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Bank of America reiterated a Neutral rating and $12.40 price target on Xpeng (NYSE:XPEV) after hosting a conference call with the Chinese EV maker. During the call, management discussed the company’s recent business update and 2023 business outlook. Management expects NEV industry sales to grow 30% YoY in 2023, and it targets outgrowing the industry, driven by its solid new models pipeline.
Xpeng plans to release an updated version of its P7 in March 2023, while also unveiling a B-class SUV – the first model based on the S platform, with a price range of RMB200-300k, in mid-2023 and start delivery in 3Q23. The company will also launch more new models based on the S platform, with a price range of RMB150-250k, in 2024-25 to boost sales growth; and launch a C-class 6-/7-seater with an average price over RMB350k, based on the H platform (aimed at family users).
BofA analysts wrote in a note, “According to management, XPeng will take effective measures to control cost in 2023 for future development amid intensifying competition. It plans to keep R&D expenses stable at c.RMB5.5bn in 2023, thanks to 1) lower R&D cost for new models based on platforms and 2) focus on smart EV development. XPeng aims to lower its SG&A expense-to-sales ratio in 2023 by slowing the pace of new store expansion and improving store efficiency. Management guides 2023 capex to decline to RMB2.0-3.0bn from RMb4.0-4.5bn in 2022, as XPeng delays new capacity expansions given that Guangzhou and Zhaoqing plants’ current production capacity is able to reach 200k units per annum on a single shift.”
Regarding Tesla’s (NASDAQ:TSLA) recent price cut, management sees weaker orders intake, as customers choose to wait and see amid the weak macro environment, but the impact is within the company’s expectation.
Shares of XPEV are down 0.40% in pre-market trading on Wednesday.
