only by steadily accumulating the strength of research, development and sales teams, can we expect quick growth,” said He when asked about the contrarian move. “Besides, in down years the cost of acquiring talent would also be lower.”
Founded in 2014, Xpeng has grown into a workforce of more than 3,000 – and will reach 8,000 after the new hiring programme. Despite rolling out deliveries of its first commercial model in December, the company has raised more than 10 billion yuan from investors including Alibaba Group, Foxconn Technology, and Xiaomi Corp founder Lei Jun.
The company’s G3 electric sport utility vehicle carries a starting price of 227,800 yuan (US$33,150) before subsidies, compared to 407,000 yuan for the Tesla Model 3. The company has received over 10,000 purchase orders, a small step towards a benchmark sales target of 100,000.
Xpeng is among the dozens of Chinese electric car start-ups that have emerged in recent years with ambitions of upending traditional carmakers like General Motors and Volkswagen, as well as challenging electric rivals like Tesla. They are betting that the future of mobility lies in connected smart cars. At the same time, electric vehicles have lowered the barrier for entry into carmaking because they do away with internal combustion engines that require hundreds of precisely engineered parts.
Although the traditional car manufacturing process is crucial for success, it is equally important to build an “ecosystem moat” through continuous investment in research and innovation, according to He. For example, a major feature of the G3 is auto-parking, where the SUV is expected to park by itself in 7 out of 10 situations with the press of a button.
Regardless of the ambitions of the country’s fledgling electric carmakers, this year will be eventful with Tesla expected to roll out production of its first locally-made model by the end of the year after breaking ground on its Shanghai factory in January. A locally-produced Model 3, with import tariff exemption and reductions in manufacturing and logistics costs, is expected to sell for between 200,000 and 300,000 yuan – affordable for a good portion of upper to middle class Chinese.
While praising Tesla’s innovation and success in the North American market, He was underwhelmed by its progress in China. “While the majority underestimated Tesla’s challenge to traditional carmakers back in 2014, most people are now overestimating its competitiveness in China,” he said. “There remains quite a gap between the US and China in terms of Elon Musk’s personal influence, user experience, annual sales and growth.”
However, Chinese carmakers could do a better job in introducing smart features tailored for domestic customers at home, the Xpeng CEO admits. “Traditional players, especially joint-venture manufacturers, should expect a steeper slump over the coming decade, while customers will discard marketing-driven electric models that offer high mileage at a high price.” He believes newcomers that pay attention to innovation and localisation will find good opportunities.
Father to a four-year-old and a two-year-old, He may never have ventured into carmaking if not for his children. After selling UCWeb he was financially secure but when his children were old enough to ask, “‘What does daddy do?’ How am I supposed to answer?”
For a computing graduate, answering that question with “investor” or “financially independent” just did not sound cool. “I want to leave some mark in this world. That’s why I wanted to start another business to make my children proud,” he said.
The start-up CEO is also an avid collector of tech gadgets, ranging from various types of robots to flying backpacks. “I bought an electric inflatable backpack once, but ended up sending it back after the inventor tried it once and fell to the ground and suffered concussion,” said He.
Not all his tech gadgets would fit in the office. He recently placed an order for a mini-submarine.
Xpeng aims to deliver 40,000 to 50,000 units of its first model this year, with a second mass production model expected to be unveiled later this year.
Xpeng employees say their boss has a lighter side and is not the typical Chinese company CEO. “I don’t feel nervous around him,” said Shining, one of the company’s early employees who works in the marketing department.
“He once said we were spoiled after we Photoshopped photos of him for fun,” she said, declining to give her family name. “In general, He is reasonable and would be an ideal boss for many.”
That does not mean He is not focused on what needs to be done. With a computing education and project management background, he is strong in logical thinking, according to Shining. “You have to lay out your conclusion and argument in order to convince him. When complaining to him in person about an issue, you are also expected to analyse the deeper causes and how you think it should be fixed.”
As a start-up, He said Xpeng can only afford one lacklustre model at most. “Once delivery starts, word of mouth would spread and if [initial] customers are unsatisfied, the company will face immense challenges,” he said.
As He sees it, starting a business is a mixture of anxiety and happiness. “I enjoy what I do, learn a great deal of knowledge, and – different from my last experience with software – the joy of creating tangible hardware is much bigger.”
The formal interview over – and as we head out for a test drive in the G3 – He offered one last challenge, though of the fun variety: a short cut to the ground floor via an indoor tube slide installed at the company’s offices.
After a moment’s hesitation, I jumped in and a few seconds later landed in a pit of soft blue and white balls.
“Feels good?” He asked after landing behind me. “Whenever I feel dejected, taking the tube slide totally changes my mindset.”
More from South China Morning Post:
- Tesla challenger Xpeng to roll out first electric car next month ahead of new credit system designed to promote China’s EV market
- Tesla’s US$5 billion Gigafactory helps Shanghai record increase in foreign direct investment for 2018
This article Xpeng CEO He Xiaopeng finds lessons in ping pong challenge for his upcoming battle with Tesla first appeared on South China Morning Post