By
Svetlana Soroka
April 18th, 2024
Xpeng shares fell because the company’s loss increased in Q2 2023. However, deliveries and revenue are still looking good even for Q3.
Shares of Chinese electric vehicle Xpeng Inc (HK: 9868) fell over 7% after the company announced disappointing figures for Q2 2023. Xpeng reported a loss of 2.8 billion yuan, higher than the 2.7 billion yuan recorded in Q1. It is also the company’s largest quarterly loss since its August 2020 US initial public offering (IPO).
Xpeng reported figures primarily affected by a falling economy in China, which has significantly reduced consumer spending. In addition to this, Xpeng has faced stiff competition from other EV companies throughout Q2. Competitors include BYD, Tesla, Li Auto, and Nio.
The competition is also getting stiffer as the Elon Musk-led Tesla reduced the prices of its Model S and Model Y vehicles. Tesla cut two Chinese versions of the Model Y by about 14,000 yuan, or $2,000. The different versions cost 349,000 and 299,000 yuan. Tesla has cut prices of its vehicles more than a few times to boost sales. In Japan, the company cut prices for Model Y and Model 3 by about 4% and 3%, respectively.
Xpeng also said its revenue for Q2 2023 was 5.06 billion Chinese yuan. Although this met the expectations of analysts polled by Refinitiv, it is a 31% plunge year over year (YoY). Among other metrics, Xpeng revealed that its vehicle margin was negative 8.6% for the quarter, compared to the positive 9.1% in the same period last year.
Xpeng Deliveries and Revenue Predictions for Q2 and Q3 2023
The company has been struggling to repair its business after suffering a stock crash of over 80% last year. Xpeng now hopes its new G6 Ultra Smart Coupe SUV will help increase its margins. Co-president Brian Gu also expects that the G6 and other products will increase sales. As part of the earnings release, Gu said:
“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.”
On a positive note, Xpeng’s deliveries were healthy in Q2 2023, scaling the company’s own projections. The EV maker delivered 23,205 vehicles, a 27% increase quarter on quarter. In July alone, Xpeng delivered 11,008 vehicles, a 28% monthly jump. July was the company’s sixth consecutive month of delivery increase. The Chinese auto company had delivered 8,620 cars the month before, which was a 15% improvement from May’s figure.
For Q3 2023, Xpeng believes it would deliver 39,000 to 41,000 products, which would be a YoY increase of between 31.9% to 38.7%. This would mean a lot more deliveries than either Q1 or Q2.
In addition to deliveries, Xpeng is also bullish on revenue, as it predicts a YoY jump of between 24.6% and 31.9% in Q3. Xpeng also expects revenue to sit between 8.5 billion yuan and 9 billion yuan for the upcoming quarter.