Don't be fooled by XPeng (XPEV)'s net cash of 30-40 billion yuan on the books. Normally, net cash doesn't consider accounts receivable and payable. In fact, occupying more funds from upstream and downstream is often seen as a sign of strength.
But don't take it too literally. XPeng mainly operates direct stores, so it doesn't need to consider settlements with franchisees. However, its accounts payable turnover has already reached 7 months.
Typically, the normal payment term in the supply chain is 3 months. For example, EOM 90. Looking at BYD's accounts payable turnover days, it has been stable at 4 months.
This shows that XPeng is delaying payments to suppliers. Nio (NIO) is slightly better but not great. In the chart, Li Auto (LI) performs the best, with rapid growth. The data is lagging, but it should normally be around 3 months.
So here's the question: If you're a supplier, wouldn't you offer the lowest price to Li Auto? Fast payment, guaranteed, and large volume.
This is one of the reasons why Li Auto has high gross margins.
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