Chinese EV maker Xpeng expects to sell 30 per cent more cars after reporting big jump in second-quarter sales

Company targeting delivery of between 21,500 and 22,500 EVs in third quarter, or 23.6 per cent to 29.3 per cent higher than number for three months ending June
‘Given our high-growth potential, chip companies will treat us as a VIP client, which gives us an advantage ahead of other car firms’

Xpeng

Daniel Renin Shanghai

Published: 9:50pm, 26 Aug 2021

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Chinese electric vehicle (EV) maker Xpeng Motors is expecting busy times ahead as it benefits from the accelerated adoption of such vehicles in China and aims to sell up to 30 per cent more cars in the third quarter.

The Guangzhou-based carmaker reported record sales and an improved gross margin for the April to June quarter on Thursday.

“We believe China’s smart EV segment is entering a new era thanks to an acceleration in the pace of growth,” He Xiaopeng, the carmaker’s co-founder and CEO, said during an earnings conference call. The company would target the delivery of between 21,500 and 22,500 EVs in the third quarter, or 23.6 per cent to 29.3 per cent higher than the 17,398 units it delivered in the three months ending June, he added.

The Xpeng announcement comes as sales of new energy vehicles – pure electric, plug-in hybrid and hydrogen fuel cell cars – rose 231.5 per cent year on year to 1.09 million units in the first half of this year, according to the China Passenger Car Association. The industry body forecast that full-year deliveries could more than double to 2.4 million EVs amid the accelerated adoption of such vehicles in China.

Xpeng would order a sufficient amount of key components such as automotive chips ahead of time to overcome the shortage carmakers are currently facing, He said. “Given our high-growth potential, chip companies will treat us as a VIP client, which gives us an advantage ahead of other car firms when it comes to competing for component supply,” he added.

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The company raked in 3.76 billion yuan (US$580 million) in sales between April and June, which represents a surge of 536.7 per cent year on year and a rise of 27.5 per cent from the previous quarter. The sales were slightly ahead of an analysts’ forecast of US$573.8 million, according to financial data company Factset.

“As EV adoption in China and around the world begins to soar, we are excited to lead in this unprecedented disruption opportunity with our outstanding vehicles and fast, seamless iterations of new technologies that are shaping the mobility experience of the future,” He said.

Its gross margin – the difference between revenue and cost of goods sold before it is divided by revenue – stood at 11.9 per cent for the second quarter, compared with negative 2.7 per cent in the same period last year and 11.2 per cent for the first quarter of 2021.

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Xpeng’s net loss in the second quarter amounted to 1.195 billion yuan, below analysts’ expectations of a net loss of 1.236 billion yuan, according to Bloomberg.

“Xpeng’s numbers are exciting because it sees great potential for increasing market share in a fast-growing market,” said Cao Hua, a partner at private-equity firm Unity Asset Management. “Surging sales are the key driver for the growth of China’s Tesla challengers, which include Xpeng.”

Analysts said they expected Xpeng’s monthly deliveries to break through the meaningful threshold of 10,000 EVs a month this year. Last month, it delivered a record 8,040 EVs, a 228 per cent year on year jump and 22 per cent more than the previous month.

02:33

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Amid the rising sales, the company said last week that it would double the annual production capacity at its factory in Zhaoqing, in China’s southern Guangdong province, to 200,000 units.

The carmaker, which is backed by Alibaba Group Holding, this newspaper’s owner, and smartphone maker Xiaomi, has started exporting its flagship P7 cars to Norway. In December, it sent the first shipment of its G3 sport-utility vehicles to the Nordic country, the first time that a Chinese carmaker had exported battery-powered vehicles to Europe.

This article appeared in the South China Morning Post print edition as: Xpeng aims to rev up electric car sales

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