China’s Xpeng expects lower deliveries amid weak demand for premium cars, posts wider loss for fourth quarter of 2022

Carmaker to strengthen leadership in smart EV tech as industry moves from rapid expansion to era of disruption by such tech, CEO says

Firm expects to hand over 18,000 to 19,000 EVs in the three months ending March 31, a year-on-year drop of 45 to 47.9 per cent

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A Xpeng P7 car is displayed at a shopping centre in Beijing. The carmaker is eyeing China’s mass market as demand for premium EVs fades. Photo: Simon Song

Published: 8:40pm, 17 Mar 2023

Guangzhou-based Chinese premium electric-vehicle (EV) maker Xpeng has forecast a fall in deliveries for the first quarter of this year, in the latest sign that mainland China’s automotive market has hit a speed bump due to weak consumer demand.

The carmaker said on Friday that it expected to hand over 18,000 to 19,000 EVs to buyers in the three months ending March 31, representing a year-on-year drop of 45 to 47.9 per cent. Compared to the previous quarter, when it delivered a total of 22,204 units, the projected numbers translate into a decline of between 14.4 and 18.9 per cent.

“We have comprehensively reviewed our strategy and took decisive actions to execute our organisational restructuring and strengthen our capabilities where necessary,” He Xiaopeng, co-founder and CEO of Xpeng, said in a statement after the company released its fourth-quarter earnings on Friday. “From 2023 to 2027, the industry will move from a phase of rapid EV penetration to an era of accelerated disruption by smart technologies. And we are confident that we will further strengthen our leadership in smart EV technologies.”

Xpeng, Shanghai-based Nio and Beijing-headquartered Li Auto are viewed as China’s best response to Tesla, the runaway leader in the premium segment. The EVs made by these firms feature preliminary autonomous driving technologies, sophisticated in-car entertainment systems and high-performance batteries.

Xpeng reported a net loss of 2.36 billion yuan (US$342.4 million) for the fourth quarter of 2022, widening from 1.29 billion yuan in the same period a year earlier. The quarterly performance fell short of market expectations of a 2.08 billion yuan loss, according to a median forecast by a Bloomberg survey of analysts.

It reported revenue of 5.14 billion yuan in the three months ended December 31, down 40 per cent year on year. Xpeng also said its gross margin dropped to 8.7 per cent in the fourth quarter from 12 per cent in the same period in 2021.