By Michael Elkins
Daiwa Capital Markets downgraded Xpeng Inc (NYSE:XPEV) to Sell (from Buy) and cut the stock's price target to $8.00 (from $13.00) after the electric vehicle company posted disappointing November sales data. Although the results were in-line with management’s guidance, analysts believe that the company will face challenges going forward given more intense market competition and likely slower sales momentum for NEVs in 2023.
XPeng is expecting to launch 3 new models in 2023: the upgraded P7 in 1Q23 and 2 SUVs in mid-2023 and 2H23 with prices likely in the CNY200-300k range. To regain competitiveness, Xpeng has made changes in management and its sales systems. However, the analysts expect NEV sales growth in China to slow to c.40% YoY in 2023, from c.100% YoY growth in 2022, given the removal of purchase subsidies and as Xpeng’s volume-driven models are in the most competitive price segment.
Daiwa cut their 2023-24 revenue estimates by 35-37% to reflect weakened confidence in Xpeng’s 2023 sales. Daiwa also lowered expectations on Xpeng’s 2023 sales to 142,000 units (from 206,000 units) vs. 119,465 units in 2022 (from 123,654 units).
Shares of XPEV closed trading down 1.12% to 10.19 on Wednesday.