Q2 2023 Earnings Report for Xpeng (XPEV)

Shares of Xpeng were down over 6% in pre-market U.S. trade, as the Chinese electric carmaker continued to face challenges with a wider-than-expected loss in the second quarter.

Xpeng’s revenue, however, met expectations for the same period.

Here’s how the company performed in comparison to Refinitiv consensus estimates for the second quarter:

• Net loss: 2.8 billion yuan loss vs. 2.13 billion yuan loss expected
• Revenue: 5.06 billion Chinese yuan ($693.7 million) vs. 5.06 billion yuan expected, representing a 31% year-on-year decline.

The net loss was wider than the 2.7 billion yuan loss reported in the second quarter of last year.

The company is working to turn around its business this year, following a challenging 2022 in which its share price plummeted by over 80%.

Xpeng faced difficulties operating in a weak Chinese economy with reduced consumer spending, while also dealing with fierce competition in China from other emerging players like Nio and Li Auto, as well as industry giants BYD and Tesla.

Xpeng previously announced that it delivered 23,205 cars in the second quarter of 2023, showing a 27% increase from the previous quarter and surpassing its own forecast. In July, the Guangzhou-based company delivered 11,008 vehicles, marking a 28% month-on-month growth.

This is the sixth consecutive month of delivery growth, indicating early signs of recovery, at least in terms of deliveries.

Xpeng has also undergone significant management restructuring and overhaul in recent months to fuel growth.

Rising deliveries have instilled some confidence in investors that a turnaround is underway, resulting in Xpeng’s stock increasing by over 50% this year.

The automaker has also secured support from German car giant Volkswagen, which invested $700 million in Xpeng last month, acquiring a 4.99% stake. The two companies will collaborate on the development of two electric vehicles for the Chinese market.

However, competition continues to intensify as a price war unfolds in the world’s second-largest economy. Tesla recently reduced the prices of its Model Y and Model S cars and provided discounts on existing inventory of the Model S and Model X in China.