Xpeng (NYSE:XPEV) stock is in the red following a downgrade to “neutral” and a price target reduction by Macquarie Research.

On Monday, the Chinese electric vehicle (EV) company disclosed its July deliveries. For the month, Xpeng delivered 11,524 vehicles, up 43% year over year (YOY). In the first seven months of 2022, the company has now delivered a total of 80,507 vehicles, up 108% YOY. Cumulative deliveries since inception have now reached over 220,000 vehicles, with Xpeng recognized as “No. 1 among emerging auto brands in China.”

The P7 was Xpeng’s most popular vehicle in July with 6,397 deliveries, followed by 3,608 deliveries of the P5 and 1,519 deliveries of the G3i. Furthermore, customers will be able to place reservations for the G9 SUV beginning this month. The official launch of the G9 will occur next month.

With that in mind, let’s get into the details of the price target reduction.

Macquarie Slashes Its Target on XPEV Stock

Macquarie analyst Erica Chen states that Xpeng has 94% sales exposure to the midsize high-tier new-energy vehicle (NEV) market and 100% exposure to the midsize battery electric vehicle (BEV) market. Chen expects these markets to slow down, which caused her to reduce her second half (H2) 2022 sales volume by 18% to 93,000 EVs. This amounts to a full-year volume decrease of 11%.

For H2 of 2022, the analyst expects Xpeng to grow volume by 35% half over half (HOH). Meanwhile, the overall NEV market is expected to grow 22% HOH. As a result, Chen believes that the company will grow its H2 2022 market share of the NEV market to 3.1%.

Chen expects the P5 and P7 models to be Xpeng’s primary growth drivers after component shortages are resolved. The analyst adds:

The company also expects its new flagship model, G9, to be delivered in 4Q, and we believe that if the G9 can be competitively priced it will help Xpeng expand quickly into the affordable luxury market.

Meanwhile, Nomura analysts Martin Heung and Benjamin Lo lowered their price target to $36.30 in July. The two analysts cited the company’s “unavoidable” cash burn. Instead, Nomura advises its clients to buy shares in BYD (OTCMKTS:BYDDY) and Li Auto (NASDAQ:LI).

XPEV has an average price target of $42.01 among 20 firms with coverage of the stock.

On the date of publication, Eddie Pan did not hold (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.