Xpeng Inc., a Chinese electric vehicle company, saw its shares decline by over 7% after reporting disappointing figures for Q2 2023. The company experienced a loss of 2.8 billion yuan, which was higher than the 2.7 billion yuan loss in Q1. This marks Xpeng’s largest quarterly loss since its IPO in August 2020. Despite the loss, Xpeng’s deliveries and revenue for Q3 remain positive.

According to Xpeng’s report, the company’s financial performance in Q2 was primarily impacted by a weakened economy in China, resulting in reduced consumer spending. Additionally, Xpeng faced fierce competition from other electric vehicle companies such as BYD, Tesla, Li Auto, and Nio.

The competition intensified further as Tesla, led by Elon Musk, reduced the prices of its Model S and Model Y vehicles. This price reduction put pressure on Xpeng’s sales. However, Xpeng’s revenue for Q2 2023 was 5.06 billion Chinese yuan, which met analysts’ expectations. Although it is a 31% decrease compared to the previous year, Xpeng’s delivery numbers exceeded projections.

Xpeng’s Expectations for Q2 and Q3 2023

Xpeng has been focused on recovering its business following an 80% stock crash in the previous year. The company expects its new G6 Ultra Smart Coupe SUV, along with other products, to boost sales and increase margins. Co-president Brian Gu believes that the launch of these new products will lead to a gradual recovery in gross margin, improved operating efficiency, and increased free cash flow.

In Q2 2023, Xpeng delivered 23,205 vehicles, a 27% increase compared to the previous quarter. July alone saw a delivery of 11,008 vehicles, a 28% monthly increase. This marked the sixth consecutive month of delivery growth for the company. Xpeng aims to deliver between 39,000 and 41,000 vehicles in Q3 2023, a year-on-year increase of 31.9% to 38.7%. Moreover, the company expects a revenue growth of 24.6% to 31.9% for the same quarter, with revenue predicted to be between 8.5 billion yuan and 9 billion yuan.

FAQs

1. Why did Xpeng’s shares drop?

Xpeng’s shares fell after the company reported a larger loss in Q2 2023 compared to Q1. This disappointed investors and led to a decline in share price.

2. What factors contributed to Xpeng’s loss in Q2 2023?

Xpeng’s loss in Q2 2023 was primarily a result of China’s weakened economy, which resulted in reduced consumer spending. The company also faced tough competition from other electric vehicle manufacturers in the market.

3. How did Xpeng perform in terms of deliveries in Q2 2023?

Xpeng delivered 23,205 vehicles in Q2 2023, exceeding their own projections and marking a 27% increase compared to the previous quarter.

4. What are Xpeng’s expectations for Q3 2023?

In Q3 2023, Xpeng aims to deliver between 39,000 and 41,000 vehicles, a year-on-year increase of 31.9% to 38.7%. The company also anticipates a revenue growth of 24.6% to 31.9% for the same quarter.

5. How does Xpeng plan to recover its business?

Xpeng plans to introduce new products, such as the G6 Ultra Smart Coupe SUV, to boost sales and increase margins. The company also aims to improve gross margin, operating efficiency, and free cash flow.

6. How has Tesla’s pricing strategy affected Xpeng?

Tesla’s price reductions, particularly for its Model S and Model Y vehicles, have put pressure on Xpeng’s sales. The increased competition from Tesla has impacted Xpeng’s financial performance.

Summary

Xpeng Inc. experienced a significant decline in its shares after reporting a higher loss in Q2 2023 compared to Q1. The company’s performance was affected by a weakened economy in China and increased competition from other electric vehicle manufacturers. Despite the loss, Xpeng’s deliveries for Q2 exceeded expectations, and the company remains optimistic about Q3, with a predicted increase in deliveries and revenue. Xpeng aims to recover its business through the launch of new products and expects improvements in gross margin, operating efficiency, and free cash flow.