(Bloomberg) -- Chinese electric vehicle maker Xpeng Inc. reported a narrower-than-estimated first-quarter loss but the dim outlook it gave underscored the degree to which China’s bruising price war is hurting business.

The automaker’s non-GAAP net loss attributable to ordinary shareholders shrank to 1.41 billion yuan ($195 million) for the first three months of the year, according to a statement Tuesday. That was better than analyst estimates of a 1.71 billion yuan deficit. Revenue jumped 62.3% from the same period a year ago to 6.55 billion yuan, versus expectations for 6.11 billion yuan.

Gross margin was 12.9%, slightly higher than 2021 and 2022 levels.

“This signifies that Xpeng, based on its smart EV business, has developed a unique approach to lift its profitability and international market potential by providing smart technologies,” Brian Gu, honorary vice chairman and co-president of the company, said in the statement.

The US-listed shares of Xpeng jumped as much as 26% in New York before paring the gain to 12% as of 10:19 a.m. The shares fell 43% this year through Monday’s close.

But Xpeng delivered only 21,821 vehicles in the quarter and deliveries have failed to top 10,000 in each of the first four months of the year, much weaker than rivals BYD Co. and Tesla Inc. Xpeng is targeting deliveries of 29,000 to 32,000 vehicles this quarter, and revenue of 7.5 billion yuan to 8.3 billion yuan, it said Tuesday. 

Analysts had been looking for deliveries of around 38,000 vehicles and revenue of 9.3 billion yuan.

Xpeng’s conservative forecast for the second quarter follows a disappointing 2023, when it met less than 60% of its annual sales target, forcing an aggressive structural overhaul and steep price cuts. 

Fellow EV upstart Li Auto Inc. on Monday reported first-quarter vehicle sales and net income that missed analyst estimates, sending its New York-traded shares tumbling 13%.

With competition in the mass-market segment intensifying following the introduction of Xiaomi Corp.’s popular SU7 and Nio Inc.’s more affordable Onvo branded cars, Xpeng is betting on its intelligent driving systems to entice buyers.

Read more: VW’s Audi, SAIC Deepen Ties for Electric Car Lineup in China

It’s also expanding into other markets, including Hong Kong and France, and has partnered with Volkswagen AG on technology and supply chain procurement. Separately, Xpeng last year acquired Chinese ride-hailing giant Didi Global Inc.’s smart-car development arm and is set to launch the Mona mass market brand this year.

Mona, which will be officially launched next month, will start delivery of its first A-class model in the third quarter of the year, Gu said in a call with analysts Tuesday, adding there will be another B-class battery-electric model under its main brand Xpeng to be delivered in the fourth quarter. 

The company also looks to launch multiple models in three years to cover a range between 100,000 yuan and 400,000 yuan, Chief Executive Officer He Xiaopeng said on the call. He stressed its confidence to “achieve huge breakthroughs” in sales, profitability and cash flows starting from October. In the meantime, income generated from technical services for the platform and software has become a vital source of the company’s total revenues, He said.

(Updates with executive comments, share trading)

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