Chinese luxury EV maker Xpeng deliveries for June rose by 24% year-over-year to 10,688 units. The number was also up by 5% compared to the last month. Xpeng has been benefiting from the ramp-up of sales of the premium X9 multi-purpose vehicle which was launched in early January. The luxury MPV – which has a starting price of about $50,000 – sold a total of 1,687 units last month. However, Xpeng’s performance continued to lag behind its principal rivals. For instance, Li Auto , which is the largest of the emerging EV players in China, delivered 47,774 vehicles for June 2024, an increase of 46.7% compared to last year driven by higher sales of its lower-priced vehicle the Li L6 and also due to some price cuts. Nio (NYSE: NIO) delivered 21,209 vehicles, a 98% year-over-year increase, driven in part by price adjustments and changes it made to its EV battery rental service.
Despite some recent growth in deliveries, XPEV stock has suffered a sharp decline of 80% from levels of $45 in early January 2021 to around $8 now, vs. an increase of about 45% for the S&P 500 over this roughly 3-year period. However, the decrease in XPEV stock has been far from consistent. Returns for the stock were 18% in 2021, -80% in 2022, and 47% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that XPEV underperformed the S&P in 2021 and 2022. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Consumer Discretionary sector including AMZN, TSLA, and HD, and even for the megacap stars GOOG, MSFT, and AAPL.
In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could XPEV face a similar situation as it did in 2021 and 2022 and underperform the S&P over the next 12 months – or will it see a recovery?
Xpeng’s financial metrics have been looking up of late. For Q1 2024, the most recently reported quarter, the company saw average revenue per vehicle rise to about $42,000, up from just about $28,000 in the year-ago quarter. This is largely due to a higher mix of sales of the more expensive X9 vehicle. Xpeng’s gross margins have also picked up, coming in at 13%, up from under 3% in the year-ago quarter driven by higher sales of technical services following the company’s collaboration with the Volkswagen Group relating to platform and software. Xpeng, which is seen as a leading player in the self-driving software space, is seeing adoption rise quickly. For June, the active user penetration rate of Xpeng’s driving assistance tools in urban driving scenarios reached 84%. The company is also slated to release a major upgrade to AI Tianji OS its in-car operating system in Q3, and this could further improve its competitiveness.
Xpeng also plans to launch more than 10 brand-new models over the next three years, while also partnering with Volkswagen to co-develop VW-branded EVs in a strategic partnership. Xpeng also intends to move beyond the luxury market toward more mass-market models. The company plans to launch its new sub-brand Mona shortly, with the vehicles expected to be priced under RMB 150,000 yuan ($21,000), allowing it to compete head-on with the likes of BYD for much bigger volumes in the mass market. See our analysis of Nio, Xpeng & Li Auto: How Do Chinese EV Stocks Compare?for a detailed look at how Xpeng stock compares with its rivals Li Auto and Nio.
XPEV Return Compared with Trefis Reinforced Value Portfolio
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