Xpeng (NYSE: XPEV), a leading Chinese electric vehicle company, published weaker-than-expected results as the number of vehicle deliveries dropped. As a result, the Xpeng stock price dropped by more than 5% in pre-market trading.
In a statement, Xpeng said that its total vehicle deliveries in the first quarter came in at 18,230, much lower than the 34,561 vehicles it sold in the same period in 2022. It was also lower than the 22,204 it sold in the fourth quarter.
The decline in deliveries happened even as Chine ended its Covid-zero strategy and the company expanded its physical sales network to 425 stores in 145 cities. Its charging network jumped to over 1,000 in the first quarter.
As a result, the company’s revenue came in at RMB 4.03 billion, which is equivalent to $0.59 billion. This was a 45% decrease from the same quarter last year. Its gross margin fell to 1.7% in Q1 from the 12.2% it had in Q1 of 2022. Net loss also widened to RMB 2.34 billion.
These results provide further evidence that the EV industry in China is slowing after years of growing. Other companies like BYD and Nio have also reported slowing sales growth recently. Tesla, the biggest EV company in the world, is also seeing slow sales growth, which has pushed it to slash prices in the past few months.
As I wrote here, Xpeng’s revenue growth has been slowing at a faster pace in the past few months. In 2022, its revenue jumped to over $3.8 billion from the previous $3.32 billion. In 2021, its revenue came in at over $803 million.
A key challenge for Xpeng is that its market is just in China and has no exposure to highly profitable countries like the US and Europe. Also, competition is rising, with the number of EV companies in China rising. Estimates are that there are almost 100 EV cars in the country.
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