Xpeng sees higher deliveries as promotions boost EV demand

Bengaluru — Xpeng expects deliveries to rise in the second quarter as price cuts draw in more buyers to its electric vehicles (EVs) in the competitive Chinese market, sending its US-listed shares 6% higher in premarket trading on Tuesday.

The company said it expected to hand over 29,000-32,000 vehicles, an increase of about 25% to 37.9% from the previous year.

The forecast signals that promotions and discounts as well as heavy investments in new technology, including artificial intelligence and self-driving, were paying off.

Xpeng reported a gross margin of 12.9% in the first quarter, compared with 1.7% a year earlier.

Experts see discounts for Xpeng’s G6 and G9 electric SUVs boosting deliveries volume in the near term, but warn that new entrants such as Xiaomi will put pressure on Xpeng’s sales in the long run.

“The launch of Xiaomi SU7 didn’t have a big impact on Xpeng. However, with the launch of SU8, it will have a big impact on Xpeng’s SUV series,” Third Bridge analyst Rosalie Chen said.

Xpeng’s first-quarter revenue of 6.55 billion yuan ($905.21 million) beat the LSEG estimate of 6.17-billion yuan, while the company reported an adjusted loss per share of 1.45 yuan compared with estimates of 1.94 yuan.

To combat new challenges and boost its revenue, Xpeng is looking to expand into overseas markets and capitalise on EV subsidies that many countries are offering as part of their efforts to cut fossil fuel consumption.

Xpeng already sells in the Netherlands, Norway and Germany and has plans to enter other European markets including France, Italy and the UK, but fears of the European Commission’s tariff imposition has made the company rethink its expansion plans.

Reuters