Monday, July 22, 2024

Xpeng Posts Larger-than-Expected Quarterly Operating Loss Amid Production Expansion

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Xpeng, a prominent player in China’s electric vehicle (EV) market, reported a quarterly operating loss that exceeded expectations on Wednesday, attributed to the costs associated with scaling up production. In response, the U.S.-listed shares of the EV maker dipped 2.5% in premarket trading.

Competing with Tesla on their home turf, smaller Chinese EV manufacturers like Xpeng and Nio have encountered hurdles in their journey, grappling with substantial expenses linked to expanding production capacities and launching new vehicle models.

For the third quarter, Xpeng’s operating loss reached 3.16 billion yuan ($436.33 million), surpassing analyst estimates of 3.79 billion yuan but marking an increase from the year-ago operating loss of 2.18 billion yuan. Quarter revenue stood at 8.53 billion yuan, slightly below analysts’ projections of 8.55 billion yuan.

In the face of these financial challenges, Xpeng aims to double deliveries in the fourth quarter, ranging between 59,500 and 63,500 units. The company places considerable emphasis on the success of its G6 sport utility vehicle, positioning it as a competitor to Tesla’s Model Y.

Despite the setback in operating losses, Xpeng projects a revenue between 12.7 billion yuan and 13.6 billion yuan for the current quarter, surpassing estimates of 12.10 billion yuan.

Chinese EV manufacturers, including Xpeng, have explored exporting vehicles to Europe for higher prices. However, they now face the potential threat of increased tariffs, with the European Commission considering an investigation into EV exporters benefiting from Chinese state subsidies.

Xpeng also disclosed a wider net loss of 4.49 yuan per American depositary share (ADS) for the third quarter, up from 2.77 yuan per share in the same period last year. The company’s financial performance reflects the intricate challenges and competitive dynamics within the evolving landscape of the Chinese electric vehicle market.

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