XPeng, the Chinese electric vehicle startup, reported a wider-than-expected loss in the second quarter and saw a significant decline in revenue compared to the previous year. However, the company is optimistic about a rebound in deliveries and sales in the current quarter.
The news of XPeng’s disappointing earnings comes shortly after the company announced a partnership with German automaker Volkswagen to produce VW-branded electric vehicles using XPeng’s technologies and platforms. Both companies are aiming to challenge Tesla in the Chinese market.
Speaking of Tesla, the American EV giant has been facing challenges in China recently. Tesla has been reducing prices, offering discounts, and providing incentives in an attempt to boost sales amid a struggling Chinese economy.
Analysts had expected XPeng to narrow its losses in the second quarter, but the company reported a net loss of 43 cents per share and a 36% decline in revenue to $693.7 million. Despite this, XPeng’s second-quarter electric vehicle sales rose compared to the first quarter, thanks to the introduction of new models. However, sales were lower than the same period last year.
Looking ahead, XPeng has provided a positive outlook for the third quarter. The company expects deliveries of 39,000 to 41,000 electric vehicles, representing a year-over-year increase of around 32% to 39%. XPeng forecasts revenue of RMB8.5 billion to RMB9.0 billion ($1.17 billion to $1.23 billion), a gain of approximately 25% to 32% in local currency. Wall Street analysts anticipate Q3 revenue of $1.329 billion, a 39% increase compared to the previous year.
Despite the positive outlook, XPeng’s stock tumbled 6% in early Friday trading, signaling a drop towards the 50-day line. The stock had experienced a significant surge in late June and July but has since pulled back.
XPeng’s competitors in the Chinese EV market, Nio and Li Auto, also saw declines in their stock prices on Friday. Meanwhile, Tesla continued to slide, and Chinese EV giant BYD fell in Hong Kong trading.
Analysts have expressed optimism about XPeng’s delivery outlook for the third and fourth quarters, citing strong orders for the company’s new G6 electric SUV. However, concerns about a slowdown in the Chinese economy have emerged. Official data showed a weakening in various sectors, including property investment, retail sales, and industrial output. China’s central bank has cut a key interest rate, but investors remain skeptical about the effectiveness of such measures in stimulating economic growth.
XPeng is hoping that the release of its G6 SUV, which began delivery in July, will drive its growth. Despite Tesla’s recent price cuts, XPeng’s G6 is priced much cheaper than Tesla’s Model Y, which did not see any price reductions.
Overall, while XPeng’s second-quarter earnings report may have disappointed investors initially, the company remains optimistic about its future performance and growth prospects in the Chinese EV market.