Xpeng’s Positive Catalysts Should Lift XPEV Stock Much Higher

With Xpeng’s (NYSE:XPEV) electric-vehicle business performing beautifully and the company still having many positive, upcoming catalysts, I enthusiastically recommend that investors buy XPEV stock.

Image of Xpeng's (XPEV) G3 electric SUV outside a mall in China
Source: Johnnie Rik / Shutterstock.com

Over time, I believe that Xpeng’s market capitalization can overtake that of the market’s current favorite Chinese EV maker, Nio (NYSE:NIO).

Xpeng’s Stupendous Performance

In June, Xpeng’s deliveries soared 617% year-over-year and rose 15% compared with the previous month, reaching a record 6,565 EVs.

In all of Q2, representing a jump of 439% YOY. Xpeng delivered an all-time high total of nearly 17,400 EVs.

Xpeng’s unit delivery numbers are catching up with those of Nio. In June, Nio’s deliveries climbed 112% YOY, reaching nearly 8,100 EVs. For Q2, Nio distributed nearly 21,900, representing a YOY gain of nearly 112%.

Obviously, if Xpeng’s growth continues to be higher than that of Nio, it won’t be long before the two companies’ delivery volumes converge. Eventually, if the trend continues, Xpeng’s deliveries should overtake those of Nio.

More Positive Catalysts Are Coming for XPEV Stock

On July 9, Xpeng is slated to launch an updated version of its G3 SUV. Named the G3i, the “i” is reportedly short  for intelligence, suggesting that the EV is likely to include many new, impressive, high-tech features.

Towards the end of this year, Xpeng is slated to launch a new electric sedan that it has  dubbed the P5. According to Motor Authority, the EV will be differentiated from the competition because it will be “the first production car in the world with…built-in lidar sensor {s}.”

The EV’s two lidar sensors will be able “to distinguish between pedestrians, cyclists and scooters, static obstacles, and road works, including in tunnels and during night driving and poor weather,” Motor Authority stated.

What’s more, Deutsche Bank analyst Edison Yu agrees that XPEV stock has strong, upcoming, positive catalysts.

Along with the launches of the G3i and the P5, Xpeng should get a boost from its introduction of EVs ” with lithium iron phosphate batteries.”

Additionally, Yu expects the company’s gross margins to meaningfully rise as a result of its increased production of the P5 and its decision to begin producing the G3 SUV itself.

The European Market and Tesla’s Problems in China

At the end of 2020, Xpeng started delivering EVs in  Norway, which has the highest EV adoption rate of any major market.  When the Chinese EV maker announced its decision to move into Norway, Xpeng CEO He Xiaopeng said in a statement, “This week’s customer deliveries in Norway represent a key milestone in Xpeng’s aspirations to become a truly international smart EV brand.” Consequently, I would not be at all surprised if Xpeng decides to enter other European markets towards the end of this year.

Meanwhile, as another InvestorPlace columnist, Chris Tyler,noted in his June 29 column, last month “Tesla began a recall of more than 285,000 of its vehicles” in China. That huge recall will, in all probability, meaningfully hurt Tesla’s reputation in the Asian country.

As a result, Tesla will probably lose a significant amount of market share in China going forward, and Xpeng should be able to pick up a portion of the share that Tesla loses.

Another Bullish Firm

In the wake of Xpeng’s strong May deliveries, Bank of America was upbeat on XPEV stock.

Like Deutsche Bank and myself, the firm believed that the company would have meaningful, positive catalysts going forward. Among the bullish drivers cited by Bank of America were Xpeng’s upcoming new models and its autonomous systems. Xpeng’s sales will increase at a compound annual growth rate of 57% between 2020 and 2025. This is estimated the firm would have kept a “buy” rating and a $46 price target on the shares.

The Bottom Line on XPEV Stock

With Xpeng’s sales already soaring and the automaker poised to release promising new models this year and take market share from Tesla, investors should become much more excited about XPEV stock later this year.

Consequently, I strongly recommend buying the shares on their current weakness.

On the date of publication, Larry Ramer 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.


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