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Renowned Chinese electric car manufacturer XPeng Inc (HK: 9868) has witnessed its shares rise to 13% within hours of announcing its intention to acquire Didi‘s smart electric car development business.
This groundbreaking deal, valued at an impressive $744 million, is set to reshape the landscape of both the EV and ride-hailing sectors. Xpeng’s acquisition of Didi’s smart electric car development division represents a strategic convergence of two major stakeholders in China’s transportation ecosystem.
Xpeng, known for its revolutionary Electric Vehicles (EVs), has been steadily making strides in the EV market, winning a reputation for technology breakthroughs and a customer-centric strategy. Didi, on the other hand, has established itself as a top ride-hailing startup, dubbed the “Uber of China”.
Under this agreement, Didi is set to become a strategic shareholder of Xpeng. This investment not only provides Xpeng with a substantial financial boost but also opens the door to a range of collaborative opportunities.
The companies are keen to collaborate on various fronts, including marketing, financial and insurance services, charging infrastructure, autonomous “robotaxi” technology, and even international expansion.
With the infusion of assets and insights from Didi, Xpeng is seizing the opportunity to develop an affordable electric car under a new mass market brand, codenamed “MONA”.
The launch of the “MONA” brand, aimed at the 150,000 Yuan ($20,580) price range, marks a shift in Xpeng’s market approach. While Xpeng’s previous lineup is normally priced in the 200,000 Yuan range and higher, this new brand aims to introduce the benefits of EVs to a wider audience.
The deal between Xpeng and Didi is not a straightforward transaction, but rather a multi-staged endeavor with built-in performance benchmarks. According to the terms, Didi will receive additional shares in Xpeng if the new mass-market car brand, born from this partnership, achieves commendable success.
This performance-based structure adds an element of risk-sharing and aligns the interests of both parties in ensuring the venture’s prosperity. Didi stands to obtain a total of 3.25% share in Xpeng if the new mass-market EV brand receives favorable market acceptance and large sales statistics.
It is worth noting that Xpeng’s collaboration with Didi is not its only strategic move. The company’s partnership with German auto giant Volkswagen Group (ETR: VOW3) is equally noteworthy. This joint effort aims to develop two new electric cars specifically tailored for the Chinese market under the VW brand.
This alliance is projected to introduce these vehicles by 2026, reflecting the companies’ shared commitment to harnessing China’s EV potential. The Volkswagen-Xpeng collaboration also includes a financial aspect, with Volkswagen’s planned investment of around $700 million in Xpeng. In exchange for this investment, Volkswagen secures a 4.99% stake in Xpeng, further solidifying the ties between these two automotive powerhouses.
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Xpeng shares fell because the company’s loss increased in Q2 2023. However, deliveries and revenue are still looking good even for Q3.
Shares of Chinese electric vehicle Xpeng Inc (HK: 9868) fell over 7% after the company announced disappointing figures for Q2 2023. Xpeng reported a loss of 2.8 billion yuan, higher than the 2.7 billion yuan recorded in Q1. It is also the company’s largest quarterly loss since its August 2020 US initial public offering (IPO).
Xpeng reported figures primarily affected by a falling economy in China, which has significantly reduced consumer spending. In addition to this, Xpeng has faced stiff competition from other EV companies throughout Q2. Competitors include BYD, Tesla, Li Auto, and Nio.
The competition is also getting stiffer as the Elon Musk-led Tesla reduced the prices of its Model S and Model Y vehicles. Tesla cut two Chinese versions of the Model Y by about 14,000 yuan, or $2,000. The different versions cost 349,000 and 299,000 yuan. Tesla has cut prices of its vehicles more than a few times to boost sales. In Japan, the company cut prices for Model Y and Model 3 by about 4% and 3%, respectively.
Xpeng also said its revenue for Q2 2023 was 5.06 billion Chinese yuan. Although this met the expectations of analysts polled by Refinitiv, it is a 31% plunge year over year (YoY). Among other metrics, Xpeng revealed that its vehicle margin was negative 8.6% for the quarter, compared to the positive 9.1% in the same period last year.
The company has been struggling to repair its business after suffering a stock crash of over 80% last year. Xpeng now hopes its new G6 Ultra Smart Coupe SUV will help increase its margins. Co-president Brian Gu also expects that the G6 and other products will increase sales. As part of the earnings release, Gu said:
“With the G6 and other new products accelerating sales growth, we expect gross margin to gradually recover while operating efficiency continues to improve and free cash flow to substantially improve.”
On a positive note, Xpeng’s deliveries were healthy in Q2 2023, scaling the company’s own projections. The EV maker delivered 23,205 vehicles, a 27% increase quarter on quarter. In July alone, Xpeng delivered 11,008 vehicles, a 28% monthly jump. July was the company’s sixth consecutive month of delivery increase. The Chinese auto company had delivered 8,620 cars the month before, which was a 15% improvement from May’s figure.
For Q3 2023, Xpeng believes it would deliver 39,000 to 41,000 products, which would be a YoY increase of between 31.9% to 38.7%. This would mean a lot more deliveries than either Q1 or Q2.
In addition to deliveries, Xpeng is also bullish on revenue, as it predicts a YoY jump of between 24.6% and 31.9% in Q3. Xpeng also expects revenue to sit between 8.5 billion yuan and 9 billion yuan for the upcoming quarter.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Xpeng is hoping that its new car would help improve the company’s losses even as it has recorded a return to quarterly growth in deliveries.
