Xpeng Motors said in an interview with CNBC on Monday that the company expects to narrow the company’s losses by reducing costs and cooperating with Volkswagen. On Friday, Xpeng posted its biggest quarterly loss since it went public in the U.S. in August 2020, with a second-quarter net loss of 2.8 billion CNY, above a Refinitiv estimate of 2.13 billion CNY. Its U.S.-listed shares closed down 4.28 percent on Friday. Xpeng’s Hong Kong-listed shares rose more than 2% on Monday afternoon.
It is noticed that Xpeng delivered 23,205 vehicles in the second quarter, a drop of 32.58% from 34,422 in the same period last year. On Friday, Xpeng Motors Chief Executive He Xiaopeng said the company was cutting costs across the board and expected this to “significantly improve gross margins in 2024.” The company plans to reduce manufacturing costs, including reducing the cost of smart-driving features by 50% by the end of 2024, Bloomberg reported in April.
“From an expense perspective, we’ve gone through a very significant business restructuring and change, and we’re starting to see our business being return to growth momentum.”
Xpeng is struggling to get back into business this year as its stock price falls more than 80% in 2022 and the company faces a challenging macroeconomic environment and a price war between domestic rivals and Tesla.
Gu Hongdi said: “The demand side is actually still quite strong. I think it is still growing despite the economic background. But at the same time, competition intensified in the first half, and more players launched more new products.” models and compete very aggressively on price.”
He said: “We have also spent a lot of time on cost cutting in order to achieve better profitability. Later next year, we expect to reduce our vehicle BOM (bill of materials) cost by up to 25%, which will improve profitability. .”
BofA Securities said in a note on Monday that it expects Xpeng’s partnership with VW to “improve its financial position and possibly improve its supply chain management.” Bank of America Securities upgraded Xpeng from “neutral” to “buy” with a price target of $22 per share, up from $16.3 previously.
In late July, Germany’s Volkswagen Group said it would inject about $700 million into Xpeng and hold a 4.99% stake in the company. The two parties will jointly develop two new electric vehicles, which will use Xpeng Motors’ advanced driver assistance software for the Chinese market, and plan to launch them in 2026.
“Through the partnership with Volkswagen, this is expected to contribute meaningfully to our bottom line starting next year. So this is another tool that we can use to improve our profitability,” Gu said.
In addition to the planned new models, Gu Hongdi said that Xpeng will also launch “updated versions of the current models” next year. our profitability and product mix.”
The launch of the Xpeng G6 at the end of the second quarter is expected to boost the company’s gross margin.