XPeng (NASDAQ:XPEV) stock is rising 4% today on the news that the company plans to launch a line of electric vehicles (EVs) priced at 50% less than its current models.
XPEV stock has lost 28% of its value since the start of 2024. Shares currently trade for about $10 apiece, at a market capitalization of about $9.6 billion.
XPEV Stock: Drive Cheap Down Electric Avenue
CEO He Xiaopeng said that XPeng’s new electric vehicles will cost between $14,000 and $21,000, making them competitive with the lower-priced models of BYD (OTCMKTS:BYDDY). The EVs will also be marketed under a new brand name and come with varying levels of “intelligent driving.”
As Reuters reports, sales of battery EVs in China “slowed to 18.2% in the first two months of the year from 20.8% for all of 2023, according to the China Passenger Car Association.”
In addition to making EVs, XPeng is also launching a flying car in 2025, which has both wheels and rotors. InvestorPlace contributor Alex Sirois recently recommended against investors buying XPEV stock, calling the flying car a distraction.
The move into lower-priced EVs seems to put Chinese EV makers well ahead of their Western counterparts. Rivian (NASDAQ:RIVN) only recently announced an EV estimated to start at $37,000 — the R3 — but the vehicle won’t be available until 2027.
Most EVs offered in the U.S. market today cost $40,000 or more. The latest version of Tesla’s (NASDAQ:TSLA) lowest-priced model, the Model 3, will start at about $39,000.
Lower-priced vehicles from a variety of Chinese brands will put intense pressure on Western automakers. Even if these companies can be kept out of the U.S. market, they could still dominate sales in the rest of the world.
XPeng delivered just 4,545 vehicles in February — numbers that were skewed by the Lunar New Year holiday. As of March 1, sales were up 14% year-over-year (YOY) so far in 2024.
What Happens Next?
The intense competition to sell low-priced EVs in China will pressure all Western auto and EV stocks, including Tesla. The competition will also break some of China’s own EV companies.
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.
