Competition Dynamics in China's Electric Vehicle (EV) Market Intensify as Automakers Continue Price Cuts. Specifically, XPeng, a Chinese electric vehicle manufacturer, made headlines when the company announced plans to launch a more affordable brand for the mass market. This announcement led to a surge in XPeng's Hong Kong-listed shares by up to 6.3%, before the gains settled at 4.4% at 39.45 Hong Kong dollars (approximately 5.04 US dollars) on Monday afternoon.
XPeng, a start-up based in Guangzhou, China, plans to launch a new brand within the next month that will offer cars in the price range of 100,000 Yuan to 150,000 Yuan (approximately $13,897 to $20,845). This was announced by He Xiaopeng, the Chairman and CEO of XPeng, at an industry meeting on Saturday. The new brand will "gradually introduce a series of new models with varying levels of intelligent driving capabilities." Current models of XPeng are mainly priced in the range of 200,000 CNY to 300,000 CNY.
"The price range of 100,000 CNY to 150,000 CNY has great market potential," He said in a post on Weibo on Saturday. The competition in the Chinese EV market is intensifying, led by BYD, which continues to lower prices, while smartphone giant Xiaomi is expected to enter the market. In August, XPeng announced that it would take over the smart car development activities of the ride-hailing service Didi for 5.83 billion HKD and launch a smart EV model under a new brand for the mass-market segment with Didi.
The EV manufacturer also plans to integrate an AI model into its vehicles in the second quarter and intends to invest 3.5 billion CNY into AI research and development, as well as to hire an additional 4,000 employees in 2024. This model will be the first mass-produced car to feature in-vehicle AI and an in-vehicle cognitive engine.
Despite an Increase in Vehicle Sales, XPeng, Which Has Not Yet Made a Profit, Recorded a Net Loss of 3.89 Billion CNY in the Third Quarter. Results for the Fourth Quarter Are to Be Announced After Market Close on Tuesday. Changes Made in 2023 "Will Lead to More Positive Results in 2024," Said He Following the Third Quarter Results. Co-President Hongdi Brian Gu Expects Stronger Free Cash Flow in the Fourth Quarter, Marking the Start of the Journey Toward Long-term Scalable Profitability. However, Daiwa Analyst Kelvin Lau Does Not Expect XPeng to Be Profitable by 2024 and Suggests That "More Positive Results" May Simply Mean a Reduced Loss.
