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EV Startup Xpeng Motors Reports Strong Q3 Sales, its First Quarter as a Publicly Traded Company

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【Summary】Chinese electric vehicle startup Xpeng Motors has reported strong third quarter earnings on rising demand for its tech-laden electric vehicles. The company is poised to become a formidable challenger to Tesla in its home country of China, which is the world’s biggest auto market. Total revenue for Q3 was RMB1,990.1 million (US$293.1 million), representing an increase of 342.5% from the same period in 2019 and an increase of 236.9% from RMB590.8 million for the second quarter of 2020.

Eric Walz    Nov 12, 2020 11:45 AM PT
EV Startup Xpeng Motors Reports Strong Q3 Sales, its First Quarter as a Publicly Traded Company
The Xpeng Motors P7 Smart Sedan is a strong competitor to the Tesla Model S in China.

Chinese electric vehicle startup Xpeng Motors has reported strong third quarter earnings on rising demand for its tech-laden electric vehicles. The company is poised to become a formidable challenger to Tesla in its home country of China, which is the world's biggest auto market.

Xpeng Motors launched its U.S. IPO in August to take advantage of strong investor interest in electric vehicles and related companies after U.S. automaker Tesla stock reached record highs this summer. 

Xpeng's shares are listed on the NYSE under the symbol "XPEV."

The company announced on Thursday it delivered 8,578 electric vehicles in Q3, representing an increase of 266% from the third quarter of 2019, when the company delivered 2,345 EVs. Xpeng's Q3 sales represented an increase of 166% in the second quarter of 2020, when the startup delivered 3,228 units of its G3 SUV and P7 smart sedan. 

The company's total revenue for Q3 was RMB1,990.1 million (US$293.1 million), representing an increase of 342.5% from the same period in 2019 and an increase of 236.9% from RMB590.8 million for the second quarter of 2020.

Revenues from Xpeng's vehicle sales were RMB1,898.0 million (US$279.6 million) in Q3, representing an increase of 376.0% from RMB398.8 million for the same period of 2019, and an increase of 250.8% from RMB541.1 million for the second quarter of 2020. The strong sales numbers increased Xpeng's vehicle margins into positive territory.

Vehicle margin, which is gross profit or gross loss of vehicle sales as a percentage of revenues from vehicle sales, was 3.2% for the third quarter of 2020, compared to negative 10.8% for the same period of 2019 and negative 5.6% for the second quarter of 2020.

"The robust results we achieved in the third quarter, from delivery numbers, production ramp-up, and advancement in R&D, to expansion plans for the new factory and overseas business, reflect the strong market appeal of our products, the resonance of our strategy, and our ability to adeptly execute our operational plan," said Dr. Brian Gu, Vice Chairman & President of XPeng. "Achieving our first positive gross profit also underscores our growth and our ability to realize economies of scale."

Government support for new energy vehicles (NEVs) in China, which have been extended through 2022, has led to a new crop of NEV startups emerging over the past several years to challenge Tesla. Others include U.S. listed NIO Inc. and Li Auto, which just raised $1.47 billion in its own U.S. IPO last month.

Xpeng's advanced electric vehicles are viewed as a popular alternative to Tesla models in China. The company offers two models, the G3 SUV, which launched in 2018, and the P7 sedan. The P7 comes packed with technology and is billed as a "smart sedan." It went on sale in April

Deliveries of the P7 reached 6,210, compared with 325 units in the second quarter of 2020.

"In our first quarter as a public company we achieved strong operating and financial results, highlighted by the rapid growth in deliveries of our P7 Smart EV," said Mr. He Xiaopeng, Chairman & CEO of XPeng.

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The Xpeng G3 SUV is a more affordable alternative to Tesla's vehicles in China.

Instead of targeting more affluent consumers, Xpeng is targeting younger, more tech-savvy buyers with its electric vehicles. This group represents over 30% of car buyers in China, according to IHS Markit. This segment also includes consumers that are more likely to purchase a fully-electric vehicle.   

The P7 costs less than half the price of a Model S. Xpeng says it's offering the same level of technology, connectivity features and performance for around $50,000 less than Tesla's flagship Model S sedan.  

Xpeng's P7 also achieved an NEDC Range of 439 Miles, the longest range of all EVs sold in China. The car features an all-wheel-drive setup with dual electric motors reaching 0-60 mph in 4 seconds.

The P7's in-house designed electric drive system is the most powerful permanent magnet synchronous motor in China's EV market, according to Xpeng. It's also the world's first EV equipped with the 950 Insulated Gate Bipolar Transistor (IGBT) module built by German semiconductor company Infineon, which more efficiently controls the output of the electric powertrain.

Xpeng Motors prides itself on developing all of its advanced autonomous driving technology in-house. More than half of the company engineering teams work in R&D to support the development of autonomous driving. The company also developed an AI-powered intelligent OS for its vehicles called XSmart OS.

Among the total P7s delivered for the quarter, 98% support Xpeng's autonomous driving system called XPILOT. The latest version is called XPILOT 3.0 and is powered by the NVIDIA DRIVE Xavier system-on-a-chip (SoC). 

The P7 is the first production vehicle powered by Nvidia's powerful Xavier SoC, which is capable of performing 30 trillion operations per second to support Level-3 autonomous driving.

To support autonomous driving, the P7 comes equipped with 12 ultrasonic sensors, five high-precision millimeter-wave radars, 13 autonomous driving cameras, plus one in-car camera with HD maps and high-precision GPS.

"Our commitment to innovation through end-to-end in-house R&D and data-driven capabilities is the cornerstone of our business. This will not only keep XPeng at the forefront of the technologies of Smart EV but also position us well in capturing the significant growth potential in the Smart EV industry. Looking ahead, Xpeng will continue to capitalize on its core strengths in technology, while heightening sales and marketing efforts, further enhancing manufacturing capability, and developing our global strategy," Mr. He said.

As of Sept 30, XPeng's sales and service network consisted of 116 stores and 50 service centers, covering 58 cities in China. Xpeng-branded super charging stations expanded to 135, covering 50 cities, the company reported.

With its strong Q3 results, Xpeng is poised to become one of the leading electric vehicle manufacturers in China and investors have taken notice. The company's stock has more than doubled since Nov. 1 and is up 36% to $45.23 as of Thursday after the company released its Q3 financial results.

Xpeng is also backed by Chinese e-commerce giant Alibaba, which is the equivalent of Amazon in China.

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