Xpeng Mulls X9 as ‘Game Changer’ But Stock Sank After the Launch

Xpeng Motors (NYSE: XPEV) launched its X9 model last week which promises some very exciting features. However, while the company believes that the model could be a “game changer,” the stock fell after the launch and is now down over 10% for the year.

The X9 minivan is the latest model from Xpeng Motors and is built on the SEPA 2.0 architecture that it launched last year. In its release, Xpeng Motors said, “With industry-leading innovations in design, intelligence, space, handling and safety, the X9 seamlessly meets the varied needs of every family member, ushering in a new era of automotive excellence. Created as an ultra-smart large 7-seater, the XPENG X9 can ‘transform’ into a spacious 4-seater SUV with just one click, providing a driving experience more comfortable than an MPV and greater flexibility than an SUV.”

Xpeng Motors launched X9 MPV

Xpeng Motors’ CEO He Xiaopeng is quite bullish on the model and in the call announcing the launch said that the company has 30,000 reservations for the vehicle. He emphasized, “Now our biggest challenge at the moment is production capacity. I informed my colleagues that we should not expect any rest even during the Chinese New Year, we must work tirelessly in January and February in order to produce the cars as soon as possible so that we can deliver on time.”

He added, “I believe that X9 will become a transformative force in China’s MPVs and 4-sear SUVs, and I am excited for it to become the king of kings.”

XPEV Stock Fell After the Launch

Meanwhile despite the X9 being one of its kind models and offering some very innovative solutions, XPEV stock fell after its launch. The stock has looked weak over the last few months after hitting a multi-month high in July last year.

Speaking with CNBC, Xpeng Motors’ vice president Brian Gu said, “For X9, we actually anticipate this to be a game changer for the battery electric vehicles segment for MPVs” and stressed that it would be a high-margin product for the company.”

He is also optimistic about the company’s sales outlook and said, “We anticipate in 2024, we will be growing much faster than the industry growth which means that we can expand our market share.”

Xpeng Motors deliveries

Xpeng Motors delivered 20,115 cars in December which was 78% higher YoY and a new record for the Chinese EV company. While Xpeng Motors’ deliveries were below par in the first half of the year, they bounced back subsequently and in Q4 it delivered 60,158 vehicles which was 171% higher YoY.

Its full-year deliveries rose 17% YoY to 141,601 and its cumulative deliveries stand at 400,311 units at the end of 2023.

Notably, 2023 was a challenging year for Xpeng Motors and started on a somber note as it delivered just about 5,000 cars in January. Its Q1 deliveries were just about 18,000 while its monthly deliveries were less than 10,000 in all months in the first half of the year.

That said, its deliveries rose sequentially in all months beginning February and are currently at a run rate of around 20,000.

BYD is the EV market leader in China

While players like NIO and Xpeng disappointed with their deliveries last year, BYD reached its goal of selling 3 million units aided by its price cuts.

Last year, BYD delivered 3.01 million cars of which 1.6 million were fully electric and 1.4 million were plug-in hybrid vehicles. BYD which became the biggest seller of new energy vehicles in 2022 sold 526,409 fully electric vehicles in Q4 which was ahead of Tesla.

Tesla CEO Elon Musk had once ridiculed the possibility of BYD being its competitor. However, currently, the Chinese EV giant is giving tough competition to Tesla with its low-priced models.

Xpeng Motors rolls out XNGP to 243 Chinese cities

Meanwhile, Xpeng Motors has rolled out its XNGP driver assistance system to 243 cities a year ahead of schedule and plans to roll out the feature to Europe soon.

Notably, Xpeng Motors has been advancing its autonomous driving capabilities and in August it also acquired the self-driving assets of Chinese ride-hailing app Didi. As part of the $744 million deal, Didi took a 3.25% stake in Xpeng in exchange for its EV and autonomous driving assets.

Also, Xpeng would launch a new EV brand developed under the project name “MONA” and would produce vehicles in the mass market RMB150,000 price range.

In July, Volkswagen partnered with Xpeng Motors to build two EVs on its platform and also buy a stake in the company for a total consideration of $700 million. The deal was a pathbreaker for not only XPEV but also the Chinese EV ecosystem as it reflected the confidence of the German auto giant in a startup EV company. It was also a testimony to Xpeng Motor’s self-driving capabilities.

Rival Chinese EV company NIO also bagged a $2.2 billion investment from UAE’s CYVN Holdings last month, its second investment from the investment giant this year.

In the previous investment round in July, CYHN invested $738.5 million in newly issued shares of NIO and purchased another $350 million from Tencent, an existing NIO shareholder.

Xpeng Motors expects positive gross margins in Q4

Xpeng Motors expects the deal with Volkswagen to also help improve its margins. It reported a gross margin of -2.7% in the third quarter as compared to -3.9% in Q2 2023 and 1.7% in Q1 2023.

The company however expects to post positive gross margins in Q4 and during the Q3 earnings call Xiaopeng said, “The progress of cost reduction in the entire process of design, R&D and manufacturing and marketing has given me confidence in accelerating the progress to reach the goal of 25% cost reduction by the end of 2024 or even exceed it, which will significantly increase the gross profit margin next year.”