$XPEV Betting On Technology

NYSE:XPEV   XPeng Inc.
After receiving an investment from Volkswagen, XPeng Inc. (NYSE: XPEV) is on a roll as it successfully entered into a strategic partnership with ride-hailing giant Didi to acquire its smart EV unit. Through this acquisition, the company is expanding its presence into a new market segment which is the mass market since it intends to manufacture A-class segment EVs that target the Chinese vast middle class starting in 2024. Considering this venture’s potential to boost the company’s revenues in the coming years, the XPEV stock forecast appears to be bright for the long-term.

XPEV Fundamentals

Catering to a New Segment
As things stand, Didi and XPEV are in the midst of a strategic partnership to develop an A-class smart EV model under a new brand called MONA that targets the Chinese middle class. The vehicle is set to be launched in 2024, which is especially promising since its price is poised to be in the RMB 150 thousand range – making it widely affordable for middle class Chinese citizens.

This move is likely going to be extremely beneficial for the company moving forward, since the Chinese middle class is enormous. According to a Pew research study, the Chinese middle class grew between 2000 and 2018 from 39.1 million to 707 million which means that over 50% of the Chinese population is in the middle class. In this way, the company’s plan to venture into the mass market segment could aid its goal of reaching profitability in 2026.

Competition in the Mass Market
With this in mind, the Chinese EV market is currently obsessed with A-segment vehicles due to their affordability and maneuverability in congested areas. Having said that, XPEV’s entry into this segment will not be easy as the mass market segment is highly competitive. Currently, BYD and Wuling are giants in this segment as both companies have produced a number of best selling A-segment EVs which are currently wildly popular including BYD’s Seagull, Wuling’s Hongguang mini EV, and Wuling’s Bingo.

These vehicles accomplished monumental feats in terms of sales since for example, Wuling’s Hongguang mini EV recorded more sales in China than Tesla’s Model Y in 2022. That said, Bingo and Seagull also recorded impressive sales so far in 2023 as Bingo recorded 20 thousand sales in July, while Seagull recorded 23.5 thousand sales in June. To see the extent of these numbers, XPEV had 11 thousand deliveries last July across its portfolio of EVs.

When XPEV’s MONA Project enters the market, it will likely enjoy the benefits of China’s current A-segment fad. That said, Mona will be competing with Bingo, and Seagull, which are likely going to be much more affordable. As is, Bingo is sold at around RMB 59.8 thousand, while Seagull’s price could vary between RMB 78 and 95 thousand. On the other hand, XPEV’s MONA will likely be priced at around the RMB 150 thousand price point.

Although XPEV is outmatched when it comes to affordability, it still has a major edge over its competition in this segment which is its portfolio of EV technology. One of the features that the company could introduce into this segment is its X NGP navigational software which is approved for autonomous driving in several Chinese provinces. So despite the discrepancy in pricing, more customers may find the difference in EV tech worth the higher price point which could make the company secure a substantial share of the mass market segment. For this reason, the XPEV stock forecast could be extremely bright for the long term.

XPEV Financials

According to its Q2 2023 report, XPEV experienced a significant decrease in assets from RMB 71.4 billion at the beginning of the year to RMB 66.6 billion. This was due to the company’s cash balance decreasing from RMB 14.6 billion to RMB 11 billion, and its short term investments plummeting from RMB 1.2 billion to RMB 462 million. On the other hand,its liabilities remained relatively unchanged at around RMB 34 billion.

When it comes to revenue, the company experienced a significant YoY decrease from RMB 14.8 billion to RMB 9 billion. This occurred as a result of waning car sales which fell from RMB 13.9 billion to RMB 7.9 billion as a result of less deliveries that could be attributed to the price war Tesla started in the Chinese market. Meanwhile, expenses slightly decreased from RMB 5.7 billion to RMB 5.5 billion. Despite this, the revenue decline led the company’s net loss to increase YoY from RMB 4.4 billion to RMB 5.1 billion.

Technical Analysis

XPEV Stock is in a neutral trend as it is trading in a sideways channel between $18.09 and $19.93. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which is a bullish sign. Meanwhile, the RSI is overbought at 78 and the MACD is approaching a bearish crossover.

As for the fundamentals, the XPEV stock forecast appears to be bullish thanks to its recent partnership with Didi since it allows the company to enter the mass market segment. Given the size of this market, the company may be on track to reach profitability in 2026 as it expects due to the expected surge in sales once the MONA Project hits the market. With this in mind, investors could wait for the stock to test its $18.09 support and hold it before entering a long position ahead of the company’s expected growth in the coming years.

XPEV Forecast

After its deal with Didi, XPEV might be well-positioned to capture a significant share of the Chinese mass market segment due to its EV technology that is more advanced than its competition in this segment. As is, the targeted population of the Chinese middle class represents more than 50% of China’s population which could see the company record impressive deliveries once the MONA project hits the market in 2024. As the company’s first real attempt to mass produce EVs in the Chinese market, its goal of reaching profitability in 2026 may not be far-fetched. For this reason, the XPEV stock forecast could be extremely bullish for the long term.


The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.