Xpeng Electric Vehicle Deliveries Drop by 47% in Q1 2023
The Chinese electric vehicle manufacturer Xpeng has reported a 47% drop in its deliveries during the first quarter of 2023. The company attributes the drop to price cuts from its competitors.
Xpeng, a Chinese manufacturer of electric vehicles, reported today a significant decline in car deliveries in the first quarter. The competition between Chinese and foreign firms is heating up in China.
Xpeng has delivered 18,230 cars to its customers in the first three months of this year, a drop of 47% compared to Q1 2022. The deliveries have been in a downward trend for several quarters and are now less than half of what they were during the fourth quarter 2021, when they seemed to have peaked.
Tesla's aggressive price cuts are hurting domestic EV companies
Despite the decision of the Chinese government to lift COVID-19 restrictions by December 2022, the economy in China is still not recovering. This is despite increased competition from companies such as Li Auto, Nio and Tesla (TSLA). The Chinese government also suspended subsidies for new electric cars on 1 January of this year.
Tesla, one the most powerful competitors of local EV companies in China, is also engaged in a price war which could force some of its smaller rivals out of business. In October 2022, the Model 3 and Model Y prices were slashed almost 10%. Tesla also reduced the prices of its Model 3 by 13.5% in January and Model Y by 10%.
Elon Musk, the CEO of American electric vehicle manufacturer Tesla, said during the most recent earnings conference that he had decided to push for a higher volume and a bigger fleet over a smaller volume and higher profit margin.
Xpeng's revenues plummet by 46% while vehicle margins turn negative
By the end this first quarter, Xpeng had 425 stores in 145 cities and 1,016 charging station including 816 that were owned by the company.
Xpeng’s sales fell to $590m as a result. This is a decline of 46% on an annual basis. The gross margins of its vehicles also shifted to the negative, going from 10.4% in Q1 2022 down to minus 2,5% during these three months.
He Xiaopeng is the head of Xpeng. He has highlighted several changes he made to the firm's organizational structure and leadership in order to change direction and restore growth.
Hongdi Brian Gu commented that Xpeng expects its cash flow to increase significantly as a result of the upcoming G6 and other product launches, which will fuel rapid sales growth.
Xpeng launched two of its best-selling models in February of this year on a few European markets, the P7 Sports Sedan, and the G9 Sport Utility Vehicle. The firm expects to deliver the first G6 SUVs before the first quarter of 2023.
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The company's sales continued to decline in this quarter, resulting in operating losses of 380 million dollars and net losses totaling $340 million. These losses were reported on a GAAP-based basis. Cash reserves for the company are still strong at almost $5 billion.
Xpeng is expecting to deliver 21,000 to 22,000 electric vehicles in the second quarter 2023. This represents a 36.1% - 39% decrease compared to last year's same period. Revenues are also expected to fall between 37% and 40 % during the upcoming quarter.
The price of Xpeng's stock has dropped precipitously by 11.5% in the early morning stock trading this morning following the release of the company's Q1 financial results for 2023.