After receiving an investment from Volkswagen, XPeng Inc. (NYSE: XPEV) is on a roll as it successfully entered into a strategic partnership with ride-hailing giant Didi to acquire its smart EV unit. Through this acquisition, the company is expanding its presence into a new market segment which is the mass market since it intends to manufacture A-class segment EVs that target the Chinese vast middle class starting in 2024. Considering this venture’s potential to boost the company’s revenues in the coming years, the XPEV stock forecast appears to be bright for the long-term.
XPEV Stock News
Deliveries
Considering the challenges facing the EV industry from supply chain woes to China’s Covid lockdowns, EV manufacturers including XPEV have suffered significantly in 2022 as they were not able to deliver on their delivery estimates. Despite this, the industry’s outlook in 2023 appears to be bright especially with China easing its lockdowns. With this in mind, XPEV recently announced its deliveries for December, Q4, and full year 2022.
In this update, XPEV announced delivering more than 11.2 thousand vehicles in December 2022. Based on these deliveries, XPEV was able to beat its Q4 delivery expectations of 21 thousand. Despite this, XPEV fell significantly short of its full year delivery estimates of 250 thousand vehicles as it managed to deliver only 120.7 thousand vehicles in 2022 as a result of the lockdowns that have affected the company’s production. However, many investors are increasingly bullish on XPEV stock forecast in 2023 as the company intends to launch 3 new vehicles in Q1. Considering the company’s vehicles’ impressive technologies, XPEV could be well-positioned to post record deliveries – aiding the company in its path to profitability.
Expanding In Europe
Looking to further expand in Europe, XPEV announced plans to open 4 XPENG Delivery and Service Centers in Norway, the Netherlands, Sweden, and Denmark in the first half of 2023 to aid its EVs in these markets. At the same time, XPEV intends to open additional locations in these markets by the end of 2023 to offer greater coverage in these markets. In light of these plans, XPEV has the potential to witness increased demand for its EVs in these markets which could help the company further expand its offerings in the European market. For this reason, XPEV stock could be one to buy at its current PPS in anticipation of these efforts to roll out.
Autonomous Driving Technology
One of XPEV’s most compelling assets is its groundbreaking autonomous driving technology. In its latest annual Tech Day, XPEV announced a number of impressive technical achievements related to its autonomous technologies. At the core of XPEV’s technologies, XNPG is designed to be its last step before autonomous driving is realized – offering driver assistance in different driving scenarios from highways to complex city roads. Moreover, XNGP achieved a technological breakthrough as it expands to areas not covered by high-precision maps. Since XNGP is China’s most advanced driver assistance technology, XPEV stock forecast appears to be bright for the future as the company could be set to become a global leader in autonomous driving.
In addition to XNGP, XPEV announced its next-generation neural network-based software architecture – XNet – on Tech Day. Unlike the first-generation architecture, XNet is based on an in-house developed neural network for visual recognition with human-like decision making capabilities. This neural network technology replaces complicated manual processing logic to achieve a self-evolving data-driven algorithm and is backed by Fuyao – the largest supercomputing center for autonomous driving in China.
With this in mind, Fuyao’s capabilities could increase the training efficiency of autonomous driving models by more than 600 times. In this way, the time for a model training could be reduced from 276 days to only 11 hours. Additionally, XNet uses only 9% of chip processing compared to 122% thanks to XPEV’s impressive deployment optimization. In light of this, many investors are bullish on XPEV stock forecast in the long-term as it continues developing its autonomous driving technologies.
With autonomous driving a major goal of the company, XPEV established China’s first fully closed-loop autonomous driving data system that includes data collection, labeling, training and deployment. This system is supported by Fuyao’s capabilities as well as a full auto-labeling system. Based on this, the system can address every detected corner case by utilizing a targeted data collection approach to acquire training data from XPEV’s vehicles. Considering XPEV’s AI capabilities, the company was able to reduce incident rates for its Highway NGP functionality by 95% – which is an impressive feat for the company’s autonomous driving efforts.
Robotaxi
As for its robotaxi development efforts, XPEV achieved a major milestone as its G9 SUV obtained an intelligent connected vehicle road test permit – making it China’s first commercial vehicle to pass the government-led autonomous driving closed-field test. With this in mind, XPEV’s platform-based robotaxi development intends to generate cost benefits while ensuring product quality, safety, and used experience. While it may take the company several years to fully realize its robotaxi ambitions, XPEV stock could be an opportunity at its current PPS in anticipation of further developments regarding this endeavor.
Flying Car
Meanwhile, XPEV is developing a flying car and brought the latest version of its full-electric vertical take-off and landing (eVToL) flying car to light at its Tech Day. Developed by XPEV’s affiliate XPENG AEROHT, the vehicle has been optimized to a new distributed multi-rotor configuration. At the same time, the vehicle’s system design complexity has been reduced to improve flight safety and reliability. On that note, the test vehicle of the new flying car has successfully completed its first flight and several single-motor failure tests. Given the company’s impressive portfolio of technologies under development, the XPEV stock forecast appears to be bright for the long term.
