While Tesla Inc. is grabbing the headlines, Xpeng Inc. has been the hottest electric vehicle stock over the past few months as investors rapidly warm to its product strategy.
The company’s Hong Kong-listed shares have surged 93% from an August low, far outpacing gains in peers from Tesla to fellow Chinese EV maker Nio Inc. Xpeng’s rally has been helped by strong order momentum for its new battery electric vehicle models on the back of competitive pricing and autonomous driving features.
The Guangzhou-based firm set a new record for monthly deliveries in October. Its results due later Tuesday are expected to show continued losses, but its sales are estimated to have risen from the previous year for a fifth-straight quarter. Bearish bets on the stock have dropped, short-interest and options market data show.
“There has been a shift in investor sentiment for Xpeng, which used to be a top target for short-sellers in the China EV space,”said Shuyan Feng, deputy general manager for investment management at Huatai Asset Management (Hong Kong). “It’s encouraging to see its sales momentum improving, and management commentary on new models will be a key share price catalyst.”
Tesla has climbed on founder Elon Musk’s connection to President-elect Donald Trump, even amid cloudy prospects for the global EV industry. China’s EV market remains strong in contrast, but fierce competition has forced companies to cut costs while carefully planning new models aimed at winning consumer demand.
Xpeng is moving to target products at the mid-to-lower-end price segment, with more smart-driving features that differentiate its brand from peers. The company has invested heavily in AI-related research and development, including its own chips and humanoid robots.
Local media reported nonrefundable orders for its EV P7+ sedan — a model starting at $26,000 that features an AI-powered camera system — reached 31,500 within three hours of launch earlier this month. That followed strong orders for its Mona M03 model, a $15,000 EV with urban advanced assisted driving features released in late August.
While Xpeng’s deliveries for the first 10 months of 2024 have jumped 21% from last year’s level, it may take time for these efforts to filter through to the bottom line.
“Profitability and market share still trail behind peers, with thin margins expected due to aggressive P7+ pricing,” said Bing Yuan, a fund manager at Edmond de Rothschild Asset Management. “For the third-quarter results, I’m watching Xpeng’s new model pipeline and guidance,” she said, highlighting an upcoming new Mona model and a shift to plug-in hybrid and extended-range vehicles in 2025.
Investors are already turning more positive, with short interest in Xpeng’s shares falling to 6.4% of the free float from around 12% in April, according to S&P Global data. The options market is pricing in a 9% one-day move following the earnings report, and the number of puts outstanding has dropped to an almost five-month low relative to calls.
“An improved sales outlook has given greater visibility to Xpeng’s cost-cutting strategy, and a margin and earnings lift in 2025,” said Joanna Chen, an analyst with Bloomberg Intelligence. “Focus is turning to Xpeng’s progress in supply chains and factory production to cut wait times and maximize the new-model effect.”
With assistance from Cecile Vannucci
