On the evening of August 20, Xpeng Motors (XPEV.US) released its 2024 interim performance report, demonstrating the company's significant growth and continued improvement in financial performance in the first half of this year. In the first half of the year, Xpeng Motors achieved double growth in delivery volume and revenue, with delivery volume reaching 52,000 vehicles, a year-on-year increase of 25.6%; total revenue was 14.66 billion yuan, a year-on-year increase of 61.2%. Among them, automobile sales revenue reached 12.36 billion yuan, a year-on-year increase of 55.7%.

After the financial report was released, Xpeng Motors' U.S. stocks rose short-term before the market opened, but fell sharply after the opening, now trading at $6.77 per share.

Gross profit margin significantly increased and net profit significantly reduced losses

A key indicator of Xpeng Motors' outstanding performance in the first half of the year is the significant improvement in gross profit margin. The report shows that the company's overall gross profit margin was 13.5%, compared with -1.4% in the same period last year; while the automobile gross profit margin increased significantly from -5.9% last year to 6.0%. This improvement in gross profit margin is mainly due to revenue growth brought about by technology cost reduction and strategic cooperation.

Gu Hongdi, honorary vice chairman and co-president, said that with the growth of global market sales driven by large product cycles, Xpeng Motors' economies of scale, operating efficiency and cash flow will continue to improve. Especially in the second quarter of 2024, the company's gross profit margin further increased to 14.0%, a year-on-year increase of 17.9 percentage points, laying a solid foundation for the full-year financial performance.

Strong performance in the second quarter drives performance growth in the first half of the year

Judging from the performance data of Xiaopeng Motors, the outstanding performance in the second quarter contributed significantly to the growth of the first half of the year. In the second quarter, Xpeng Motors' total vehicle delivery volume was 30,200 vehicles, a year-on-year increase of 30.2%; it achieved total revenue of 8.11 billion yuan, a year-on-year increase of 60.2%. The company's gross profit margin in the second quarter also reached 14.0%, which was significantly higher than the gross profit margin in the same period last year.

Promote the “going overseas” strategy and expand international markets

Xpeng Motors not only performs well in the domestic market, but its "overseas" strategy is also steadily advancing. This year, Xpeng launched the "Jupiter Project" to expand pipeline coverage through the "direct operation + authorization" model, especially in the sinking market. In addition, Xpeng Motors' "Going Overseas" 2.0 strategy has accelerated and has now entered 30 countries and regions including Europe, the Middle East and Latin America, and has more than 70 sales stores overseas. The left-hand drive and right-hand drive versions of Xpeng G6 will be launched and delivered to overseas markets in the third quarter of this year, which will further expand its international market share.

Technological innovation and strategic cooperation move towards new heights of intelligent driving

Xpeng Motors has also made important breakthroughs in innovation in the field of intelligent driving. The company signed a strategic cooperation agreement on electronic and electrical architecture technology with the Volkswagen Group to jointly develop industry-leading electronic and electrical architecture. The first cooperative model is expected to be mass-produced in the next 24 months. At the same time, Xpeng released the AI ​​Tianji system that integrates large models, taking the lead in the Chinese automotive industry to achieve mass production of end-to-end autonomous driving large models. This move will further enhance Xpeng Motors' leading position in the field of intelligent driving technology.

Xiaopeng reduces losses but still not out of trouble

After experiencing a sales peak in the first half of 2022, Xpeng Motors has gradually fallen into a dilemma of declining sales.

Although Xpeng's sales have rebounded in the second quarter of 2024, its overall performance is still weak, with monthly delivery volume basically remaining at around 10,000 vehicles, which is far lower than the sales levels of Ideal and NIO. Xiaopeng sold a total of 63,000 vehicles in the first seven months of 2024. Although it increased by 20% year-on-year, it is still far from the annual target of 280,000 vehicles.

In order to cope with the decline in sales, Xpeng Motors has made many internal adjustments, including introducing Wang Fengying, a former executive of Great Wall Motors, launching the "Jupiter Project" to reform the sales system, and reducing inventory. However, these initiatives did not bring significant results, and the wholesale sales model also progressed slowly due to internal resistance and dealer concerns. Although Xpeng's sales rebounded in June and July, it is still difficult to determine whether it is the effect of the reform or the market share gained by relying on low-price strategies.

The current challenge facing Xpeng Motors is how to achieve its annual sales target in the remaining time, while balancing internal management and market strategies to avoid confusion in the price system and an exacerbation of the trust crisis.

