Xpeng Motors (NYSE: XPEV) has launched its P7 sedan and G9 SUV in Europe. Both these EV models are showcased at eCar Expo 2023 in Stockholm and are now available for ordering in Denmark, the Netherlands, Norway, and Sweden.
Commenting on the move, Brian Gu, Vice Chair and President of XPEV said, “XPENG G9 and P7 bring a combination of superior styling, quality, performance and comfort, exemplifying our market-leading technology and innovation. Today also represents a significant milestone as we build our presence in Europe.”
Notably, Europe is turning out to be the new battleground for Chinese EV companies. NIO already sells cars in some of the countries in the region.
BYD, which last year became the largest seller of NEVs (new energy vehicles) is also targeting Europe. There are reports that BYD is considering buying Ford’s plant in Germany to scale up its production in the continent.
Notably, when it comes to EV (electric vehicle) adoption, Europe comes second after China. The US lags far behind with single-digit EV adoption. Things might change for the better though as the Inflation Reduction Act of 2022 enhances the EV tax credit for US buyers.
Tesla is among the major beneficiaries of the Act and many analysts advised buying Tesla stock after the Act was passed last year.
Xpeng Motors Enters Europe as EV Competition Heats Up
Xpeng Motors stock had a tumultuous 2022 as the stock nosedived over 80%. While there was broad-based selling in EV stocks and Tesla and NIO also lost 65% each, Xpeng Motors was among the worst performers.
The stock’s underperformance is not hard to comprehend. Xpeng Motors delivered 22,204 cars in the fourth quarter and 120,757 in 2022 which were lower than both Li Auto and NIO. The company’s 2022 deliveries were less than half of the 250,000 that it was initially targeting.
The EV competition has increased as more models hit the road. There are already signs of a price war. In the US, Ford lowered Mach-E prices after Tesla cut prices for its Model Y. In China also, Xpeng Motors announced a price cut shortly after Tesla lowered car prices in the country last month.
Ford sees Chinese EV Companies as Worthy Competitors
Automakers see Chinese EV companies are worthy competitors and Tesla and Ford have publicly acknowledged the same. During Ford’s Q4 2022 earnings call, following which the stock slumped, the company’s CEO Jim Farley said that Chinese EV companies would eventually enter Europe as well as the US.
He said, “I don’t think you can be globally successful in the EV business if you don’t compete with the Chinese.”
NIO incidentally has been quite open about its plans to enter the US, which is the world’s most profitable automotive market.
Recently, Baillie Gifford also increased his stake in NIO. Many analysts see NIO as a worthy competitor to Tesla. There is a guide on how to buy NIO stock.
Musk also Praised Chinese EV Companies
During Tesla’s Q4 earnings call, Canaccord Genuity analyst George Gianarikas asked which companies Tesla sees as its key competitors in five years timeframe.
Musk said that at least when it comes to self-driving no other automaker comes anywhere near it. Incidentally, many companies are reconsidering their investments in self-driving ventures.
Lars Moravy, TSLA’s Vice President of Vehicle Engineering said that “whoever keeps up with the trend of EVs is going to be our competitor.” He added, “The Chinese are scary, we always say that.”
Musk was also all praise for Chinese EV companies. He said, “we have a lot of respect for the car companies in China. They are the most competitive in the world. That is our experience.”
He added that the Chinese market is “most competitive.” He also said, “if I would have guessed, there are probably some company out of China as the most likely to be second to Tesla.”
Xpeng Motors Pushes Back Profit Goals
Coming back to Xpeng Motors, the company has pushed back its profit goals and now expects to post an operating profit by 2025. The company was previously looking to break even by late 2023 or early 2024.
The EV price war would only complicate things for loss-making companies like Xpeng Motors. The company is meanwhile betting on economies of scale through production ramp up, and autonomous driving to help it become profitable.
The company has also been looking to cut costs. It has also rejigged the top management and appointed Fengying Wang as the company’s president.
Wang spent over three decades in China’s Great Wall Motor and is among the few female executives in the country’s automotive market, which is the largest globally. She would report to Xpeng’s CEO and chairman He Xiaopeng and look after the company’s product portfolio and sales operations.
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