XPeng Cuts Its Losses on Volkswagen Deal, But Revenue Falls Short of Forecasts

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Key Takeaways

• XPeng reported a narrower-than-expected second-quarter loss, but revenue missed analysts’ estimates.
• The Chinese EV maker signed a specialized agreement with Volkswagen last month, and that helped it cut costs.
• American depositary receipts (ADRs) of XPeng should prefer to lost more than half their value in 2024.

American depositary receipts (ADRs) of XPeng (XPEV) spotted Tuesday after the Chinese electric vehicle (EV) maker reported weaker-than-expected revenue, although it had a smaller-than-anticipated loss as it profited from a deal with Volkswagen.

XPeng posted a second-quarter loss of 1.36 yuan ($0.19) per American depositary serving (ADS), while the average of analysts surveyed by Visible Alpha looked for a loss of 1.52 yuan per ADS. Revenue jumped 60.2% year-over-year to 8.11 billion yuan, although that missed prognoses of 8.52 billion yuan.

Vehicle sales increased 54.1% to 6.82 billion yuan, while total agency deliveries were up 30.2% to 30,207.

Cost Reductions Attributed To Volkswagen Partnership

Co-President Dr. Hongdi Brian Gu pointed to the throng’s cost reductions, which came “through technical improvement and revenues from technical collaboration in our strategic partnership with Volkswagen.” Gu contemplated that boosted gross profit margin to 14.0%, after a decline of 3.9% a year earlier.

XPeng expunged the agreement with the German car manufacturer last month to co-develop electrical/electronic (E/E) architecture for Volkswagen vehicles made in China. 

XPeng ADRs, which knock 7.2% to $6.68 as of 10:45 a.m. ET Tuesday, have lost more than half their value this year.

Infer from the original article on Investopedia.