Surging Delivery Growth Boosting Xpeng Stock

author: FutureCar Staff    

Chinese luxury electric vehicle maker Xpeng has experienced significant growth in its stock price, rising nearly 60% year-to-date. The company had a strong October, delivering 20,002 vehicles, a 292% increase compared to the previous year and a 30% increase compared to the previous quarter. This growth was primarily driven by the success of the G6 Ultra Smart Coupe, Xpeng's latest model, which competes with Tesla's popular Model Y. Xpeng has increased production for the G6, making it the best-selling battery electric SUV in its price segment. In comparison, rival Nio delivered 16,074 vehicles in October, a 60% increase year-over-year, while Li Auto delivered 40,422 vehicles, a 4x increase compared to the previous year.

Despite its recent success, Xpeng's stock has seen a significant decline of 65% from its early January 2021 levels. In comparison, the S&P 500 has increased by about 15% during this period. However, Xpeng's stock performance has been volatile, with returns of 18% in 2021, -80% in 2022, and 60% in 2023. This underperformance compared to the S&P 500 in 2021 and 2022 highlights the challenges of consistently beating the market.

In contrast, the Trefis High Quality Portfolio, consisting of 30 stocks, has outperformed the S&P 500 each year during the same period. This portfolio has provided better returns with less risk compared to the benchmark index. The reasons for this outperformance are attributed to the performance metrics of the HQ Portfolio stocks.

Given the current uncertain macroeconomic environment, including high oil prices and elevated interest rates, there is speculation about whether Xpeng will face a similar situation as it did in 2021 and 2022 and underperform the S&P 500 in the next 12 months. The global EV market's near-term demand appears mixed, with mainstream automakers indicating a softer-than-expected uptake. However, in China, demand for fully battery electric vehicles remains strong, accounting for 25% of automotive sales in September. Despite this, Xpeng faces increasing competition and price wars, which have reduced its pricing power. The company's financial performance has also been challenging, with Q2 results showing its widest-ever net loss and a decrease in vehicle gross margins.

However, there are some positives for Xpeng. The company is considered a strong player in the self-driving software space and has recently unveiled an advanced driver assistance system. Xpeng is also set to launch a new flagship vehicle, the X9 seven-seater multi-purpose vehicle, which could drive incremental volumes and help improve pricing. Additionally, Xpeng received a $700 million investment from Volkswagen, one of the world's largest automakers, and the two companies will collaborate on developing EVs. This partnership is seen as a vote of confidence in Xpeng's capabilities and market access.

In conclusion, while Xpeng's stock has experienced volatility and underperformance compared to the S&P 500, the company has shown growth in its deliveries and has positive prospects in the self-driving software space and through strategic partnerships. The future performance of Xpeng will depend on various factors, including the global EV market demand and the company's ability to improve its financial performance.

FutureCar Staff