What’s Driving Xpeng’s Surging Deliveries?

Chinese luxury EV maker Xpeng (NYSE:XPEV) reported deliveries of 30,895 units for November, a 54% year-over-year increase and up 29% from the previous month. The company also delivered a total of 153,373 EVs during the first 11 months of the year, up 26% year-over-year. Xpeng’s delivery growth was stronger than its rivals. Nio stock (NYSE:NIO) reported deliveries of 15,493 vehicles for November, an increase of about 29% compared to last year, while Li Auto (NASDAQ:LI), saw volumes rise 19% year over year. The 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 November marking the third 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. Besides this, Xpeng also saw strong demand for its XPENG P7+ sedan, which saw volumes exceed 7,000 units over the first three weeks of sales.

Xpeng stock’s performance in recent years has been volatile compared to 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 roughly 2x estimated 2024 revenues. While this isn’t an unreasonable valuation, it is ahead of its peers Nio and Li Auto, though still well below U.S.-based Tesla, which trades at about 11x forward revenues. Moreover, Xpeng’s recent growth has also been stronger than its rivals. 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 Li and Nio.

A couple of factors could help to drive a re-rating for Xpeng stock. Xpeng is 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. Xpeng is also pursuing aggressive international expansion of its operations, 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. In November, the company signed an agreement to enter the U.K. market as well.  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 12/3/2024
[2] Cumulative total returns since the end of 2016

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