Chinese electric vehicle (EV) maker XPeng Inc (NYSE: XPEV) reported robust fiscal second-quarter (Q2) results with a 60.2% year-on-year increase in sales, reaching 8.11 billion Chinese Yuan ($1.12 billion). However, the company fell short of analyst expectations, which had forecasted sales of 8.21 billion Chinese Yuan ($1.13 billion). Sequentially, XPeng’s revenues rose by 23.9%, reflecting continued growth despite current market challenges.
XPeng Q2 Results:
The company reported an adjusted net loss per American Depositary Share (ADS) of 1.29 Chinese Yuan, slightly missing the analyst consensus loss estimate of 1.26 Chinese Yuan. In U.S. dollar terms, the adjusted earnings per ADS resulted in a loss of 18 cents, which aligned with market expectations.
XPeng, a prominent rival to Tesla Inc (TSLA), saw a notable 30.2% increase in vehicle deliveries year-on-year, totaling 30,207 units for the quarter. This growth underscores the company’s expanding footprint in the competitive EV market. By June 30, 2024, XPeng had established a physical sales network of 611 stores across 185 cities and a self-operated charging network with 1,298 stations.
Revenue from vehicle sales climbed 54.1% year-on-year to $0.94 billion, while the company’s gross margin improved to 14.0%, up from a negative 3.9% a year ago. Vehicle margins also turned positive at 6.4%, compared to a negative 8.6% in the previous year. These improvements are attributed to cost reductions and enhancements in the model product mix.
Despite these gains, XPeng faced an operating loss of $0.22 billion for the quarter. The company maintained a solid cash reserve of $5.14 billion as of June 30, 2024, providing a buffer for future operations and expansion.
Looking forward, XPeng is optimistic about its growth trajectory. Chairman and CEO Xiaopeng He highlighted that the launch of the MONA M03 in August marks the beginning of a significant product cycle. The company plans to introduce numerous new models and updated versions over the next three years.
Dr. Hongdi Brian Gu, Honorary Vice Chairman and Co-President, noted that improvements in technical capabilities and revenues from the strategic partnership with Volkswagen contributed to the enhanced gross profit margin in the second quarter. The company’s cost reduction efforts and collaborations are expected to support its financial performance moving forward.
For the third quarter, XPeng projects vehicle deliveries between 41,000 and 45,000 units, representing a year-on-year increase of 2.5% to 12.5%. The company forecasts second-quarter revenue of 9.1 billion to 9.8 billion Chinese Yuan, a year-on-year increase of 6.7% to 14.9%, which is below the consensus estimate of 10.50 billion Chinese Yuan.
Despite these positive developments, XPeng’s stock has struggled, falling over 56% in the past year due to intense domestic price competition and protectionist tariffs from the U.S. and EU. At the time of this publication, XPeng’s stock opened at $7.25 but was trading at $6.74, down 6.20% on the day.
As XPeng navigates these challenges and capitalizes on its growth opportunities, investors will be closely monitoring the company’s ability to meet its ambitious targets and overcome the hurdles facing the EV sector.
