Strong EV Sales Driving Investment in XPeng

The electric vehicle revolution is here, but not all automakers in this space deserve equal attention. Among the most promising contenders is China’s XPeng (XPEV).

What’s different about XPeng’s electric vehicles? This company’s vehicles aren’t just “smart”: they are integrated with advanced Internet, artificial intelligence (AI), and autonomous driving technologies. Moreover, 43% of XPeng’s 3,676 employees work in research-and-development-related areas. (See XPeng stock chart on TipRanks)

In other words, these are advanced vehicles based on state-of-the-art technology. As has been proven by companies such as Apple (AAPL), top tech can lead to outstanding sales results.

A Quick Look at XPEV Stock

XPEV stock peaked at a 52-week high of $74.49 on Nov. 23 of last year. Could it get back there again?

It’s certainly possible, though its investors needed to have strong stomachs when XPEV stock bottomed out at $23 and change in May of this year. The stock now appears to be turning a corner, as it was already back up to $42.16 on June 25, 2021.

Therefore, the bulls appear to be gaining momentum, yet there’s still plenty of room for XPEV stock to run. It’s a great setup.

A Month to Remember

Without a doubt, XPeng’s stakeholders waited and hoped for strong data in May. Thankfully, the numbers were absolutely outstanding.

For the month of May, XPeng delivered 5,686 vehicles, which represents a 483% year-over-year increase. It’s also a 10% improvement over the prior month. Those May deliveries included 3,797 P7’s (XPeng’s smart sports sedan) and 1,889 G3’s (the company’s smart compact SUV). With that, XPeng reported that it had delivered 24,173 vehicles year-to-date, which signifies an amazing 427% year-over-year increase.

Prior to the release of that data, XPeng celebrated a tremendous first quarter of 2021. Regarding that, XPeng Vice Chairman and President Brian Gu had some statistics to share.

“Thanks to our record-breaking deliveries in this quarter, our revenues reached RMB2,950.9 million in Q1, representing year-over-year growth of 616.1%. We also witnessed further improvement in our profitability. In particular, our gross margin continued the upward trend and reached 11.2% in the quarter,” Gu stated.

XPeng A Leader in Lidar

Even beyond the sales numbers, investors can get excited about Xpeng’s future-facing automotive technology.

One notable tech innovation is XPeng’s lidar-equipped P5. Lidar is short for light detection and ranging, and it’s the laser-guided technology that self-driving cars often use. According to the company, the XPeng P5 is the world’s first production smart electric vehicle that’s equipped with automotive-grade lidar technology.

Reportedly, the XPeng P5 will bring Navigation Guided Pilot capabilities to city roads for the first time in a production vehicle. This will be powered by the company’s in-house-developed autonomous driving system known as XPILOT 3.5.

You’d be hard-pressed to find more robust autonomous driving system than XPILOT 3.5. Its comprises 32 perception sensors, including 2 lidar units, 12 ultrasonic sensors, 5 millimeter-wave radars, and 13 high-resolution cameras.

Chairman and CEO He Xiaopeng emphasized that the P5 is top-of-the-line for the company as well as for the broader industry, saying, “Each new XPeng model aims for a new high in technology, and the P5 is our most advanced and technically ambitious model yet.”

Wall Street Weighs In

According to TipRanks’ analyst rating consensus, XPEV is a Strong Buy, based on 5 unanimous Buy ratings. The average XPeng analyst price target is $49.92, implying 18.4% upside potential.

The Takeaway

Clearly, XPeng is highly ambitious and takes its automotive technology seriously. Added to the fact that XPEV stock has room to the upside, that means a long position could generate substantial returns in 2021.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.