Xpeng (NASDAQ:XPEV) stock rose 10% over the weekend, on top of a 5% move on June 9, after claiming it signed 25,000 pre-orders for its new G6 car in three days.
The G6 is the first car Xpeng has announced based on its SEPA 2.0 design, aimed at unifying the construction of its product line. The car carries a price tag of $31,600, lower than a Tesla (NASDAQ:TSLA) Model Y.
Xpeng stock will open this morning at about $9.62 per share. It was priced below $8.50 early on June 9. The move brings the company’s market capitalization back to over $8 billion.
Price Sells Cars
Xpeng has been the most troubled of the three Chinese EV makers traded in New York during 2023. (The other two are Nio (NYSE:NIO) and Li Auto (NASDAQ:LI)). Before the latest move shares were down 20% on the year.
Xpeng delivered just 7,506 cars during May, down 56% from the same period in 2022. For the first five months of 2023, deliveries totaled 32,815 cars, down 39%. By contrast, rival Li Auto delivered 28,277 cars in May. The difference is that Li’s cars are plug-in hybrids, with a gas-powered engine serving an electric drivetrain.
The G6 is called an SUV, but the car has the shape of a typical Toyota (NYSE:TM) or Hyundai (OTCMKTS:HYMTF) coupe. XPeng announced the SEPA 2.0 platform in April, saying it can cut design time by 20%. But the company has been losing money and draining cash.
The early success of the G6 could indicate a turnaround is in sight. The price of the G6 also gives XPeng a play in China’s mid-market, an area now dominated by BYD (OTCMKTS:BYDDF). XPeng’s earlier cars were seen as luxury vehicles.
XPEV Stock: What Happens Next?
XPeng did have $5.1 billion in revenue last year, so a valuation of $8.5 billion may not be unreasonable. This assumes it can deliver its new orders at a profit.
On the date of publication, Dana Blankenhorn 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.
