XPeng Stock Is Riding the Crest of the EV Wave in China

XPeng (NYSE:XPEV) stock will benefit from the strong impact the company has made on the EV industry.

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

China’s booming electric vehicle industry has given a massive opportunity to EV makers across the world.

There was a time when Tesla (NASDAQ:TSLA) was the only recognized name in the industry but not anymore.

As the industry grew, thousands of companies joined the bandwagon, and XPeng distinguished itself. XPEV stock is trading above $38 today. It has had a strong ride in 2021 and is up 8% over the last six months.

China is the largest market for automobiles in the world and the country aims to sell 20% of new cars to be new energy vehicles by 2025.

This has given a push to XPeng and its delivery numbers are proof that the demand for EVs is consistently rising and consumers are enjoying their cars.

I am bullish on XPEV stock and believe it has the potential to soar. Let us consider the two reasons to be excited about the stock. 

Closer Look at XPEV Stock

XPEV stock has had a roller coaster ride over the past year and in no time, it has become a favorite of investors. The stock was trading at $20 in September 2020 and hit an all-time high of $72 in November 2020. 

However, it did not stay at this high for long and fell to $40 in December 2020. Since the start of 2021, the stock has been trading close to this range. It hit $56 in January and went down to $23 in May. It has been rising consistently since then and I think it has the potential to hit $50 sometime soon. 

A major reason to keep your eyes on XPEV stock is its new P5. The company kicked off the pre-sale of P5, the world’s first mass-produced LiDAR-equipped smart car. The pre-sale received an enthusiastic response from customers across China which is a clear sign that the company is moving in the right direction.

This is the third production model of XPeng and the delivery will start in October 2021.

The company has already expanded across Norway and could be entering other countries too. Norway has the highest penetration of EVs and XPeng plans to deliver the P7 model in Norway from the next quarter. 

China plans to ban gasoline-powered cars by 2035 in an attempt to reduce carbon emissions in the region. This move is going to work as a catalyst for every electric vehicle company. Additionally, the country is looking to consolidate the market, according to Reuters. 

The Industry and Information Technology Minister Xiao Yaqing stated that the industry has too many players and with consolidation, China will be able to improve the EV sales as well as charging network. This move could work in favor of XPeng and rival Nio (NYSE:NIO). 

The Bottom Line

With ample upside ahead, XPEV stock is one of the favorite stocks of investors this year. It has 20% upside potential and if the company manages to report strong delivery numbers this month, we will see the stock moving higher.

As one of the top EV makers in the country, XPeng may have had a tough August, but the outlook is brighter. 

All automakers have been facing trouble due to the chip shortage and I believe that XPeng may have handled it well this month. With strong delivery numbers, the company will be ready to report stellar third-quarter revenue. 

XPEV stock is a buy as it gears up for the sale of P5 and takes over the market with its third model. The stock will generate strong returns for investors if it manages to post impressive delivery and revenue numbers in the coming quarter.

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.

Article printed from InvestorPlace Media, https://investorplace.com/2021/09/xpev-stock-is-riding-the-crest-of-the-ev-wave-in-china/.

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