One thing that has become increasingly clear over the course of 2021 is that electric vehicles are the future of transportation. Consumers are embracing this emerging trend, as indicated by the fact that since 2018, the amount of EVs globally has risen by 64%. As demand rises, EV manufacturers are working around the clock to meet it and investors are enjoying the ride as EV stocks soar. One Chinese producer has had cause to celebrate recently as good news for Xpeng Motors (NYSE:XPEV) has sent XPEV stock shooting up.
XPEV Stock: What Happened?
After markets closed yesterday evening, news broke that Xpeng had released the results of its environmental, social and governance (ESG) report. As it turns out, the company had good reason to publish them, as the report revealed that “For the second consecutive year, in 2021 Xpeng received an ‘AA’ rating from MSCI ESG Research, the highest MSCI ESG rating among automobile companies worldwide.”
The news of this impressive feat was quick to lead to some impressive gains. XPEV stock began to rise this morning and is up 8.6% on the day. This caps an even more impressive week with shares rising than 12.66% for the past five days. Despite some turbulence around May, 2021 has been an overall good year for Xpeng.
What It Means
According to Barron’s, this rating has earned Xpeng the title of world’s most sustainable car company, at least temporarily. This impressive ESG score is good news for investors because it means they won’t have to be concerned with environmental factors down the road, always a pressing concern in our current state.
Its findings, though, point toward another type of sustainability – that of Xpeng’s as a company. Tesla (NASDAQ:TSLA), the dominant company in the EV market and the benchmark against which all other EV producers are currently measured, only received an A rating on its ESG report from the same agency. While that isn’t a bad statistic, no one should ignore the fact that an industry giant was outscored by a smaller competitor.
Why It Matters
While this likely won’t hurt Tesla too much in the short term, it will certainly help XPEV as the startup works to establish itself in a red-hot global market and show the world that it can compete with its larger competitors.
One of Xpeng’s rivals, Nio (NYSE:NIO), saw some gains of its own today after the announcement that the company will be doubling its production capabilities in the coming year. This development will likely position Xpeng well to stay competitive, though.
As InvestorPlace’s Vandita Jadeja recently noted “XPeng has proved its worth time and again with stellar delivery and revenue numbers. In the next five years, XPeng could be one of the top EV makers. It also has the potential to become profitable over the next two to three years
All investors should be watching EV producers. With that in mind, XPEV stock is definitely worth watching.
On the date of publication, Samuel O’Brient 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
