To The Moon

Hurt by earnings results posted this week that missed market expectations and a forecast of up to 39% fall in new car sales amidst slowdown in the economy and rising competition from the incumbents $Tesla Motors(TSLA)$ and $BYD COMPANY(01211)$  and new startups the likes of $NIO Inc.(NIO)$ and $Li Auto(LI)$ , $XPeng Inc.(XPEV)$ share price was punished on Wednesday when its share price plunged over 11% before recovering some lost ground to close down 5%. XPeng share price remains deeply in the red during the latest trading session, trading down almost 8% at the time of my post.

Despite re-opening of the Chinese economy, recovery has so far been uneven with mixed economic data, while a looming global recession amidst rising interest rates to rein in stubbornly high inflation has weighed on consumer sentiments and hence spendings.

It does not help that the market leader Tesla has been slashing prices in China to maintain its leadership and market dominance has exerted pressure on XPeng’s operating margins as the company struggles to defend its market share.

While the management has embarked on corporate restructuring and streamlining of operations recently, more decisive reforms are required by the company to re-invent itself to keep rising competition at bay.

Nevertheless, with increasing global awareness of climate change and tightening regulations on emissions, the future is bright for the electric vehicle industry. The key is standing out among the growing number of peers. As more startups jump onto the electric vehicle bandwagon, continual innovation is pivotal to XPeng's relevance.

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