Summary
- XPeng will launch its most highly anticipated G9 flagship SUV this year.
- The G9 will also debut its most advanced driver-assistance technology, to herald its entry into Europe.
- We discuss why we think XPeng stock is a buy now.
- I do much more than just articles at Ultimate Growth Investing: Members get access to model portfolios, regular updates, a chat room, and more.
Investment Thesis
XPeng Inc. (XPEV) has continued its strong start to the year with a robust January delivery cadence. It also leads its arch-rivals, NIO Inc. (NIO) and Li Auto Inc. (LI). However, there was a marked slowdown from its record December deliveries, but we think it's just a temporary blip. Moreover, the company has also communicated that it sees strength in its long-term production build-up as it continues to gain traction with its P5 sedan. Furthermore, its upcoming flagship G9 premium SUV launch, equipped with its most advanced X-Pilot 4.0 ADAS platform, could garner significant interest among Chinese and European consumers. While the company is still taking "baby steps" so far in its European markets foray, we believe G9 will herald a more aggressive approach to take on Europe's premium SUV automakers.
Nevertheless, the stock has continued to be battered, dropping back to its October lows. Nevertheless, it's also testing a critical price level that has held firm in the previous July and October retracements. Therefore, we believe that investors who have been biding their time can consider adding XPeng stock now.
On the opposite hand, its momentum slowed markedly from December’s file month as MoM deliveries fell 19.2%. It also fell better than NIO’s 8% decline and Li Auto’s 12.9% MoM drop. But, we manufacture now not mediate merchants ought to calm be unduly concerned over the MoM decline. The corporate has ideal managed to hit above 10K units since September. Resulting from this truth, we predict that XPeng is positively calm within the early innings of its global growth formulation. In a most modern interview, XPeng President Brian Gu also emphasised its worthy progress in expanding its ability in direction of a 500K annualized bolt price. He accentuated (edited):
ON A YEARLY BASIS, WE DELIVERED ABOUT 100K AUTOS AND OUR PRODUCTION BOLT PRICE IS HIGHER THAN THAT. AND IN 2022, WE’VE HOPES THAT OUR TOUGH DEVELOPMENT WILL CONTINUE. TO BE CAPABLE TO IN ACTUALITY SUPPORT OUR DEVELOPMENT TRAJECTORY, WE ATTAIN DESERVE TO FABRICATE BIGGER THAT EXTRA OR MUCH LESS ABILITY. WE’RE DOUBLING THE PLANNED ABILITY OF THE PRESENT PLANT FROM 100K TO 200K. IT IS GOING TO ALSO BE ADJUSTED CLOSER TO 250K IF WE NEED IT. AND THEN THERE ARE TWO ASSORTED VEGETATION WHICH WOULD MAYBE MAYBE BE ABOUT TO RETURN ON-LINE THIS YR AND IN 2023. THAT OUGHT TO CALM GIVE US 200K IN PLANNED ABILITY, AND WITH EXTRA SHIFTS IT WILL MOST CERTAINLY BE CESSATION TO 300K. SO, BY THE DISCONTINUE OF NEXT YR, WE’LL POTENTIALLY BEGET A ABILITY OF 500K THAT WE ARE IN A POSITION TO MANUFACTURE THE MOST OF FOR OUR DEVELOPMENT. WE’RE SEEING A MONUMENTAL QUANTITY OF DEVELOPMENT LAWFUL NOW IN OUR ALTERNATE. (INSIDEEVS)
Notably, the company also highlighted that it’s committed to owning its recognize production ability, rather then contract manufacturing. It believes that this sort of mannequin will enable it to force scale, and operating leverage better shifting forward. Furthermore it also helps the company to manipulate its quality, and outcomes better.
G9 Will Be An Crucial Beginning for XPeng’s World Ambitions
Xpeng communicated that it is now not in a position to fabricate bigger its attain into the US market within the intervening time as it’s targeted on its European adventure within the near term. On the opposite hand, the company’s long-term global growth roadmap stays unchanged. While XPeng has expanded to Norway now not too long ago, it has been relatively composed because the company is calm within the attempting out fragment.
Resulting from this truth, we predict that XPeng’s next flagship, its G9 top class SUV will herald the company’s entry into European markets in a convincing formulation. The corporate has maintained its belief to introduce the G9 about a months after its China delivery this yr. The G9 is targeted at snatching market fragment from the section historically dominated by BMW’s (OTCPK:BMWYY) X5, and Audi’s (OTCPK:VWAGY) Q7. Notably, it might maybe probably even premiere the most modern version of XPeng’s alternate-leading evolved driver-assistance system; X-Pilot 4.0. XPeng promises that it’ll be “the most innovative ADAS tech for a production automobile.” We predict that Gu has excessive conviction that XPeng’s ADAS tech is at the identical stage as Tesla’s (TSLA) FSD, if now not better. XPeng has already demonstrated its amazing X-Pilot 3.5 previously, which has been optimized for city riding, with amazing outcomes.
For those who might maybe well even beget now not watched its City NGP functionality, we support you to see it for yourselves.
Resulting from this truth, we are very wrathful to see what X-Pilot 4.0 can potentially rating, as XPeng has emphasised. It also believes that its ADAS system will most certainly be a fabric catalyst for its gross sales in each and every China and Europe when launched. We predict that XPeng has demonstrated that it has the most evolved ADAS tech to this level amongst its Chinese pure-play peers. Thus, we support merchants to stare this scheme carefully.
Decide XPEV Stock Now
XPEV inventory build action(TradingView)
Readers can stare that the sellers appear to beget digested the bull entice from its November spike. The battering has also introduced XPeng inventory support to the July and October support levels.We discussed in our earlier articlethat XPeng inventory modified into once undervalued. Resulting from this truth, the inventory looks even extra attractively valued now.
Which potential that,we reiterate our Decide rating on XPEV inventory.
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