What’s New With XPeng Stock?

Chinese luxury EV maker Xpeng (NYSE:XPEV) delivered 23,917 vehicles for the month of October, a record for the company. While sales were up about 20% compared to last year, they also rose about 12% compared to September. Xpeng’s total year-to-date sales for the first ten months of the year stood at about 122,500 units, a 21% increase from the same period last year. In comparison, Li Auto (NASDAQ:LI), the largest of the emerging EV players in China, delivered 51,443 vehicles in October 2024, up 27.3% year-over-year. However, sales were down from 53,709 in September 2024. Nio delivered 20,976 vehicles in October, showing the strongest year-over-year growth of 30%, although numbers were roughly flat on a sequential basis.  A bulk of Xpeng’s growth appears to have been driven by the company’s new sub-brand, Mona, with the brand’s first model, the Mona M03, selling over 10,000 units in October marking the second straight month of 10,000 plus sales. The vehicle has a starting price of about RMB 119,800 (about $17,000), which is well below Xpeng’s other models and roughly half the price of Tesla’s Model 3 and Model Y.

The decrease in XPEV stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 18% in 2021, -80% in 2022, and 47% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could XPEV face a similar situation as it did in 2021 and 2022 and underperform the S&P over the next 12 months – or will it see a recovery?

Xpeng stock currently trades at around 1.9x forward revenues. While this isn’t an unreasonable valuation, it’s higher than that of its peers Nio and Li Auto, though still well below U.S.-based Tesla, which trades at about 7x forward revenues despite projecting flat revenue growth this year. See our analysis of Nio, Xpeng & Li Auto: How Do Chinese EV Stocks Compare? for a detailed look at how Xpeng stock compares with its rivals Nio and Li Auto.  Several factors could help to drive a re-rating for Xpeng stock.

Despite challenges in the broader economy, the Chinese EV market remains resilient, with new energy vehicle sales now comprising about 50% of all automotive sales in the country. Additionally, the premium segment of the EV market – vehicles priced above $30,000 – has been growing, which could benefit Xpeng, as it primarily competes in the higher-end market. The Chinese government has also introduced a stimulus package to stabilize the economy, including interest rate cuts and fiscal support, which could boost consumer spending and further drive EV demand.

Xpeng is also seen as a leader in the Chinese EV market when it comes to automation and assisted driving technology. The company claims to be the only Chinese automaker to offer urban Advanced Driver Assistance Systems (ADAS) that operate without relying on HD maps or costly LiDAR sensors, making their systems more affordable and possibly more conducive to mass adoption. Its Xpeng Navigation Guided Pilot system reached an 86% penetration rate in urban driving among its monthly active users in October. Xpeng is also pursuing aggressive international expansion, aiming to enter over 60 countries by 2025. In October, the company officially launched its G9 and G6 models in the UAE, marking its entry into the Middle Eastern market. The company’s vehicles and tech are compelling and greater market access could help to considerably scale up Xpeng’s revenues and profits.

[1] Returns as of 11/4/2024
[2] Cumulative total returns since the end of 2016

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