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2023-03-17

XPeng Earnings Preview: Q4 To Be Soft With Promotions Hitting Margins

"We expect generally soft results and a weak 1Q23 outlook due to challenging demand and pricing dynamics," Edison Yu's team said. ...

XPeng Earnings Preview: Q4 To Be Soft With Promotions Hitting Margins

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Insurance registration figures for the past two weeks suggest that the company did not see a significant improvement in deliveries in March.</p><h1>Uncertainty in 2023</h1><p>The key to XPeng&#39;s relevance going forward is to win back market share, and that could take several quarters to achieve, which has created significant uncertainty this year, Yu&#39;s team said.</p><p>Demand for the company&#39;s flagship SUV, the G9, has clearly been disappointing, despite mostly positive reviews, the team said, adding that they expect XPeng to potentially make pricing or SKU adjustments to the SUV in the coming months.</p><p>XPeng&#39;s new P7i sedan should help with order volume, but there won&#39;t be materially beneficial until the second quarter, the team said.</p><p>Most importantly, XPeng&#39;s upcoming Tesla Model Y competitor, the G6, needs to reach at least 5,000 units per month by the end of the year to be considered a success, the team said.</p><p>The team now expects XPeng to be on track to deliver 145,000 vehicles in 2023, a 10,000-unit downward revision from earlier, taking into account the decline in G9 sales.</p><h1>How can capacity utilization be improved?</h1><p>If XPeng&#39;s sales continue to be weak, its management may need to get creative to improve its capacity utilization, Yu&#39;s team said, adding that the easiest way to do that would be to sign some large fleet deals.</p><p>That may be hard in China, considering BYD and GAC have stronger positions in the taxi and ride-sharing segment, but XPeng recently signed deals with some local car rental companies to buy its P7 sedan, the team noted.</p><p>XPeng entered into a strategic partnership with local car rental company eHi Car Services on July 19, 2022, and delivered the first few hundred cars to the latter.</p><p>On January 9 this year, XPeng signed agreements with car rental company China Auto Rental and Geely&#39;s travel service platform Xiaolinggou Travel Technology, and completed the delivery of the first XPeng P7 vehicles in Ningbo, Zhejiang province.</p><p>In addition, XPeng has restarted its expansion efforts in Europe, where large fleet deals could make sense due to the region&#39;s high percentage of corporate fleets and low availability of cheap BEV options, Yu&#39;s team said.</p><p>&#34;We note BYD has an agreement with SIXT for 100,000 EVs and XPeng&#39;s vehicles fall into a similar price point. BYD also just announced a 5,000 unit agreement with UK&#39;s Octopus EV,&#34; the team wrote.</p><p>Another option is to partner more deeply with traditional OEMs on EVs and robotaxis, which could come in the form of equity investments or strategic alliances, according to the team.</p><li></li></body></html>","source":"cnevpost_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>XPeng Earnings Preview: Q4 To Be Soft With Promotions Hitting Margins</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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Insurance registration figures for the past two weeks suggest that the company did not see a significant improvement in deliveries in March.Uncertainty in 2023The key to XPeng's relevance going forward is to win back market share, and that could take several quarters to achieve, which has created significant uncertainty this year, Yu's team said.Demand for the company's flagship SUV, the G9, has clearly been disappointing, despite mostly positive reviews, the team said, adding that they expect XPeng to potentially make pricing or SKU adjustments to the SUV in the coming months.XPeng's new P7i sedan should help with order volume, but there won't be materially beneficial until the second quarter, the team said.Most importantly, XPeng's upcoming Tesla Model Y competitor, the G6, needs to reach at least 5,000 units per month by the end of the year to be considered a success, the team said.The team now expects XPeng to be on track to deliver 145,000 vehicles in 2023, a 10,000-unit downward revision from earlier, taking into account the decline in G9 sales.How can capacity utilization be improved?If XPeng's sales continue to be weak, its management may need to get creative to improve its capacity utilization, Yu's team said, adding that the easiest way to do that would be to sign some large fleet deals.That may be hard in China, considering BYD and GAC have stronger positions in the taxi and ride-sharing segment, but XPeng recently signed deals with some local car rental companies to buy its P7 sedan, the team noted.XPeng entered into a strategic partnership with local car rental company eHi Car Services on July 19, 2022, and delivered the first few hundred cars to the latter.On January 9 this year, XPeng signed agreements with car rental company China Auto Rental and Geely's travel service platform Xiaolinggou Travel Technology, and completed the delivery of the first XPeng P7 vehicles in Ningbo, Zhejiang province.In addition, XPeng has restarted its expansion efforts in Europe, where large fleet deals could make sense due to the region's high percentage of corporate fleets and low availability of cheap BEV options, Yu's team said.\"We note BYD has an agreement with SIXT for 100,000 EVs and XPeng's vehicles fall into a similar price point. BYD also just announced a 5,000 unit agreement with UK's Octopus EV,\" the team wrote.Another option is to partner more deeply with traditional OEMs on EVs and robotaxis, which could come in the form of equity investments or strategic alliances, according to the team.","news_type":1},"isVote":1,"tweetType":1,"viewCount":362,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}