Chinese EV stocks flourished today as the wider markets eyed a slight gain to close the day. Indeed, Nio (NYSE:NIO) and Li Auto (NASDAQ:LI) each closed up by more than 6% while XPEV stock closed the day up by 15%.
What’s behind today’s Chinese EV rally?
Well, it seems XPeng is the automaker behind today’s boom. On Sunday, the Guangzhou-based EV company announced a “stunning” new production process said to cut costs and improve research and development cycles.
The Smart Electric Platform Architecture, referred to as SEPA2.0, will apparently enable XPeng to produce and enhance its EVs both faster and cheaper. Per the company’s press release:
“SEPA2.0 (Smart Electric Platform Architecture) brings a series of more advanced architectural solutions, from XPENG’s in-house development autonomous driving software to vehicle engineering. It will shorten future models’ R&D cycle by 20%, significantly optimizing R&D efficiency. 80% of architectural components will be compatible with new models, enabling XPENG to meet diverse customer needs at optimized costs.”
XPeng’s latest innovation has a great deal of flexibility as well, supporting a wide-range of vehicle types including sedans, coupes, hatchbacks, wagons, SUVs and certain trucks. According to the report, the first SEPA2.0 production model will debut on April 18 at Auto Shanghai 2023.
XPeng Chairman and CEO He Xiaopeng had the following to say about the development:
“We envision that this evolutionary intelligent architecture will lead smart EV technology development for the next three years. It will make rapid advancements in technology available for our customers as standard, with faster software upgrades, stunning cost savings and elevated product experience.”
Chinese EV Stocks Soar on EV Production Innovation
While XPeng may own the technology enabling its “evolutionary” new production methodology, all of China may see benefits from the development. Currently, much of the hesitation around switching to EVs from traditional gas-powered cars has to do with the cost difference between them. EVs are typically more expensive than their combustion-based alternatives, although they’re usually cheaper to maintain. For instance, electricity is notably cheaper than fuel.
Indeed, with the new platform news, the entire Chinese EV market enjoyed a XPeng-induced rally on the first day of trading following the announcement. LI stock and NIO stock both saw gains, although the big winner has of course been XPEV stock.
This comes as a relief for XPeng, which has been in desperate need of a catalyst for some time. If you recall, the company’s deliveries fell more than 45% last quarter, compared to the year prior.
That isn’t to say the battle is now won, however. Competitors and market leaders Tesla (NASDAQ:TSLA) and BYD (OTCMKTS:BYDDY) have continued to lead new EV sales in March. Tesla also recently hinted at its new generation of EVs, another cost-cutting measure in the industry.
On the date of publication, Shrey Dua 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.
