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XPeng Is Expecting A Brighter 2024 Despite Intensified Competition

On Wednesday, XPeng Inc (NYSE: XPEV) delivered its third quarter results that showed aggressive promotions with which the EV maker responded to Tesla Inc (NASDAQ: TSLA), who kicked off a price war at the beginning of a year, took a toll on its bottom line.

XPeng Reported Its Losses Widened

For the quarter ended on September 30th, revenue surged 22% YoY to $1.17 billion, slightly missing FactSet’s estimate of $1.19 billion. But this is XPeng’s first revenue gain since 2022’s third quarter as well as its return to more than $1billion in sales since 2022’s second quarter. Yet, gross margin swinged to negative 2.7% from 13.5% in 2022’s comparable quarter. Cost of sales rose both YoY and quarter-over-quarter to $1.2 billion which is a 48.4% rise. Although deliveries rose 72.4% from the second quarter, higher costs, owed to the rise of cost of sales and inventory write-downs, resulted in a wider loss. During the third quarter, XPeng lost 3.89 billion Chinese yuan which equates to about $530 million.

Outlook

XPeng expects its fourth quarter delivery guidance in the range from 59,500 to 63,500. It already reported record October deliveries of 20,002. XPeng will be revealing its new EV on November 17th that will be competing against the highly anticipated Mega EV from Li Auto Inc (NASDAQ: LI). XPeng generally targets consumers with a lower price point compared to Li Auto that got known for premium offerings, but that is about to change with its newest EV. Li Auto made a big achievement in October as it ran over Tesla in October with its sales record of 40,422 cars. Li Auto also posted strong third quarter results that topped estimates. Also, Li Auto stated it expects deliveries to continue at a similar pace during the last three months of the year.

XPeng Is Expecting Next Year To Be Better, Despite Intensified Competition

While XPeng’s third quarter was defined by a revenue miss and a weak gross margin, China EV leader, BYD Company Limited (OTC: BYDDY), reported record third quarter earnings in late October. Also, BYD reported its October sales were double compared to Tesla’s. October was also the sixth consecutive month in which BYD posted record deliveries, while also passing the 300,000 milestone. With BYD strengthening its dominance in China, Li Auto unveiling its Mega EV, XPeng will only have a harder job of staying competitive, with its G6 electric SUV already challenging Tesla Model Y that became the world's best-selling car during the first three months of the year, with about 267,200 sold vehicles. Tesla is also hoping that December will be its best time of the year with Cybertruck deliveries scheduled to kick off at the end of November. However, XPeng CEO He Xiaopeng stated that the changes the EV maker made earlier in the year will bring positive results next year and beyond.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

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This article XPeng Is Expecting A Brighter 2024 Despite Intensified Competition originally appeared on Benzinga.com

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