With Chinese electric vehicle (EV) company Xpeng (NYSE:XPEV) continuing to post strong delivery numbers in China and making impressive technical innovations, I remain bullish on Xpeng stock.
The company is making great progress, For instance, it’s expanding into Europe and its EVs continue to generally get high marks from reviewers. Moreover, there are signs that Tesla (NASDAQ:TSLA) is not going to be as dominant in China and Europe as it is in the United States.
In light of these points – along with the fact that Xpeng’s vehicles are relatively affordable – I believe that it will be one of the bigger winners in the global EV race.
Xpeng Stock: Strong Sales, Impressive Innovations
For December, Xpeng reported that its deliveries soared an eye-popping 326% year-over-year to 5,700. The surge proves that the popularity of Xpeng’s EVs is climbing rapidly in China. Showing that the vehicles are well-regarded in the Asian country, that data point certainly bodes very well for Xpeng stock.
Also very promising for the automaker and its shares are its impressive technical innovations. Xpeng’s new Navigation Guided Pilot, or NGP, “will allow the company’s flagship P7 sedan to automatically change lanes, speed up or slow down, overtake cars and enter and exit highways,” according to Seeking Alpha. The NGP reportedly includes “high-precision maps” and “a Surrounding Reality display for navigation assisted autonomous driving.”
Moreover, Xpeng recently announced that it was launching a software upgrade for the P7 with “40+ new functions and 200+ optimized features.” Among the functions and features that will be covered in the upgrade, according to the automaker, are “autonomous driving assistance, full-scenario voice assistance, smart audio and music cockpit, in-car App ecosystem, and personalized settings. ”
In a note to investors on Jan. 12, Bank of America wrote that Xpeng has a comparative advantage over other Chinese automakers because, unlike them, it makes its own autonomous driving “software and algorithm,” allowing it to collect data to enhance its autonomous systems. The firm had a $54.10 price target and a “buy” rating on XPEV stock.
Expanding to Europe and More Upbeat Reviews
As another InvestorPlace columnist,
Meanwhile, positive reviews continue to roll in for Xpeng’s EVs.(I detailed a few upbeat evaluations of its EVs in a previous column on XPEV stock).
Autocar’s recent review of the P7 , for example, was full of compliments for the EV, saying that its “interior has a futuristic feel,” while its seats are “comfy.” Additionally, the reviewer noted that the P7 has a range of more than 400 miles and good acceleration, along with “well weighted” steering.” And, most impressively of all, the reviewer contended that the P7’s new navigation system was better than that of Tesla’s cars made in China when it comes to “merging onto the highway and cruising at the speed limit.”
Meanwhile, Clean Technica recently reported that Xpeng’s G3 SUV “is a smart, snazzy, stylish, high-tech electric vehicle sort of like a Tesla but not as great as a Tesla but much cheaper than a Tesla.”
Tesla Is Looking Vulnerable in Europe and China
From January 2020 to November 2020, the sales of Tesla’s Model 3 in China fell 14% year-over-year in China, even as the country’s overall EV sales soared 123% YOY, according to Seeking Alpha author Sunil Shah.
And in a warning sign for the American automaker in Europe, Tesla’s Model X basically tied for second in the SUV category last year in Norway. Tesla came in well behind the E-Tron from Audi, Shah noted.
Bottom Line
Despite the recent gains of Xpeng’s stock, its market capitalization is $38.5 billion, versus Tesla’s $837 billion. Given Xpeng’s strong vehicles and technology, along with Tesla’s vulnerability in Europe and China, I believe that the gap will close, with Xpeng rallying in the coming quarters and years. As a result, I think its stock is a good choice for longer-term investors.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been Plug Power, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.
