Xpeng's vice president of autonomous driving, Wu Xinzhou, is rumored to be leaving the company and is set to join US chip giant Nvidia.
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A top Chinese government meeting on Monday boosted investor optimism, with Nio and Xpeng, the laggards of the past few months, coming into more favor.
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Xpeng will hold an official launch event for the G6 today starting at 8 pm Beijing time, where the official pricing will be announced.
Xpeng's (NYSE: XPEV) highly anticipated new SUV, the G6, a Tesla (NASDAQ: TSLA) Model Y competitor, will go on sale in China in about 10 hours. Ahead of that, investors are clearly excited.
Xpeng's Hong Kong-traded stock was up 4.72 percent to HK$46.90 as of press time, giving it a cumulative gain of more than 18 percent since Monday.
The Chinese electric vehicle (EV) company's US-traded ADRs rose 7.29 percent to $11.78 at yesterday's close, giving it an 18.99 percent gain for the week.
The biggest catalyst driving the rally in Xpeng shares this week is the upcoming launch of the G6.
Xpeng will hold the launch event of the G6 starting at 8 pm Beijing time (8 am US Eastern time) on June 29, and it posted a Weibo early this morning saying that everything is in place for the event.
(Image credit: XPeng)
Xpeng gave the G6 its debut on the first day of the Shanghai auto show on April 18, saying the G6 is the ultimate form of car before full autonomous driving is achieved.
The model is based on the 800 V high-voltage platform and can get a 300-kilometer range in as little as 10 minutes of charge, Xpeng said at the time. The company's other 800 V-based model is the flagship SUV G9.
Xpeng began pre-sales for the G6 on June 9, with pre-sale prices starting at RMB 225,000 ($31,090), significantly lower than the Tesla Model Y's starting price of RMB 263,900 in China.
The Xpeng G6 received more than 25,000 orders within 72 hours of the start of pre-sales, the company announced on Weibo on June 12.
The G6 show cars were already available at Xpeng stores, and the model would officially launch on June 29 with deliveries starting in July, the company said earlier this month.
Referring to the practices of other local Chinese EV companies, Xpeng will likely announce a lower final pricing than the pre-sale price when the G6 officially launches today, thus providing consumers with a surprise that exceeds expectations.
The Xpeng G6 is an all-electric mid-size SUV with a length, width and height of 4,753 mm, 1,920 mm and 1,650 mm, respectively, and a wheelbase of 2,890 mm, a regulatory filing from March showed.
For comparison, the Tesla Model Y has a length, width and height of 4,750 mm, 1,921 mm and 1,624 mm, respectively, and a wheelbase of 2,890 mm.
The G6 will be a hot seller in China's new energy SUV market priced in the RMB 200,000 to 300,000 range and will enable Xpeng's total deliveries to grow well above the industry in the third quarter, the company's management said in a call with analysts after announcing its first-quarter earnings on May 24.
In the view of Wall Street analysts, the G6 will be critical to boosting Xpeng's sluggish sales.
"With margins and cash burn looking materially worse following 1Q earnings, we believe management may be making its last stand with the G6," Deutsche Bank analyst Edison Yu's team said in a research note sent to investors on May 30.
Xpeng management said in a May 24 conference call that it had set aside about two months between the start of production and delivery of the G6, and that Xpeng wanted the model to reach more than twice the sales of the P7i.
This means, according to Yu's team, that Xpeng management expects the G6 to sell 6,000-8,000 units a month.
The G6 needs to be successful for XPeng to be truly relevant to the market again, the team said.
($1 = RMB 7.2379)
XPeng says G6 gets over 25,000 orders 72 hours after pre-sale starts
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XPeng's stock traded in Hong Kong continues to rally after the announcement of the G6's pre-sale price, currently up about 5 percent.
XPeng (NYSE: XPEV) shares traded in Hong Kong rallied quickly after pre-sales of the new SUV G6 began, suggesting investors may be bullish on the pricing.
At press time, XPeng was up 5.03 percent to HK$34.45 in Hong Kong.
XPeng's local peer NIO (NYSE: NIO) is now down about 0.08 percent in Hong Kong, while Li Auto (NASDAQ: LI) is up 0.8 percent. Hong Kong's Hang Seng Index is up 0.58 percent.
XPeng opened up more than 2 percent in Hong Kong, but then fell quickly, giving back all of its gains at about 10:20 am.
The company announced at 10:16 am today that the G6 was up for pre-sale, with a starting pre-sale price of 225,000 yuan ($31,610). Its stock price continued to move higher after that.
The pre-sale starting price for the XPeng G6 is RMB 38,900 less than its direct competitor, the Tesla Model Y, and RMB 84,900 less than the RMB 309,900 starting price for XPeng's flagship SUV, the G9.