Shares of Chinese electric vehicle (EV) maker Xpeng Motors (NYSE: XPEV) rose following the company’s report of car deliveries, signifying a quarterly return to growth. XPEV climbed 11% in response to the news of growth, after continuous declines for over a year.
According to data from MarketWatch, Xpeng shares listed in the US have climbed 42.84% over the last five days and 71.73% in a month. The shares have also seen a 31.92% increase in 3 months and nearly 46% year-to-date (YTD). However, its 1-year performance shows a 52% plunge.
On Saturday, Xpeng revealed a 27% quarterly increase in car deliveries for the year’s second quarter, at a total of 23,205. The figure is higher than the company’s forecast set in May – to deliver between 21,000 and 22,000 cars.
Xpeng said it delivered 8,620 cars in June, a 15% increase from May. June’s figure is the year’s highest so far.
Xpeng launched its new G6 Ultra Smart Coupe SUV at the end of Q2 and expects deliveries to begin soon. The company hopes that sales would help shore up some of its losses.
Xpeng stock fell in May after the company released Q1 earnings and a modest forecast for deliveries. The company reported that its Q1 revenue fell 50% year-over-year (YoY). Xpeng’s income was 4.03 billion Chinese yuan, about $571.6 million at the time, much lower than analysts’ expectation of 5.19 billion yuan. The EV maker also reported its expected net loss was 2.34 billion yuan, more than 18% higher than the expected 1.9 billion.
At the time, Chairman and CEO Xe Xiaopeng said he made a few decisive changes to the company’s organizational structure, senior management team, and strategy. He expressed confidence in the changes, stating they would drive product sales growth, customer satisfaction, team morale, and brand reputation.
Since the first quarter of 2022, Xpeng has suffered declines in deliveries each quarter. A lot of the company’s poor performance results from macroeconomic headwinds in China. The company is suffering mixed consumer spending because of an economy recovering from the effects of COVID-19 restrictions.
Xpeng is also facing fierce competition from other EV makers, including Tesla (NASDAQ: TSLA) and BYD. Last October, Tesla cut prices for its Model 3 sedan and Model Y SUV in China. At the time, the company said it cut prices because it had earlier increased them following a rise in the cost of raw materials.
In January this year, Tesla announced further price reductions in China for both cars amid growing competition. The company then announced a price cut in the US in March and a further reduction in April. However, in early May, Tesla hiked prices for its Model S and Model X vehicles by 19,000 yuan, about $2,751.
In June, EV maker Nio cut prices by nearly $4,200 even though CEO William Li claimed the company would not join a “price war”.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
China’s Xpeng shares were trading lower in US pre-trade after the EV company forecast significantly lower vehicle deliveries for Q2.
The shares of Chinese electric vehicle (EV) giant XPeng Motors (NYSE: XPEV) slid 5% following missed Q1 earnings and a gloomy delivery forecast.
Xpeng shares sank in US pre-market trade after the company reported a 50% year-over-year (YoY) decline in Q1 revenue. The company raked in income of 4.03 billion Chinese yuan ($571.6 million) compared to the 5.19 billion yuan analysts expected. For the first quarter of 2023, the Chinese Tesla rival also sustained a net loss of 2.34 billion yuan versus the 1.9 billion expected. Xpeng’s latest quarterly deficit exceeded the 1.7 billion yuan loss suffered in the same quarter last year.
Xpeng Chairman and Chief Executive Officer He Xiaopeng weighed in on the company’s quarterly performance, saying:
“During the first quarter of 2023, I made changes to our strategy, organizational structure, and senior management team decisively. I am fully confident in taking our company into a virtuous cycle, driving product sales growth, team morale, customer satisfaction, and brand reputation over the next few quarters.”
With shares currently trading at $9.11, Xpeng forecast at most 22,000 vehicle deliveries in Q2. The company’s latest restrained delivery guidance of between 21,000 and 22,000 EVs represents a 36.1% to 39.0% YoY decrease. Additionally, Xpeng’s second-quarter forecast revenue of between 4.5 billion yuan and 4.7 billion yuan is a 36.8% to 39.5% YoY drawdown.
However, He remained optimistic about the company’s prospects, especially regarding its soon-to-be-released G6 SUV. The EV rolls off the assembly line next month, and the Xpeng CEO believes it will become a popular, best-selling model in China.
Meanwhile, Xpeng Honorary Vice Chairman and Co-President Hongdi Brian Gu stressed the company’s commitment to achieving sustained profitability in a saturated market. Gu said:
“[As we advance], our top priority remains to accelerate growth in sales and market share. As the upcoming G6 launch and other new product launches fuel rapid sales growth, we expect our cash flow from operations to improve significantly.”
Xpeng’s recent less-than-stellar performance is due to debilitating macroeconomic parameters in China. This includes mixed consumer spending in an uneven economy still recovering from stringent Covid protocols. In addition, the Guangdong-based EV maker has also ceded some market share to rising competition from other EV companies. Xpeng’s competitors range from local to international, including China’s BYD, Li Auto, Nio, and the US Tesla (NASDAQ: TSLA).
Although Tesla recently hiked the prices of some of its EV models, the company’s previous price cuts impacted Xpeng’s competitiveness.
In early February, Xpeng launched its flagship electric vehicle models in Europe amid intensifying competition at home and abroad. The overseas push is to increase the Chinese company’s brand visibility and eke out a potentially lucrative foreign market share.
On February 3rd, Xpeng launched its P7 sedan and G9 SUVs in Denmark, Netherlands, Norway, and Sweden. At the time of the Europe launch, the Chinese EV manufacturer priced its P7 sedan below Tesla’s EVs.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.