XPeng is viewed cautiously by analysts with EV competition heating up

XPeng (NYSE:XPEV)$XPeng Inc.(XPEV)$ is being closely watched after revenue and deliveries guidance disappointed analysts and investors.

Barclays downgraded XPEV to an Equal Weight rating after having it set at Overweight. Analyst Jiong Shao said that while Q2 results were solid, the Chinese electric vehicle maker provided much weaker guidance than expected.

With execution risks heightened ahead of XPeng's G9 rollout, the firm turned cautious with a move to the ratings sidelines.

Shao also warned that the competitive environment has worsened for XPEV as more auto makers have introduced competing models in the similar price range

Nomura analyst Martin Heung also called XPeng's (XPEV) lackluster compared to other domestic luxury brands in China. "The weakness in P5 deliveries might have played a part in management’s conservative growth target, given that the P5 has yet to reach the heights that was expected from it by management," noted Heung.

Nomura is also concerned that a competitive EV landscape could hurt XPeng (XPEV) with the second batch of EV entrants such as LeapMotor and Neta pricing their products in XPEV's range.

"We, thus, believe XPeng will further double down on its ADAS-centric strategy and EV supercharging infrastructure to distinguish itself from the competition, but the increased EV market share will not come cheaply if XPeng cannot find a way to better monetize these additional perks and services."

Nomura kept a Neutral rating on XPEV following the earnings report.