Mohit Oberoi
Xpeng Motors (NYSE: XPEV) has appointed Fengying Wang as the company’s president with immediate effect. The news comes amid the slump in XPEV stock and the rising competition and price war in the Chinese EV (electric vehicle) industry.
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.
Commenting on her appointment, Xpeng Motors said, “Ms. Wang brings to us over 30 years of experience in the automotive industry, spanning roles in sales, strategy and senior management. Her leadership and expertise have been instrumental in driving the development of some of the most successful auto products, earning her remarkable industry recognition.”
The move comes after a dismal 2022 where XPEV stock lost 80% and fell to its all-time lows. While there was a broad-based sell-off in EV stocks, and even Tesla stock slumped 65%, Xpeng Motors was among the worst performers.
Notably, Xpeng Motors’ operating performance, especially in the back half of 2022 disappointed markets.
Xpeng Motors Appoints New President After a Dismal 2022
The company’s deliveries were less than 10,000 in both October and November 2022. Its deliveries did rebound to 11,292 in December but still trailed NIO and Li Auto by a big margin. Both NIO and Li Auto delivered a record number of cars in December.
Xpeng Motors delivered 22,204 cars in the fourth quarter and 120,757 in 2022 which were lower than both Li Auto and NIO. Xpeng Motors’ cumulative deliveries reached 258,710 at the end of 2022 which is only marginally ahead of Li Auto. At one point, Xpeng Motors looked set to surpass NIO in terms of cumulative deliveries but now risks falling behind Li Auto also.
Later this week, NIO, Xpeng Motors, and Li Auto would release their January delivery report. These stocks have rebounded this year amid the rally in EV names.
Recently, Baillie Gifford also increased his stake in NIO. Many analysts see NIO as a worthy competitor to Tesla. There is a guide on buying NIO stock.
Price War in the Chinese EV Market
There has been a price war in the Chinese EV market after Tesla lowered car prices earlier in January. It is the second price cut by Tesla in China since October.
Following Tesla’s footsteps, it reduced the prices for multiple models including the best-selling P7 sedan whose starting price it cut by around 12.5%. Xpeng also lowered prices for G3i and P5 models. However, the company has not revised the prices for the newly launched G9 model.
The price war might take a toll on Xpeng Motors’ margins. It reported a net loss of around $330 million in the third quarter of 2022. While losses narrowed slightly from the previous quarter, they were significantly higher than in the third quarter of 2021. Its gross margin also fell by 90 basis points YoY to 13.5%.
NIO’s gross margins also contracted in Q3 2022 amid higher input costs. Even Tesla’s gross margins slumped in Q4 2022. However, the company managed to somewhat make up with higher carbon credit sales.
The Elon Musk-run company earned $467 million from sales of carbon credits in Q4, a YoY rise of nearly 50%.
Coming back to Xpeng Motors, the stock is trading lower in US premarkets today. Hong Kong shares slumped today led by losses in Alibaba stock. However, Chinese stocks are now comfortably above their 2022 lows amid optimism over reopening in China coupled with hopes of a friendlier tech policy.
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This article was written for Business 2 Community by Mohit Oberoi.
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