(Bloomberg) -- Xpeng Inc. shares sank as concern about lower selling prices at the end of this year cast a shadow over the Chinese electric vehicle-maker’s third-quarter results.
The automaker narrowed its net loss to 1.53 billion yuan ($211 million) and increased revenue to 10.1 billion yuan for the three months ending in September — largely as expected by analysts. The gross margin hit 15%, the highest quarterly figure since it listed in the US in 2020.
However, Xpeng shares fell as much as 8.5% in New York on Tuesday amid concern about a weaker end to the year.
Rising sales of Xpeng’s Mona M03 could dilute the average selling price and margin in the fourth quarter, Citi analyst Jeff Chung warned in a note. The electric sedan, which starts at 119,800 yuan, saw sales surpass 10,000 units for September and October. Chung also said he expects rivals to launch new models in the coming months that could further ramp up competition in the already crowded Chinese market.
The share fall could spell an end to a rally that had turned Xpeng into the best-performing EV stock of the past few months, outpacing gains from Elon Musk’s Tesla Inc. and Chinese rival Nio Inc. While demand for EVs remains strong in China, manufacturers there face fierce competition.
Xpeng delivered a record total of around 24,000 vehicles in October, but annual sales are lagging the company’s goal. It sold 122,478 cars in the first 10 months, less than half of its annual target of 280,000.
The company shipped 46,533 cars in the third quarter, more than analysts expected, and forecast fourth-quarter sales of as much as 91,000 units and revenue in the last three months of 2024 of as much as 16.2 billion yuan.
Extended Range
In November, Xpeng unveiled an extended-range EV platform called the Kunpeng, which allows vehicles to drive as far as 1,400 kilometers (870 miles) powered by an electric battery and a small gasoline engine that charges the cell. Cars with these range extenders have surged in popularity in China and beyond because they can travel further and tend to be cheaper than battery-only EVs. Xpeng’s extended-range EVs are expected to start mass production starting from late 2025, according to Chinese media reports.
Upcoming range-extended vehicles should attract consumers in markets such as Latin America, Central Asia and the Middle East, where charging infrastructure is lacking, Brian Gu, the vice-chairman and co-president, said in an earnings call on Tuesday. The company is still aiming to break even next year, Gu added.
The new products have driven the rally in the EV maker’s shares, which had almost doubled since hitting a multi-year low in August. The refreshed P7+ sedan, which went on sale earlier this month, has received more than 31,500 orders within hours of being launched, according to local media.
Xpeng’s collaboration with Volkswagen AG is continuing to drive its income from services, which nearly doubled to 1.3 billion yuan in the third quarter from a year earlier. The Guangzhou-based EV maker said in August it would jointly develop electrical architecture for all locally produced vehicles based on VW’s China Main platform and Modular Electric Drive Matrix platform.
(Updated with shares and comments from analyst and executive.)
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