Xpeng reports wider losses for third quarter, forecasts sharp decline in sales ahead

Xpeng expects a sharp decline in new car deliveries in the fourth quarter
EV firm expects ‘a recovery in the first quarter of next year’, president says

Electric & new energy vehicles

Daniel Renin Shanghai

Published: 9:00pm, 30 Nov 2022

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Xpeng Motors expects a sharp decline in new car deliveries in the fourth quarter, the Chinese smart electric vehicle (EV) maker said on Wednesday.

A strained supply chain continued to be a stumbling block to sales growth, said the carmaker as it posted a net loss of 3.28 billion yuan (US$335.8 million) for the third quarter. Its losses for this period widened by 49.7 per cent from the 1.59 billion yuan it posted for the same period a year ago.

When compared with the previous quarter, its losses narrowed 12 per cent from 2.7 billion yuan. Its net loss in the third quarter fell short of a median forecast of 1.8 billion yuan made by analysts polled by Bloomberg.

“We had a supply-chain issue to sort out and it deterred us from building and delivering enough G9 vehicles to our customers,” Brian Gu, president of the Guangzhou-based carmaker, told the Post after its quarterly earnings were released. “But we are on track to solving the problem and expect to see a recovery in the first quarter of next year.”

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Improved operational efficiency, new products and technology roll-outs will turn Xpeng around soon, Gu added.

The forecast of reduced deliveries comes as Beijing’s stringent coronavirus controls continue to wreak havoc on Chinese carmakers, which face a severe shortage of key components.

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The EV firm’s forecast on Wednesday of 20,000 to 21,000 vehicles being delivered to customers between October and December represents a decline of between 29 per cent and 32.4 per cent from the 29,570 units sold in the third quarter. Xpeng’s quarterly deliveries hit an all-time high of 34,422 in the three months through June.

“Making better use of capacity is of great importance to Xpeng, because more new models will hit the market next year amid heightened competition,” said Gao Shen, an independent analyst in Shanghai. “Xpeng also needs to fine-tune its marketing and pricing strategy to enhance brand awareness among potential EV buyers.”

Gu said that about 10,000 vehicles could be delivered in December, restoring Xpeng to production levels seen before the outbreak in Guangzhou. The city has been badly affected by China’s latest coronavirus outbreaks, recording more than 150,000 infections since October, when a resurgence in new cases began.

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The carmaker launched its G9 premium sport utility vehicle (SUV) in September, with the aim of overtaking US carmaker Tesla’s Model Y, the current bestseller in China. It is priced from 309,900 yuan to 469,900 yuan, and Xpeng hopes to turn it into a new benchmark for smart EVs in China, the world’s largest electric car market.

Deliveries of the G9, Xpeng’s fourth production model, started in October. The SUV, which is capable of navigating its way automatically along city streets and will have a driving range of 702 kilometres on a single charge, has eaten into demand for Xpeng’s other models, Gu said.

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