*Updated June 18th, 2023
Rivaling Tesla
In April, XPEV revealed its new EV G6 SUV coupe (G6) which is notable since it could be considered a TSLA Model Y competitor. Both EVs’ dimensions are nearly identical with a difference of only a few millimeters. Additionally, G6 has 292 horsepower making it more powerful than the model Y SR, but slightly less powerful than the model Y SR+. With these similarities in mind, the G6 model could provide XPEV with substantial revenues due to its status as a cheaper model Y alternative.
As things stand a standard model Y costs around $41 thousand, while G6 costs around $31 thousand. This disparity in price provides the G6 model with a clear market advantage over model Y which can be seen in the G6 recording more than 25 thousand preorders within 72 hours of reservations opening.
Another advantage the G6 has over the TSLA model Y is range. Model Y boasts an estimated range of 330 miles, while the G6 has a significantly longer range of nearly 469 miles. Given its features, the G6 could prove to be a major competitor to Model Y which could allow XPEV to gain market share in China.
Not only the G6 would be a strong competitor to Model Y in China, but it could also be a competitor in the European market as there are a few hints in the standard of G6’s construction that indicate that it might be sold outside of China. The first and most notable hint is its rigidity, which allows it to meet the highest safety standard in Europe and North America. The second is that its chassis was tuned by a German professional team which indicates that the G6 was designed to compete with EVs in outside markets.
Self Driving
As things stand XPEV is poised to gain another major advantage over TSLA due to the fact that it is currently monopolizing autonomous driving in China. Recently, some of XPEV’s vehicles gained access to XPEV’s new X NGP navigational software through a wireless update. This feature is available for some P7s, P5s, and G9s which may increase the sales of these models since X NGP is the only Chinese semi-autonomous driving system with approval from Beijing’s transport authorities.
By expanding its autonomous driving capabilities into Bejing, XPEV’s X NGP is now available in Guangzhou, Shenzhen, Shanghai, and Beijing, with plans to expand it to dozens of cities within this year. Based on this, XPEV appears to be on the right track to deliver on its plan to make all of its autonomous driving functions available to drivers across China by 2024. Given that Tesla’s FSD software is not approved in any Chinese province, XPEV has a major edge over the EV giant as it can effectively control the autonomous driving market in China.
*Updated July 27th, 2023
Volkswagen Investment
Volkswagen recently invested $700 million in XPEV for a 4.99% stake in the Chinese EV manufacturer. This investment is part of a joint plan to manufacture two midsized SUVs inspired by XPEV’s G9 crossover SUV. These SUVs will be sold in China under the Volkswagen brand and production is expected to start in 2026. This could prove to be extremely beneficial for XPEV’s sales and profitability prospects since the company will start receiving “technology service revenue” from Volkswagen starting next year.
In addition to receiving revenue from this deal, XPEV’s cash balance will drastically increase from $1.2 billion as last reported in Q1 2023 to nearly $2 billion. In this way, the company would be able to improve its production capabilities since it is currently developing a new MPV in addition to plans to launch facelifted versions of its P7, G3, and P5 models. Based on this, the XPEV stock forecast could be bright for 2023 as the newly released versions may boost the company’s sales this year.
Another benefit of Volkswagen’s investment in the company is that XPEV may utilize Volkswagen’s resources including its relationship with European distribution centers. Expanding in Europe has always been a target of the company and it is currently available in Nordic countries in Europe. That said, the company now may be able to enter more lucrative markets like Germany for example which would substantially boost sales given the impressive technology the company’s vehicles boast. Since this investment appears to be a turning point for the company, the XPEV stock forecast appears to be bullish in 2023 and beyond which could see the stock continue climbing over the coming months.
*Updated August 28th 2023
Catering to a New Segment
As things stand, Didi and XPEV are in the midst of a strategic partnership to develop an A-class smart EV model under a new brand called MONA that targets the Chinese middle class. The vehicle is set to be launched in 2024, which is especially promising since its price is poised to be in the RMB 150 thousand range – making it widely affordable for middle class Chinese citizens.
This move is likely going to be extremely beneficial for the company moving forward, since the Chinese middle class is enormous. According to a Pew research study, the Chinese middle class grew between 2000 and 2018 from 39.1 million to 707 million which means that over 50% of the Chinese population is in the middle class. In this way, the company’s plan to venture into the mass market segment could aid its goal of reaching profitability in 2026.
Competition in the Mass Market
With this in mind, the Chinese EV market is currently obsessed with A-segment vehicles due to their affordability and maneuverability in congested areas. Having said that, XPEV’s entry into this segment will not be easy as the mass market segment is highly competitive. Currently, BYD and Wuling are giants in this segment as both companies have produced a number of best selling A-segment EVs which are currently wildly popular including BYD’s Seagull, Wuling’s Hongguang mini EV, and Wuling’s Bingo.
