XPeng projects lower-than-expected quarterly revenue on stiff competition

6:44 am Tuesday, August 20th, 2024

(Reuters) – Chinese firm XPeng forecast third-quarter revenue below analysts’ expectations and missed June-quarter sales estimates on Tuesday, hurt by stiff competition and a drop in demand for its aging line-up of pricey electric vehicles.

The company, however, expects to deliver between 41,000 and 45,000 vehicles in the third quarter, slightly above 40,008 units a year earlier.

U.S.-listed shares of the Guangzhou, China-based company rose about 2% in premarket trading as it reported an improvement in gross margin of 1.1 percentage points to 14% in the second quarter after technical improvements and revenue from its collaboration with Volkswagen Group.

The company is planning to refresh its model lineup by launching a range of new EVs in the next three years, priced between 100,000 yuan and 400,000 yuan ($14,001.88 and $56,007.51), to grab market share from domestic players such as BYD, Nio and U.S. automaker Tesla.

It plans to launch the MONA M03 mid-sized sedan this month, which is set to compete with BYD’s Seagull, Dolphin and the higher-priced Tesla Model 3.

XPeng has seen its expansion plans temporarily throttled by the European Commission’s move to impose tariffs on electric vehicles made in China to prevent a flood of cars built with state subsidies.

It is among the Chinese companies considering setting up a manufacturing plant in the region to avoid those tariffs.

Vehicle margin in the April-June period improved to 6.4% from 5.5% in the prior quarter. It expects deliveries in the third quarter to be between 41,000 and 45,000 vehicles, compared with 40,008 units in the corresponding quarter of last year.

XPeng’s revenue rose to 8.11 billion yuan ($1.14 billion), while analysts had expected revenue of 8.17 billion yuan, according to LSEG data.

It expects third-quarter revenue between 9.1 billion yuan and 9.8 billion yuan, compared with analysts’ estimates of 10.4 billion yuan.

($1 = 7.1419 Chinese yuan renminbi)

(Reporting by Akash Sriram in Bengaluru; editing by Alan Barona)