Chinese EV maker Xpeng expects delivery ramp-up in second quarter as price war with Tesla and other rivals abates

The guidance came as the company reported a 45.9 per cent drop in revenue and a 37.6 per cent wider net loss in the first quarter
Xpeng expects its newest model, the G6 SUV, to boost sales and spur a turnaround after deliveries begin in June

Electric & new energy vehicles

Daniel Renin Shanghai

Published: 9:00pm, 24 May 2023

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Chinese electric vehicle (EV) start-up Xpeng expects its deliveries in the second quarter of this year to rise by up to 21 per cent as a bruising price war abates.

The Guangzhou-based carmaker said it would hand 21,000 to 22,000 cars to customers between April and June, compared to its total deliveries of 18,230 units in this year’s first quarter.

Xpeng published the delivery guidance on Wednesday after it reported worse-than-expected quarterly earnings, battered by weaker consumer demand for premium electric cars on the Chinese mainland.

The company reported that its net loss widened 37.6 per cent year on year to 2.34 billion yuan (US$332 million) for the three months ended March 31.

An Xpeng factory in Zhaoqing, Guangdong province, pictured on November 19, 2020. Photo: Iris Ouyang

In the fourth quarter of 2022, Xpeng posted a net loss of 2.36 billion yuan.

Revenue in the first quarter was 4.03 billion yuan, down 45.9 per cent year on year and 21.5 per cent quarter on quarter. It also fell short of an estimate of 4.22 billion yuan in a survey of analysts conducted by Shanghai-based Cailian news agency.

“Xpeng may see a turnaround in the second half after it launches the new SUV [sport-utility vehicle] model G6,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. “Consumers are still not in the mood to spend on expensive vehicles now, but new models can normally whet their buying appetite.”

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Tesla spearheaded the price war by offering huge discounts on its Shanghai-made Model 3s and Model Ys twice starting in October last year.

Since January, Xpeng, BYD and Aito, an EV brand backed by telecommunications equipment maker Huawei Technologies, followed suit. Manufacturers that make both conventional cars and EVs, such as Volkswagen’s mainland Chinese ventures and Dongfeng Honda Automobile, also cut prices by as much as 40 per cent to reduce inventory.

Last week, Citic Securities said in a research note that positive signs have emerged for the mainland’s automotive sector as the price war showed signs of fading and car deliveries were strong in the first week of May.

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Chinese carmakers delivered 375,000 units to customers between May 1 and May 7, an increase of 46 per cent over the same period in April, according to the China Passenger Car Association.

Xpeng will start delivering its G6 model, to be priced from 200,000 to 300,000 yuan, at the end of June.

He Xiaopeng, co-founder and chief executive of Xpeng, said earlier this year that the G6’s sales would more than double those of the P7 sedan, its current bestselling model, which recorded sales of about 5,000 units a month so far in 2023.

An XPeng G6 electric on display at the Shanghai Auto Show in Shanghai on April 18, 2023. Photo: Bloomberg

Xpeng, Shanghai-based Nio and Beijing-headquartered Li Auto are viewed as China’s best response to Tesla as all their vehicles feature autonomous driving technology, high-performance batteries and sophisticated in-car entertainment systems.

On April 16, the company said it will fine-tune its designs and improve efficiency next year, aiming to slash costs by 25 per cent as price competition eats into Chinese carmakers’ profits.

The efficiency drive and cost-cutting programme would put Xpeng on the road to generate positive cash flow by 2025, the company’s president, Brian Gu, told a media briefing.

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