It is important to note that the pre-sale price is not the final price and XPeng may provide new pricing based on consumer feedback when the G6 is officially launched.
G6 show cars are already available at XPeng stores, and the model will be officially launched on June 29, with deliveries starting in July, the company said.
Analysts believe the G6 will be critical for XPeng as the company continues to face weak sales and financial performance.
"With margins and cash burn looking materially worse following 1Q earnings, we believe management may be making its last stand with the G6," Deutsche Bank analyst Edison Yu's team said in a May 30 research note.
The team's previous view assumed XPeng could see stable natural margin improvement from the sharp drop in battery input prices, but those savings were mostly offset by incremental promotional activity and a poor mix.
" Therefore, the importance of the upcoming G6 has become even GREATER," the team wrote.
Weak delivery performance over the past year has dampened XPeng shares, and they are down about 11 percent year to date.
XPeng begins pre-sales of G6 with starting price significantly lower than Tesla Model Y
($1 = RMB 7.1187)
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Li Auto leads the pack with superior execution, but risk-reward increasingly favors XPeng and NIO after a drastic sell-off this year, Morgan Stanley said.
Shares of major Chinese electric vehicle (EV) makers have generally suffered a sell-off so far this year, as the sector's weak sales at the start of the year and recent widespread price wars have raised investor concerns.
However, in Morgan Stanley's view, the sales potential of China's EV companies in the second half of the year is underestimated at a time when costs are sliding.
"We think YTD stock corrections should have discounted competition risks but underrate the cost-driven upside to EV margin/volume in 2H, " Morgan Stanley analyst Tim Hsiao's team said in a research note sent to investors on March 19.
As of Monday's close, NIO's (NYSE: NIO) US-traded ADR was down 10 percent this year, XPeng was down 8 percent, and Li Auto was up about 12 percent.
Hsiao's team believes that significant margin pressure from price wars will fuel market concerns about industry profitability and cash flow, especially among new energy vehicle (NEV) heavyweights, namely BYD and Tesla China, which can afford to initiate another round of price cuts in the second quarter.
That, combined with weak full-year sales following the stimulus withdrawal, could dampen sales volumes and margins for EV brands in the first half of 2023, the team said.
Still, the production potential of China's NEV industry in the second half of the year and beyond appears to be underestimated as the decline in prices of batteries and key components accelerates following aggressive capacity expansion in 2022, the team noted.
This could translate into potential margin relief for NEV makers and potentially increase NEV penetration in the second half of the year in a cost-effective manner, the team said.
Hsiao's team estimates a 20-25 percent drop in battery costs for major NEV makers, implying a 6-10 percentage point cost savings.
The price drop of lithium carbonate, a key raw material for batteries, has accelerated in recent days and saw its biggest one-day drop so far this year on March 20, according to a CnEVPost report yesterday.
The average price of both industrial-grade lithium carbonate and battery-grade lithium carbonate fell by RMB 12,500 per ton on March 20, with the latest average price at RMB 272,500 per ton and RMB 312,500 per ton, respectively.
NIO's management said in a call with analysts after the March 1 earnings announcement that they expect lithium carbonate prices to fall back to around RMB 200,000 per ton this year, boosting gross margins back up.
EV makers that can take full advantage of this will not only enjoy margin relief, but also have more flexibility to price their models to further boost NEV penetration in mass markets and lower-tier cities, Hsiao's team wrote in their report.
"That said, the tailwinds from falling input costs may take time to kick in as our checks with major OEMs suggest they are still in discussions with battery suppliers on new terms," the team added.
The team believes that a tougher operating environment will accelerate market reshuffling, with leading EV manufacturers weathering the downturn better than their peers, while the growth of smaller, lagging EV startups could be slowed by a depletion of liquidity in 2023.
Growing investments should also push up cash burn rates. As a result, the ability to optimize working capital and access to market funding will play a more important role in ongoing operations in 2023, the team added.
"Our analysis suggests EV trio (NIO, XPeng, and Li Auto) will still hold fast, backed by healthy balance sheet conditions and better connections to capital markets," Hsiao's team wrote.
The team said they're fully aware of investor worries about EV startups' cash burn that may rapidly deplete their liquidity.
But they believe the EV trio can remain self-funded for the next 18 months, even under the stress-test scenario of a prolonged price war.
"We believe continuous investment would further solidify their technology leadership and enable them to have a better chance of winning out in the next up-cycle," the team wrote.
The team believes that trough valuations mean the market has lowered expectations for EV startups' operational performance and financial resilience in an industry downturn, making any marginal improvement in their sales a meaningful stock catalyst.
Li Auto leads the pack with superior execution, but risk-reward increasingly favors XPeng and NIO after this year's sharp dip, the team said.
Lithium prices see biggest drop this year in China as decline accelerates
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