Struggles with Economic Recovery and Consumer Spending

Xpeng has projected that its vehicle deliveries for the second quarter will range between 21,000 and 22,000, indicating a year-over-year decline of approximately 36.1% to 39.0%. In addition, the company anticipates its revenue for the same period to be between 4.5 billion yuan and 4.7 billion yuan, reflecting a year-on-year decrease of about 36.8% to 39.5%.

  • The company has encountered several challenges in China. The sudden removal of strict Covid-19 control measures in December by the country has had a detrimental impact
  • Moreover, China's economic recovery has been inconsistent, leading to mixed data and dampened consumer spending

Xpeng faces fierce competition in the electric vehicle sector, not only from fellow startups like Li Auto and Nio but also from established players such as Tesla and Warren Buffett-backed BYD. Tesla's price reductions in China to stimulate demand have also placed pressure on Xpeng's competitiveness.

Tesla Floods Western Markets With Chinese Made Cars

Initially, Tesla CEO Elon Musk had emphasized that the cars manufactured in China would solely cater to local demand and would not be exported. However, the remarkable success of Gigafactory Shanghai propelled it to become Tesla's most productive plant and the largest electric vehicle factory worldwide.

  • Tesla is now making a significant entry into the Canadian electric vehicle (EV) market by introducing China-made electric cars that are more affordable and have the potential to disrupt the industry.
  • Consequently, the Chinese facility has become Tesla's primary export hub, supplying vehicles primarily to Europe, Asia, and Australia. Yet, it has not yet imported cars to North America.

Local Chinese media reports indicate that Tesla intends to ship up to 10,000 vehicles from China to North America this quarter. Since buyers in the United States would not qualify for the federal tax credit if the vehicles originated from China, it is likely that these shipments are exclusively destined for Canada.

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products. Please note that the writer of this article is not registered as a financial advisor.

Credits

Photo by Road Trip with Raj / Unsplash.