Xpeng drops as Q3 forecast falls short of expectations

Xpeng (NYSE:XPEV) $XPeng Inc.(XPEV)$fell around -9% Tuesday after it posted Q2 earnings that missed estimates and issued lower-than-expected guidance for the next quarter deliveries.

Revenues managed to beat estimates, rising 98% Y/Y to $1.11B as deliveries jumped the same amount to 34,422 units. This included 15,983 deliveries of the P7 sports sedan and 12,848 deliveries of the P5 family sedan.

also continued its sales network expansion with 388 stores in 142 cities at the end of June 2022. Its self-operated charging station network also expanded to 977 stations, including 793 supercharging stations and 184 destination charging stations.

Yet gross and vehicle margins slipped this quarter, with the former falling to 10.9% from 11.9% for the same period in 2021 and 12.2% in Q1, and the latter dropping to 9.1% from 11% in Q2 2021 and 10.4% in Q1 2022.

XPeng attributed the lower margins to an increase in operating expenses, specifically higher raw material and battery costs. R&D expenses also rose 46.5% as the Guangzhou-based EV manufacturer focuses on developing new vehicle models to drive future growth.

CEO He Xiaopeng said: "We are on track for the official launch of our flagship G9 SUV in September 2022. The G9 is expected to become the industry’s new benchmark for comfort, luxury and advanced technologies in the medium- to large-size SUV segment. With the G9, we have taken both electrification and smart technologies to new heights.

These new technologies will be integrated into our future models and alongside our extraordinary product design we will set the bar for an unparalleled driving experience."

The most notable downgrade was Xpeng's Q3 forecast, with the automaker expecting 29,000 to 31,000 deliveries for the quarter, compared with an estimate of 45,865. The lower forecast reflects a drop in demand that is affecting other Chinese EV makers as well.