MONA M03 is about to be launched to meet the peak of the product cycle

Xpeng Motors plans to launch the first model of the MONA series, MONA M03, on August 27. Its full English name is "Made Of New AI" and is positioned to be the popularizer of AI intelligent driving cars in the world. The core selling point of this car is its advanced intelligent technology, equipped with Xpeng Motors' latest intelligent driving assistance system. He Xiaopeng once said that "young people's cars must also be flagships", so the entire MONA M03 series is equipped with Qualcomm 8155 chips and 16GB memory.

From the perspective of pricing, MONA M03 is a model that focuses on low prices. According to the data of DYNAMIC, its price is 135,900 yuan. Previously, investors in Xpeng Motors had revealed that the starting price of this car would be less than 140,000 yuan.

In the past, the price of Xpeng Motors' high-end smart driving models ranged from 200,000 to 300,000 yuan, and other brands even sold for more than 300,000 yuan. Xiaopeng obviously hopes to attract more consumers and reverse the current market situation by significantly lowering the price threshold of high-end intelligent driving systems with the concepts of "popularizing intelligent driving" and "young people's first AI intelligent driving car" .

Although Xpeng is in the first echelon of intelligent driving systems, in actual market performance, its labels in terms of intelligence, cost-effectiveness and low price are not clear. When facing the C-end market, Xpeng’s intelligent driving system has relatively little market presence due to competition from giants such as Huawei and Tesla. In terms of low prices, BYD’s dominant position in the new energy market also makes it difficult for Xpeng to Take advantage.

Xpeng Motors' current key task is how to break through the existing market with a new car and establish a unique label for Xpeng. MONA M03 obviously shoulders this important task. However, the price range of 100,000 to 150,000 yuan has always been BYD's strong area. Among the top ten new energy vehicles in this price range, 8 are BYD models. If Xiaopeng wants to stand out in BYD's home field , is bound to face fierce competition.

Can MONA M03 live up to Xpeng’s expectations?

The starting point of MONA is Didi’s internal car-making project - Da Vinci. In August 2023, Xpeng Motors acquired Didi's car-making business for a consideration of 5.8 billion yuan, and the "MONA" model was eventually placed into Xpeng Motors' new sub-brand.

He Xiaopeng once revealed that the annual sales volume is conservatively expected to be 100,000 vehicles. At the same time, judging from the agreement between Xiaopeng and Didi, during the first performance target period, only if the delivery volume of eligible new cars reaches 100,000 units, Didi can obtain the corresponding shares from Xiaopeng. This means that Didi also needs to use its own resources in the online ride-hailing ecosystem to help MONA M03 achieve sales breakthroughs on the B-side.

On August 15, He Xiaopeng revealed at the 10th anniversary celebration that Xpeng MONA M03 pre-sale orders exceeded expectations and surpassed the G6 launch in the same period. Xpeng has officially disclosed that Xpeng G6 had over 25,000 users within 72 hours of pre-sale.

Is Xpeng worth investing in?

According to the company's forecast, Xpeng Motors expects vehicle delivery volume in the third quarter of 2024 to be between 41,000 and 45,000 vehicles, a year-on-year increase of approximately 2.5% to 12.5%; total revenue will be between 9.1 billion and 9.8 billion yuan. During the period, the year-on-year growth was approximately 6.7% to 14.9%. The iteration of intelligent driving and the launch of new models are expected to help Xpeng Motors achieve a reversal of financial data and move towards a new level of profitability.

Daiwa Bank stated that Xpeng's sales performance in the first half of the year was relatively weaker than that of its competitors. In addition, considering that the EU may impose tariffs on its export products and the delivery of new cars is slower than expected, it has lowered its revenue forecast for this year and next by 8% to 27 %, and sales forecasts were reduced by 22% and 38% respectively. Daiwa reiterated its "buy" rating and expected that Xpeng will continue to promote ADAS technology innovation to achieve product differentiation. However, so far the positive impact of ADAS on automobile sales and automobile gross profit margin has been limited. The target price of US stocks has been reduced from US$11 to US$8.9. 

UBS estimates that Xpeng's current price-to-sales ratio in 2025 is 0.9 times, which is higher than NIO's 0.7 times and the ideal 0.7 times. The bank narrowed Xpeng's net loss forecast from 2024 to 2026 by 35% to 39%, mainly taking into account higher additional service revenue from Volkswagen and its high profit margin, as well as the fine-tuning of some models, including 2025 and 2026 A slight increase in annual sales volume was offset by lower average selling prices, as well as some slightly higher expenses. The target price for Xpeng's U.S. shares dropped slightly from $8.3 to $8.2 based on the updated revenue forecast.

Overall, although major banks have lowered their expectations for Xpeng Motors' stock price, they still maintain a buy rating. Therefore, Xpeng Motors' current stock price still has room to rise.