Why Electric Vehicle Stocks Like XPeng Could Accelerate

The last time I weighed in on XPeng (NYSE:XPEV), I said, “We’re being offered opportunity with XPEV on a pullback. After racing from a November low of $20 to nearly $75, the XPEV stock dipped to find support around $41.86. I’d buy the XPEV stock here with a near-term target price of $75 on key catalysts.”

Xpeng logo and P7 model in store XPEV stock
Source: Andy Feng / Shutterstock.com

That was on Dec. 31, as the XPeng stock traded around $42.

At the moment, it’s consolidating around $47. From here, as the electric vehicle boom accelerates, I’d like to see it closer to my initial target of $75.

XPEV Has the Pedal to the Metal

By 2030, the world could see up to 125 million electric vehicles on the road, according to the International Energy Agency, with the U.S., China, and Europe pushing for a greener future. Plus, President Joe Biden announced the U.S. will rejoin the Paris Agreement, and also wants to see more EVs in circulation. He even wants to replace the federal fleet with EVs.

“The federal government also owns an enormous fleet of vehicles, which we’re going to replace with clean electric vehicles made right here in America, by American workers,” said Biden, as quoted by Benzinga, which added, “The U.S. fleet is made up of 645,000 vehicles which include 245,000 civilian vehicles, 173,000 military vehicles, and 225,000 post office vehicles.”

That all supports the EV story, and related stocks like XPEV.

XPEV is Also Seeing Record Delivery Numbers

In December, XPEV delivered 5,700 smart EVs, a 326% increase year over year. It was also an increase of 35% month over month. For the fourth quarter, it delivered a total of 12,964 vehicles. That represents 303% year-over-year growth, and 51% quarter-over-quarter growth.

For all of 2020, it delivered 27,041 vehicles, representing year-over-year growth of 112%. For just January 2021, it just delivered 6,015, representing year-over-year growth of 470%. It was also the third consecutive month of record-breaking delivery numbers. Going forward, I expect for these numbers to get even better.

XPEV is Now in the European Market

Over the last few weeks, the company delivered its first XPeng G3 smart electric SUVs in Norway. According to a company press release:

Xpeng is actively exploring opportunities in other EV-mature markets with supportive government policies, advanced EV infrastructure and high EV awareness as the top priority markets. Xpeng is also planning to launch its second production model, the P7 electric sports sedan, in Europe within the next 12 months.

Analysts are Just as Bullish on XPEV Stock

Deutsche Bank rates the stock a “buy,” but not because of its rising EV sales. Instead, the firm is bullish on XPEV’s autonomous vehicle (AV) technology.

In fact, the company’s latest feature, called the Navigation Guided Pilot (NGP), helps its P7 sedan to change lanes, speed up and slow down, as noted by CNBC. Reportedly, it can also help the sedan enter and exit highways. All of that is part of the company’s XPILOT 3.0, which is expected to launch in the first quarter of 2021.

Better, with a price target of $58, analyst Edison Yu believes, “AV is set to become the EV of 2021.”

The Bottom Line on XPeng Stock

With plenty of global demand, EV companies could see another explosive year ahead.

Biden is in the White House and wants more electric vehicles on the roads. Global governments are pushing for more electric vehicles. Related companies, like XPeng are already seeing record delivery numbers. Plus, demand is through the roof, with investors piling in.

In addition, analysts at Deutsche Bank are bullish on the company’s autonomous vehicle technology, saying “Avis set to become the AEV of 2021.” All of that is bullish for EV stocks, like XPEV.

With all of that being said, I’m just as bullish on the stock, as I was in December. Again, I believe that by this time next year, it could be well above $75 a share. Buy, hold, and let it run.

On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. A contributor to InvestorPlace.com, Ian Cooper has been analyzing stocks and options for web-based advisories since 1999.


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