Chinese EV maker Xpeng reports quarterly loss that exceeds analyst estimates
CHINESE electric carmaker Xpeng reported a wider-than-expected quarterly loss as it struggles to ramp up deliveries amid intense competition in the world’s biggest EV market.
Guangzhou-based Xpeng posted a net loss of 2.80 billion yuan (S$521 million) in the three months ended Jun 30, according to a company statement on Friday (Aug 18), more than the 2.1 billion yuan deficit estimated by analysts. It had a 1.77 billion yuan loss in the same quarter a year earlier.
The carmaker delivered 23,205 vehicles in the quarter, beating its original guidance of 21,000-22,000 units. While recording a quarter-over-quarter increase of 27 per cent, the company’s deliveries dropped 33 per cent from the same period a year ago. Revenue declined 32 per cent to 5.06 billion yuan, which beat analysts’ forecast of 4.91 billion yuan.
Xpeng has worried financial markets with its sluggish sales and weak gross margins, which fell to as low as 1.7 per cent in the first quarter of the year. The company was forced to delay its profitability target to 2025, and overhaul its internal management and product platforms as sales and shares plunged.
It’s now betting on the G6 – an intelligent sport utility vehicle that was launched in late June to take on Tesla’s most popular Model Y and win more market share for the company.
The company looks to deliver between 39,000 and 41,000 vehicles in the three months ending Sep 30, and post revenue between 8.5 billion and 9.0 billion yuan, a year-over-year increase of approximately 25 per cent to 32 per cent.
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“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,” said Brian Gu, honorary vice chairman and co-president of Xpeng.
The recent investment of US$700 million from Volkswagen AG is providing another boost. The German automaker will eventually hold a 4.99 per cent stake in the company, and jointly develop two battery electric vehicle models for sale in China under the Volkswagen brand. The collaboration will leverage the core competencies of both companies, using Xpeng’s G9 platform, connectivity and assistance driving software.
“The tie-up helps confer confidence in and reflects the value of Xpeng’s EV platform and software technologies, and should put away any ‘going concern risk’ that some investors have for the company,” Sanford C Bernstein analysts led by Eunice Lee wrote in a note.
But Tesla is adding to the pressure. It implemented two rounds of price cuts for some models in China this week, fueling concern about a rekindled price war that had shown signs of abating. Geely Automobile Holdings also marked down the price of its signature model, the Zeekr 001, which together with Tesla’s Model Y rivals Xpeng’s G6. BLOOMBERG
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