Xpeng Launches Budget Sub-brand MONA at Competitive Prices

BEIJING (Reuters) – Chinese electric vehicle maker Xpeng (NYSE:XPEV) has priced its first model from the budget sub-brand MONA at $16,813. This move aims to penetrate the mainstream yet highly competitive segment of China’s auto market.

The MONA M03 electric hatchback coupe is Xpeng’s most affordable offering and will vie against other EV models priced between 100,000-150,000 yuan ($14,035-$21,052), which represents one-third of total car sales in China.

Variants of MONA M03

There will be two versions of the MONA M03: an entry-level model lacking advanced autonomous driving technology priced from $16,813, and the M03 Max incorporating Tesla-like technology starting at $21,866. Both variants are less expensive than Xpeng’s lowest priced EV, the P5 sedan, which starts at $22,000.

Deliveries for the M03 Max, touted as “the only car with advanced autonomous driving under 200,000 yuan ($28,068),” are set to commence early next year. This announcement was made by He Xiaopeng, co-founder and CEO of Xpeng Motors, during a launch gala celebrating the carmaker’s 10th anniversary.

Strategic Developments

Xpeng introduced the MONA brand following its acquisition of the EV development unit from Didi Global, the ride-hailing company that has scaled back in the EV sector. The loss-making Xpeng anticipates achieving better economies of scale with MONA to reach break-even status, aiming to sell at least 100,000 MONA vehicles annually.

Xpeng’s gross profit margin has seen improvement this year, driven by a 20% increase in EV sales in the first seven months compared to last year, alongside revenue growth from technology services to Volkswagen (ETR:VOWG_p).

In April, Xpeng’s competitor Nio (NYSE:NIO) also launched a lower-priced brand called Onvo. The Onvo L60, set to start selling in September, is expected to challenge Tesla’s best-selling Model Y in China.

Technology and Strategy

Both Onvo and Mona EVs do not utilize lidar sensors for their autonomous driving technologies, opting for a camera-only strategy reminiscent of Tesla’s Full-Self Driving, which effectively lowers hardware costs. Although lidar sensors have seen a significant price drop due to increased production from Chinese manufacturers like Hesai Technology, Xpeng previously removed the sensor from the P5 to target price-sensitive consumers effectively.

As of now, Xpeng vehicles equipped with lidar sensors retail starting from $31,450.

($1 = 7.1256 Chinese yuan renminbi)