Electric car star XPeng had a disappointing first quarter
Chinese electric vehicle maker XPeng’s revenues have nearly halved over last year, and profitability is a long way off. A company restructure and a flashy release next month is intended to return the firm to growth.
On Wednesday, electric vehicle (EV) firm XPeng released its first quarter earnings. Investors were disappointed both with the poor performance of the company, which fell short of expectations, and with its underwhelming forecasts.
XPeng only delivered 18,230 cars in the first three months of 2023, a drop of 47% over last year. Revenue also plummeted 50% to 4.03 billion yuan ($571.6 million). Meanwhile, projections for second quarter deliveries are only slightly better, at around 22,000 units — far below the 10,000 per month output that the company is targeting.
Following the release of the earnings report, XPeng’s share price dropped 11%, exacerbating the steady decline of the company’s stock since January 2022, and landing around 88% down from its record high of $74.49 from November 2020.
China news, weekly.
Sign up for The China Project’s weekly newsletter, our free roundup of the most important China stories.
There are several reasons for these dismal numbers. There was weak consumer demand across the sector at the start of the year.
XPeng also became embroiled in the EV price war that began when Tesla cut its prices in the first quarter. The good news for XPeng and other EV firms that were squeezed is that this seems to have abated for now. XPeng also restructured its management, which apparently led to a loss of focus.
But CEO 何小鹏 Hé Xiǎopéng stated yesterday that he was “fully confident” in reversing the company’s fortunes. XPeng is pinning this hope on a new sports utility vehicle, the G6, set to launch in June. Whether this will help XPeng get back on track is an open question. But its lack of obvious avenues for profitability should be the overriding concern for investors.
Companies:
Sources and additional links:
- XPENG Reports First Quarter 2023 Unaudited Financial Results
- 卖一辆亏一辆，Q1小鹏毛利率3年来再转负| 见智研究 / Wall Street CN
- 小鹏汽车Q1财报：营收40.3亿元，现金储备超340亿 / Dongchedi
- 何小鹏：新车型有望带动总交付量 形成年内销量拐点| 财经夜行线 / Yicai
- XPeng Stock Dips After Earnings. It Has a Demand Problem. / Barron’s
- Chinese Tesla rival shares dive 5% after it forecasts a plunge in car deliveries / CNBC
- Will China’s EV price war kill some of its car companies? / The China Project
- China’s top 15 electric vehicle companies / The China Project
