The company reported a loss of $340 million on revenue of $587 million. The loss was wider than a year ago and wider than expected.
XPEV stock opened this morning at $8.30 per share, a market capitalization of $7.4 billion. As of writing, it is down over 10% in early morning trading.
A Hard Turn for XPEV Stock
XPeng is trying to execute a turn to a uniform design for all its electric vehicles. It announced the platform, called SEPA 2.0, in mid-April. At the time it claimed the platform would cut design time by 20%.
But uniform platforms for electric vehicles aren’t new. General Motors (NYSE:GM) has been pushing its Ultium platform for years. Volkswagen (OTCMKTS:VWAGY) offers the Modular Electric Drive Matrix (MEB). The idea in both cases is to offer a single design for the motor and battery components, then build a variety of bodies on top of them.
XPeng forecasts continued poor results as it executes its turn to SEPA 2.0. It hopes to deliver 21,000-22,000 vehicles in the current quarter.
XPeng is based in the southern Chinese city of Guangzhou. It has won investment from e-commerce giant Alibaba (NASDAQ:BABA). Meituan (OTCMKTS:MPNGY), a rival of Alibaba, holds a large stake in LI Auto.
China’s electric vehicle market is very competitive. In addition to Li Auto, Nio (NYSE:NIO) and Tesla (NASDAQ:TSLA) on the luxury end of the market, there are mid-market electric companies like BYD (OTCMKTS:BYDDF) and Geely (OTCMKTS:GELYF), even low-cost specialists like Wuling Motors (OTCMKTS:WLMTF), which has a joint venture with GM producing a car for under $5,000.
What Happens Next?
XPeng may not have time to execute its turn to SEPA 2.0 if the company can’t generate sales. It is now the weakest of China’s luxury EV makers, a difficult reputation to turn around.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.