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China’s Xpeng shares were trading lower in US pre-trade after the EV company forecast significantly lower vehicle deliveries for Q2.
The shares of Chinese electric vehicle (EV) giant XPeng Motors (NYSE: XPEV) slid 5% following missed Q1 earnings and a gloomy delivery forecast.
Xpeng shares sank in US pre-market trade after the company reported a 50% year-over-year (YoY) decline in Q1 revenue. The company raked in income of 4.03 billion Chinese yuan ($571.6 million) compared to the 5.19 billion yuan analysts expected. For the first quarter of 2023, the Chinese Tesla rival also sustained a net loss of 2.34 billion yuan versus the 1.9 billion expected. Xpeng’s latest quarterly deficit exceeded the 1.7 billion yuan loss suffered in the same quarter last year.
Xpeng Chairman and Chief Executive Officer He Xiaopeng weighed in on the company’s quarterly performance, saying:
“During the first quarter of 2023, I made changes to our strategy, organizational structure, and senior management team decisively. I am fully confident in taking our company into a virtuous cycle, driving product sales growth, team morale, customer satisfaction, and brand reputation over the next few quarters.”
Xpeng Forecast Lower Q2 Vehicle Deliveries & Revenue Haul amid Shares Slip
With shares currently trading at $9.11, Xpeng forecast at most 22,000 vehicle deliveries in Q2. The company’s latest restrained delivery guidance of between 21,000 and 22,000 EVs represents a 36.1% to 39.0% YoY decrease. Additionally, Xpeng’s second-quarter forecast revenue of between 4.5 billion yuan and 4.7 billion yuan is a 36.8% to 39.5% YoY drawdown.
However, He remained optimistic about the company’s prospects, especially regarding its soon-to-be-released G6 SUV. The EV rolls off the assembly line next month, and the Xpeng CEO believes it will become a popular, best-selling model in China.
Meanwhile, Xpeng Honorary Vice Chairman and Co-President Hongdi Brian Gu stressed the company’s commitment to achieving sustained profitability in a saturated market. Gu said:
“[As we advance], our top priority remains to accelerate growth in sales and market share. As the upcoming G6 launch and other new product launches fuel rapid sales growth, we expect our cash flow from operations to improve significantly.”
Xpeng’s recent less-than-stellar performance is due to debilitating macroeconomic parameters in China. This includes mixed consumer spending in an uneven economy still recovering from stringent Covid protocols. In addition, the Guangdong-based EV maker has also ceded some market share to rising competition from other EV companies. Xpeng’s competitors range from local to international, including China’s BYD, Li Auto, Nio, and the US Tesla (NASDAQ: TSLA).
Although Tesla recently hiked the prices of some of its EV models, the company’s previous price cuts impacted Xpeng’s competitiveness.
In early February, Xpeng launched its flagship electric vehicle models in Europe amid intensifying competition at home and abroad. The overseas push is to increase the Chinese company’s brand visibility and eke out a potentially lucrative foreign market share.
On February 3rd, Xpeng launched its P7 sedan and G9 SUVs in Denmark, Netherlands, Norway, and Sweden. At the time of the Europe launch, the Chinese EV manufacturer priced its P7 sedan below Tesla’s EVs.