Chinese luxury electric vehicle maker Xpeng saw a 32% year-over-year increase in vehicle deliveries in April, delivering a total of 9,393 vehicles. This growth was largely driven by sales of the X9 multi-purpose vehicle, which saw 1,959 units sold during the month. Xpeng’s performance was better than rival Li Auto, whose growth slowed over April, and well below Nio, which delivered 15,620 vehicles in April, up 134% year-over-year.
Despite the strong performance in April, Xpeng’s stock has suffered an 80% decline from $45 in early January 2021 to around $9 currently. This underperformance compared to the S&P 500 has been inconsistent, with returns for the stock varying widely over the past few years. However, beating the S&P 500 consistently has been challenging for individual stocks, even for heavyweights in the sector, as seen with companies like Amazon, Tesla, and Microsoft.
There are concerns about global EV demand, with mainstream automakers scaling back on their electrification goals. However, China’s EV industry benefits from considerable government support, with recent incentives announced to encourage consumers to trade their older gasoline cars for electric and low-emission vehicles. Despite this, competition and price wars are intensifying in the Chinese EV market.
Xpeng has some positives going for it, such as its strong position in the self-driving software space. The company’s XPeng navigation guided pilot feature now enables self-driving in various scenarios across China. Additionally, Xpeng plans to launch more than 10 new models over the next three years and is partnering with Volkswagen to co-develop VW-branded EVs. The company also intends to move beyond the luxury market into more mass-market models with the launch of its new sub-brand Mona, offering vehicles at a price point to compete with bigger volumes.
As Xpeng looks to expand its market presence and offer more competitive pricing, it faces challenges such as rising competition and uncertain macroeconomic conditions. The ability to outperform the S&P 500 over the next 12 months remains to be seen, but Xpeng’s strategic partnerships and focus on self-driving technology could help drive its growth in the increasingly competitive Chinese EV market. Investors will be watching closely to see how Xpeng navigates these challenges and continues to innovate in the electric vehicle space.
