U.S. listed Chinese EV player Xpeng stock (NYSE: XPEV) has rallied by almost 50% from recent lows of about $20 per share seen in early May, currently trading at about $30 per share. While Xpeng stock was weighed down by sluggish delivery growth over the first few months of the year due to Covid-19-related lockdowns in China, and also by concerns about the delisting of Chinese stocks from U.S. exchanges, there are a couple of factors that have helped the stock recently. Firstly, production and deliveries for Chinese EV players recovered strongly in the month of June, as the government eased Covid-19-related restrictions and also as the company resumed double-shift production at its Zhaoqing plant around mid-May. Xpeng reported 15,295 deliveries, marking an increase of 51% compared to May, and up 133% versus last year. This was also well ahead of rivals Li Auto, which delivered 13,024 vehicles, and Nio which delivered 12,961 vehicles.
Things could look up for Xpeng going forward. Although there are concerns about a global economic slowdown, amid surging inflation and rising interest rates, demand is unlikely to be an issue for Chinese EV players, in our view. EV sales in China soared 130% to 546,000 units in June, accounting for close to 30% of overall auto sales. The China Passenger Car Association also just raised its forecast for new energy vehicle sales (NEV) for 2022 to 5.5 million up from a previous expectation of 4.8 million. Production could pick up, with the semiconductor shortage showing signs of easing, due to cooling global growth and slower demand from the technology sector. This should help Xpeng, considering that its premium EVs have a high semiconductor content. Moreover, the company plans to launch its flagship SUV, the G9, in September, and this could also help volumes to an extent. The Chinese government’s support of the electric vehicle industry is also likely to continue, given the reports that it is considering extending tax breaks for EVs in the country.
Check out our analysis on Nio, Xpeng & Li Auto: How Do Chinese EV Stocks Compare? for more details on how Xpeng stock stacks up versus its peers Nio and Li Auto.
|S&P 500 Return||1%||-20%||71%|
|Trefis Multi-Strategy Portfolio||1%||-23%||208%|
 Month-to-date and year-to-date as of 7/15/2022
 Cumulative total returns since the end of 2016