On 1 January Xpengannounced that it had delivered 16,000 Smart EVs in December 2021, "exceeding the monthly delivery benchmark of 15,000 units for the second consecutive month despite ongoing global supply chain challenges" and a 181% increase on the same period last year. Total vehicle deliveries for 2021 were 98,155 - a 263% increase year-on-year.
Here we take a closer look at the Chinese EV maker Xpeng, whose shares are listed in the US and Hong Kong.
Analysis of China’s EV market
In 2020, China sold around 1.25 million electric vehicles (EV). In the first half of this year, that number was nearly matched – even as semiconductor shortages and supply chain troubles disrupted the auto industry worldwide.
Between January and June, EV sales in China reached 1.1 million units, above the one million EVs sold across Europe and more than quadruple of the 250,000 delivered in the US, according to an analysis fromCanalys.
Ram Chandrasekaran, head of road transportation at Wood Mackenzie, said: “Policy measures passed by both regions [China and Europe] for a green recovery from the Covid crisis appear to have a positive effect as far as the passenger transport sector is concerned.”
The consultancy companyforecastEV sales in China to exceed 2.5 million units by year-end, making it a highly contested market, where local manufacturers such asBYD,NIO, andXpengcompete with market leaderTeslaand internationally renownedVW.
Xpeng stock analysis: latest performance
Following a rapid fall in late 2020, XPEV stocks continued trending down in the first half of this year, reaching a low of around $23 in May.
After that its share price steadied around $40 and climbed to $50 on 16 November, a level last seen in January.
Xpeng’s rival, Nio, also slumped in May, trading around $31, and was trading at $50.14 (as of 31 December 2021).
Over 2021 XPEV shares rose 17%, while NIO fell about 35%.
Strong sales momentum
The latest datashowedthat Xpeng delivered 25,666 vehicles in the third quarter, the fifth straight quarter of growth and a 300% increase in the same quarter in 2020.
Between January and November, the EV maker delivered 82,155 units.
On 1 December Xpeng announced that it had hit its November target and delivered 15,613 EVs, a 270% increase year-on-year.
This news came shortly after itsthird-quarterresults showed that vehicle sales amounted to $546m – a 187% increase on the same period a year earlier.
Among Xpeng models, the P7 sport sedan accounted for nearly 77% of sales in the third quarter.
New models boost
Xpeng officially launched P5 in September, a family sedan retailing for CNY157,900-CNY223,900 (between $25,000 and $35,000). Its first batch of delivery in October amounted to 437 units, with Xpeng saying there was “a solid order backlog” for the model.
Competitive spreads
Such a price range is cheaper than Tesla’s Y SUV (base price CNY276,000), making the P5 a highly attractive alternative for family and price-sensitive consumers in China.
On top of that, Xpeng, in October, announcedthe public unveiling of a new SUV model during the Guangzhou International Automobile Exhibition on 19 November.
Xpeng share price prediction: Latest earnings
Now, let’s look at Xpeng’s most recent financial performance.
Itsthird-quarterresults, where its revenue jumped 187% year-on-year, its loss for the period was $247.5m compared to $178.3m for the same quarter in 2020.
The gross margin increased to 14.4% compared with 11.9% in the second quarter. In the third quarter of 2020, the gross margin was at 4.6%.
The company continued to spend heavily on research and development, with expenses for the segment rising 47% on-year to $196.2m.
Such an increase was “mainly due to (i) the increase in employee compensation as a result of expanded research and development staff, and (ii) higher expenses relating to the development of our new models, namely the G9 and the P5, and related software technologies to support future growth,” according to Xpeng.
Xpeng stock forecast: Autonomous drive
It researched and conducted tests of autonomous driving (AD) technology. The results see it rival Tesla’s system.
“Xpeng has formed a closed loop of data that can support rapid functional iteration, which is comparable to Tesla’s shadow model. As such, Xpeng’s NGP [navigation guided pilot] system is the closest rival to Tesla’s NOA [navigate on autopilot],” analysts at Jefferies said in a note from 10 November.
“Xpeng owns the biggest AD research and development team of more than 600 staff and plans to increase its headcount to [around] 1000 by year-end,” they added.
Analysts at Nomura held a similar view after observing Xpeng’s autonomous drive in urban areas, noting:
“The P5 sedan managed to perform an 18km urban autonomous driving trip…involving 2 multi-story garage parkings, 15 crosswalks, 10 intersections with traffic lights, and 7 merging lanes. There were multiple times when the AI [artificial intelligence] was faced with challenging scenarios such as jaywalking pedestrians, dashing bicycles, and parked-vehicles on one side of the lane. The P5 was able to solve all these problems without human intervention.”Xpeng share price forecast: Widening technological gap
“We believe XPeng has delivered an exciting product that so far no other EV OEMs (original equipment manufacturer) are able to match (competitors are only capable of autonomous driving on highways),” Nomura analysts said.
“The complexity and randomness of urban autonomous driving are extremely immense, so it is essential to incorporate system redundancies in terms of vehicle perception (i.e., LIDARs or light detection and ranging on top of cameras, ultrasonic sensors, and mmWave-radars), localisation (i.e. centimetre-level accuracy) and data processing (i.e., more powerful AI chips, i.e. two Orin- X SoC chips with 508 TOPs in total). As a result, we believe there should be a widening technological gap between XPeng and its rivals, in terms of AD technology.”
Export to Norway
The Chinese company has also started to expand internationally. In December 2020, its G3 SUV debuted in Norway, where EV sales account for more than 80% of new car sales.
In October, the popular P7 sport sedan was available for sale in Norway, with its retail price starting from NOK447,820 (around $53,000).
Xpeng also plans for the P5 family sedan to be exported to Norway. The EV maker has 17 sales outlets and 21 service centres in the country.
Xpeng stock prediction: 2023 - 2027
Is Xpeng stock a ‘buy’, ‘sell’ or ‘hold’?
All 9 analysts tracked byMarketBeathave a ‘buy’ call for Xpeng as of 25 January 2022. The target price average among these analysts is at $58.86.
Meanwhile, 17 out of 21 analysts tracked byMarketWatchhave a ‘buy’ call, while two call it overweight and two recommned a hold.
AI-basedWallet Investor’sXPEV stock forecast suggests the stock price could reach $55.78 in a year’s time rising to $106 in five years.
When looking for Xpeng stock predictions, it’s important to bear in mind that analysts’ forecasts can be wrong. Analysts’ projections are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results.
It’s important to do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest money that you cannot afford to lose.
Source: Capital
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