These vehicles accomplished monumental feats in terms of sales since for example, Wuling’s Hongguang mini EV recorded more sales in China than Tesla’s Model Y in 2022. That said, Bingo and Seagull also recorded impressive sales so far in 2023 as Bingo recorded 20 thousand sales in July, while Seagull recorded 23.5 thousand sales in June. To see the extent of these numbers, XPEV had 11 thousand deliveries last July across its portfolio of EVs.
When XPEV’s MONA Project enters the market, it will likely enjoy the benefits of China’s current A-segment fad. That said, Mona will be competing with Bingo, and Seagull, which are likely going to be much more affordable. As is, Bingo is sold at around RMB 59.8 thousand, while Seagull’s price could vary between RMB 78 and 95 thousand. On the other hand, XPEV’s MONA will likely be priced at around the RMB 150 thousand price point.
Although XPEV is outmatched when it comes to affordability, it still has a major edge over its competition in this segment which is its portfolio of EV technology. One of the features that the company could introduce into this segment is its X NGP navigational software which is approved for autonomous driving in several Chinese provinces. So despite the discrepancy in pricing, more customers may find the difference in EV tech worth the higher price point which could make the company secure a substantial share of the mass market segment. For this reason, the XPEV stock forecast could be extremely bright for the long term.
XPEV Stock Financials
Q3 2022 Earnings
Looking into XPEV’s Q3 report, the company has $10 billion in assets including more than $4.4 billion in cash and cash equivalents which can be utilized by the company to further improve its technologies. XPEV also has $4.5 billion in liabilities – $3.2 billion of which are current liabilities. Based on this, XPEV appears to be in a strong financial position which reduces its potential to dilute its shareholders.
Meanwhile, XPEV reported $959.2 million in revenues and had a gross profit of $129.7 million. However, the company incurred $439.2 million in operating costs – leading the company to report a net loss of $334 million. Considering that the company is operating at significant losses, XPEV stock forecast could be bright for the future as the company anticipates becoming operating profit positive by 2025 – making it one to hold onto for the long-term.
Q1 2023 Earnings
According to its latest Q1 report, XPEV’s $9.8 billion in assets – $1.2 billion of which are in its cash balance. On the other hand, XPEV has $4.8 billion in liabilities. In terms of revenues, XPEV reported $587.3 million in Q1. However, the company only reported a gross profit of $9.7 million due to its cost of revenues standing at a staggering $577.5 million. At the same time, XPEV reported $390.5 million in operating costs. In this way, XPEV operated at a net loss of $340.2 million.
Q2 2023 Earnings
According to its Q2 2023 report, XPEV experienced a significant decrease in assets from RMB 71.4 billion at the beginning of the year to RMB 66.6 billion. This was due to the company’s cash balance decreasing from RMB 14.6 billion to RMB 11 billion, and its short term investments plummeting from RMB 1.2 billion to RMB 462 million. On the other hand,its liabilities remained relatively unchanged at around RMB 34 billion.
When it comes to revenue, the company experienced a significant YoY decrease from RMB 14.8 billion to RMB 9 billion. This occurred as a result of waning car sales which fell from RMB 13.9 billion to RMB 7.9 billion as a result of less deliveries that could be attributed to the price war Tesla started in the Chinese market. Meanwhile, expenses slightly decreased from RMB 5.7 billion to RMB 5.5 billion. Despite this, the revenue decline led the company’s net loss to increase YoY from RMB 4.4 billion to RMB 5.1 billion.
Media Sentiment
@tradertvshawn is long XPEV stock following its latest deal with Didi.
@OpenOutcrier is optimistic about XPEV’s deal with Didi.
Technical Analysis
XPEV Stock is in a neutral trend as it is trading in a sideways channel between $18.09 and $19.93. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which is a bullish sign. Meanwhile, the RSI is overbought at 78 and the MACD is approaching a bearish crossover.
As for the fundamentals, the XPEV stock forecast appears to be bullish thanks to its recent partnership with Didi since it allows the company to enter the mass market segment. Given the size of this market, the company may be on track to reach profitability in 2026 as it expects due to the expected surge in sales once the MONA Project hits the market. With this in mind, investors could wait for the stock to test its $18.09 support and hold it before entering a long position ahead of the company’s expected growth in the coming years.
XPEV Stock Forecast
After its deal with Didi, XPEV might be well-positioned to capture a significant share of the Chinese mass market segment due to its EV technology that is more advanced than its competition in this segment. As is, the targeted population of the Chinese middle class represents more than 50% of China’s population which could see the company record impressive deliveries once the MONA project hits the market in 2024. As the company’s first real attempt to mass produce EVs in the Chinese market, its goal of reaching profitability in 2026 may not be far-fetched. For this reason, the XPEV stock forecast could be extremely bullish for the long term.
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