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Electric cars in China

Xpeng Motors to halt poaching rival staff after employee lawsuits

China's Tesla rival unveils second EV model and expansion plans

GUANGZHOU -- One of China's fastest growing electric car startups, Xpeng Motors, will no longer poach staff from rival manufacturers after two senior employees were accused by U.S. authorities and Tesla of stealing business secrets.

"In recruiting manufacturing talent, especially senior staff... I will not look for people in companies whose businesses are directly related to ours," He Xiaopeng, CEO at Xpeng Motors said in an interview with the Nikkei Asian Review at its Guangzhou headquarters. "This should also make [competitors] feel less tense."

Last month, U.S. electric car maker Tesla accused one of Xpeng's former engineers of illegally obtaining confidential autopilot information before joining the Chinese company. The allegation came less than a year after a former Apple employee was charged by the U.S. FBI for stealing secrets when he left for a new job at the Chinese EV maker.

Xpeng has not been accused of wrongdoing in either case, and has denied any involvement. But the hiring shift underlines the dilemma faced by Chinese EV companies as they compete with global rivals for talent to drive rapid growth.

He's new hiring policy follows a year of rapid expansion for Xpeng's research and development team. The startup had roughly 1,000 staff in early 2018, and now employs some 3,500 people, more than 60% of whom work in R&D. He intends to more than double his workforce to 8,000 by the end of this year.

He was speaking ahead of Tuesday's launch of the group's second model, the P7 intelligent electric four-door coupe, at the Shanghai Auto Show. The new car will accelerate from zero to 100 kms an hour in four seconds. Xpeng plans to take on EV market leader Tesla by rolling out at least one model every year with price tags between 150,000 to 300,000 yuan ($22,400 to $44,700).

The Xpeng founder, who built the world's fourth-biggest mobile browser company, UC Web, before selling out to e-commerce giant Alibaba Group Holding in 2014 -- plans to exploit his experience of internet companies to differentiate his cars. He envisions that in the future, cars will be like smartphones, devices that people can use to engage in other activities when they do not need to concentrate on driving.

Xpeng plans to introduce e-wallets and online shopping mall functions to the operating system of its cars in the second half this year. The additional services are expected to be a major revenue source, in addition to car sales and repair fees, he said.

Xpeng, backed by tech investors such as Alibaba and iPhone assembler Hon Hai Precision Industry, also known as Foxconn, is one of China's best-known EV companies.

Founded in 2014, Xpeng launched its first all-electric model, the G3 SUV, last year and began its first deliveries at the end of March. Reviews widely noted the G3's similarities to Tesla's Model X, from its shape to the touch screen in the dashboard.

He says the G3 has attracted more than 10,000 orders so far, and the company aims to sell 40,000 by the end of this year. Currently all Xpeng branded vehicles are made at an original equipment manufacturer plant in Zhengzhou owned by Haima Automobile, a subsidiary of state-owned automaker FAW Group.

Xpeng is also building its own factory in Guangdong Province, which will produce 200,000 vehicles a year. That is not far off from Tesla's Shanghai plant, which is expected to turn out up to 250,000 cars a year in its first phase.

The company has been valued in recent fund-raisings at $3.6 billion, and plans to raise another $3 billion by the end of the year. He, who has not revealed his stake in Xpeng, said he planned to raise his investment from an undisclosed amount to 2 billion yuan in the next fundraising this year.

He believes the group now has enough experienced engineers from established manufacturers to support his ambitious growth strategy. Talent will be recruited from other industries, as well academia and research institutions, He said.

Xpeng has already attracted big names from global carmakers. It recently hired former Mercedes-Benz designer Do Young Woo to lead its design team and Miyashita Yoshitsugu of Toyota Motor to manage quality control.

"The recent incidents do have an impact on our recruiting strategy," He said. After two lawsuits, he has given a lot of thought to his hiring approach. "Over the past few years, I think we already have accumulated a very good talent pool. So now we have the right senior people to teach and manage younger employees," He said.

The head of Xpeng's said he was optimistic about the EV market despite Beijing's recent decision to cut government subsidies by 50% to 60% this year. For years, manufacturers of eco-friendly vehicles in China have enjoyed generous subsidies as part of Beijing's efforts to combat air pollution. While the policy shift took many off guard, He said he embraced a market with zero subsidies.

"I have always hoped that subsidy policies would expire as soon as possible," the CEO said, as those who only survived thanks to the government support would be squeezed out of the market. "This way, we can enter the next stage of competition," he said, with the emphasis on quality and design.

He was equally bullish about the prospect of competing against the industry's EV pioneer, Tesla. While Tesla's cutting-edge technology has impressed global drivers, Chinese manufacturers have the upper hand at home because they know the country better, he said. Driving habits and road conditions are very different from the U.S. "In my opinion, Tesla has not done much on localization," He said.

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