Xpeng Motors, a Chinese electric vehicle manufacturer, has found itself embroiled in an anti-corruption campaign as it commences the official launch of its highly anticipated G6 model.
According to information obtained by 36Kr, on the afternoon of October 9, Li Feng, vice president and head of procurement at Xpeng, was suspended from duty and taken into custody by law enforcement authorities. Simultaneously, Li’s information was no longer accessible on the company’s employee system and Feishu communication platform.
Insiders told 36Kr that Li is the sole individual implicated in this investigation, and the company’s supply chain operations will temporarily be overseen by the internal control department in his absence.
Xpeng released a statement in response to these developments, asserting that the company’s actions are part of its commitment to combating corruption and upholding ethical standards. It emphasized its unwavering stance against corruption, stating that this incident is limited in scope and expected to have minimal impact on the company’s business and production processes.
Sources have also disclosed that Xpeng initiated anti-corruption efforts targeting its supply chain at the beginning of this year, with CEO He Xiaopeng reportedly receiving numerous whistleblower emails.
Following the unsuccessful release of the G9 model last year, Xpeng underwent several internal reforms, gradually expanding Li’s sphere of influence. By the end of October 2022, an organizational restructure saw the establishment of a new supply chain development department, absorbing the functions and personnel of the original supply chain development department of Xpeng’s procurement center. Li was appointed as the head of this department and reported directly to He Tao, co-founder of Xpeng.
By the end of 2022, Xpeng merged the supply chain, marketing service procurement, and parts procurement departments into a single department. This new department was led by Li, while He Tao gradually withdrew from core business activities. Several employees have noted how He Tao has become increasingly absent in the company.
In February this year, Xpeng once again underwent organizational restructuring, consolidating most core business responsibilities under the charge of He Xiaopeng and Wang Fengying, who joined the company as president after departing from Great Wall Motors. While Li continued to report procurement operations to He Xiaopeng, tasks related to production supply and demand fell under Wang’s purview.
Supply chain costs have always been a critical factor in manufacturing industries. Despite relentless price cuts and industry pressure from companies like Tesla and BYD, these companies have often managed to maintain double-digit profit margins. Nonetheless, Xpeng recognized the importance of cost control.
During the Q2 earnings conference call earlier this year, He Xiaopeng emphasized the need to reduce costs and increase efficiency, citing them as core objectives for various teams involved in product development, manufacturing, supply chain, and marketing to achieve in the foreseeable future.
“The goal of achieving a 35% overall cost reduction by the end of 2024 is achievable, and we aim to surpass this target in several specific areas,” He said. He believes that implementing a series of cost-cutting and efficiency improvement measures will substantially improve Xpeng’s product competitiveness.
In this context of stringent cost control and team restructuring, the suspension of Li may only be the beginning of this anti-corruption storm.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Li Anqi for 36Kr.