China's Xpeng sees higher quarterly deliveries as promotions boost EV demand

2024 Beijing International Automotive Exhibition

By Zaheer Kachwala

(Reuters) -Xpeng forecast a rise in second-quarter deliveries on Tuesday as price cuts help the electric-vehicle maker to attract more buyers in a competitive Chinese market, sending its U.S.-listed shares 4% higher.

The automaker expects to hand over between 29,000 and 32,000 vehicles, an increase of about 25% to 37.9% from a year earlier, as discounts aid sales of its G6 and G9 electric SUVs.

Xpeng also plans to launch several models priced between 100,000 yuan and 400,000 yuan ($13,816.73 and $55,266.94) within the next three years, starting with an electric sedan in the fourth quarter.

This could help it compete better in the market where an EV price war has forced companies to roll out cheaper vehicles.

Tesla's best-selling Model Y and Xiaomi's SU7 sedans start at 249,900 yuan and 215,900 yuan, respectively.

Some analysts have warned that Xpeng has little room left for more price cuts and would face stiff competition from Xiaomi's upcoming SU8, a mid-size vehicle.

"At most, there may be limited-time promotional activities during the May Day and Dragon Boat Festival holidays," Third Bridge analyst Rosalie Chen said.

In the first quarter, Xpeng's revenue of 6.55 billion yuan beat the LSEG estimate of 6.17 billion yuan, while its adjusted loss per share of 1.45 yuan was smaller than estimates of 1.94 yuan.

Gross margin improved to 12.9% from 1.7% a year earlier.

Xpeng is also looking to expand in over 20 countries, according to company executives, to capitalize on state EV subsidies aimed at reducing carbon emissions.

However, expansion plans for Chinese EV makers have come under pressure with the launch of an anti-subsidy probe by the European Commission as well as U.S. tariff hikes announced last week.

($1 = 7.2361 Chinese yuan renminbi)

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Varun H K and Shinjini Ganguli)