Electric vehicle maker XPeng (NYSE:XPEV) is giving strong competition to other EV players including Nio (NYSE:NIO). Despite being impacted due to the chip shortage, Xpeng managed to report impressive delivery numbers for May. Although there is only a minor increase from the April delivery numbers the company has managed to rake in strong year on year growth. The future looks bright for XPEV stock.
It looks like the industry is finally out of the semiconductor crunch, so EV manufacturers will see a surge in demand.
XPeng has the potential to meet the growing demand of consumers and it will push the stock higher. XPEV stock is currently exchanging hands at $41.22. I am bullish on the stock for the massive market opportunity and the strong progress in the autonomous driving space. With that in mind, let’s take a look at the investment case for XPEV stock.
Strong delivery numbers
XPeng has delivered a total of 5,686 smart EVs in the month of May. It is a whopping 483% increase year over year and a 10% increase over the last month. At the end of May, the year-to-date deliveries for the company stood at 24,173 units, showing a 427% rise year over year.
The company has delivered a record high of 3,797 P7s which is a sign that consumers are keen on investing in this model. It has some of the top features and was launched in January this year.
Tesla’s Loss Is XPengs’s Gain
EV maker Tesla (NASDAQ:TSLA) recently got into trouble when it was found guilty of throttling the charging speed. It landed in legal trouble in Norway and has been asked to pay $16,000 as a fine to the owners who have been affected. Affected cars included the Model X and Model S, which have been discontinued since 2016. There was a software update in 2019 that led to a decrease in the range of the cars from 19 to 48 kilometers.
Vehicle owners witnessed slow charging sessions after the update. Noticing this, car owners started filing lawsuits in different markets and one was filed in Norway with 30 car owners backing the case. However, there could be more than 10,000 car owners only in Norway who may have been affected by this update.
EV makers are making a beeline towards Norway, which has the highest EV penetration in the world.
This could mean strong sales and high demand for XPeng EVs. It has already marked a presence in Norway by shipping two batches of smart EVs. It has already shipped 300 units till now. Car owners are going to look for options that are reliable and XPeng could be their top choice. It has premium cars with advanced technologies offered at attractive price points.
If XPeng manages to make the most of this situation by increasing production and delivery, it can widen its market share in Norway.
Wall Street loves XPeng Stock
I am not the only one bullish on XPEV stock. City Analyst Jeff Chung has a buy rating for the stock with a price target of $50.30. Further, Nomura analyst Martin Heung has a buy rating for the stock with a price target of $47. The analyst calls XPEV the best China electronic vehicle player.
Additionally, all 7 analysts on TipRanks have a buy rating for the stock with an average price target of $49.92, around 21% upside from current levels.
All in all, XPEV is a great stock to buy and hold for the long term. As the chip shortage comes to an end, EV makers will have a blow out in the second half of the year. We will see the strong growth in delivery numbers showing the company’s ability to scale to meet the demand.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.
