Xpeng, a key player in China's electric vehicle (EV) sector, recently offered a glimmer of hope to its investors by reporting a smaller-than-anticipated quarterly loss and projecting an uptick in vehicle deliveries for the first quarter. This news comes as a much-needed respite amidst concerns of a pricing skirmish that has cast a shadow over the auto industry in China, the world's largest car market.
The Guangzhou-based EV manufacturer, which has seen its U.S.-listed shares depreciate by nearly a quarter this year, surprised market watchers by posting an adjusted loss per share of 0.98 yuan for Q4 2023, against an anticipated 1.87 yuan loss. Co-president Hongdi Brian Gu attributed this positive shift to "cost reduction through technology and engineering" and improved operational efficiencies, which boosted the vehicle margin by an estimated 10 percentage points sequentially in the fourth quarter.
Amid an uncertain economic climate that has dampened consumer spending, Chinese EV firms, including Xpeng, have been compelled to slash costs aggressively. To remain competitive, Xpeng recently unveiled plans for a new, more affordable brand, with models ranging between 100,000 yuan and 150,000 yuan, targeting a fiercely contested market segment.
For the upcoming first quarter, Xpeng has set its delivery sights between 21,000 and 22,500 vehicles, marking a 15% to 23% year-over-year increase. This optimism is further buoyed by a reported fourth-quarter gross margin of 6.2%, a significant recovery from a negative 2.7% in the preceding quarter. The company anticipates first-quarter revenues to fall between 5.8 billion yuan and 6.2 billion yuan, signifying a 44% to 54% rise from the same period last year.
Despite missing fourth-quarter revenue estimates with 13.05 billion yuan, Xpeng recorded a remarkable revenue of 13.05 billion yuan in Q4 2023, a 153.9% increase from the same period in 2022, and a 53% rise from Q3 2023. This revenue spike was fueled by a record 60,158 vehicle deliveries, a testament to Xpeng's robust performance amid challenging market conditions.
Xpeng's journey back to positive gross margins, which stood at 6.2% in Q4, reversing two quarters of negative margins, highlights the company's resilience and adaptability. Moreover, the company's vehicle margin rebounded to 4.1% in the same period, showcasing a significant recovery from -6.1% in Q3.
The company's net loss also narrowed considerably to 1.35 billion yuan in Q4, down 42.9% year-on-year and 65.33% from the previous quarter, demonstrating a robust path to profitability. Additionally, Xpeng's robust financial standing, with cash reserves and equivalents totaling 45.7 billion yuan as of December 31, 2023, positions it well for future growth and expansion.
As Xpeng gears up for a promising Q1 with an expected delivery of up to 9,705 units in March alone, the company's strategic pivot towards cost efficiency, innovation, and market expansion underscores its potential to redefine the EV landscape. With a record-breaking performance and a forward-looking approach, Xpeng is poised to navigate the complexities of the global auto market, promising a brighter, more sustainable future.
