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Xpeng's Meteoric Rise: Why Analysts Say the EV Surge Is Just Getting Started

Overview
Xpeng, the Guangzhou-based electric vehicle (EV) manufacturer, is dominating headlines after its Hong Kong-listed shares surged over 10% on Thursday. Year-to-date, the stock has climbed an impressive 78%, and analysts believe there’s still substantial room for growth. Strong delivery numbers, an optimistic revenue outlook, and upcoming product launches have sparked renewed investor enthusiasm.

Earnings Blow Past Expectations

In its latest earnings release on Wednesday, Xpeng reported a first-quarter revenue more than doubling year-on-year, buoyed by a dramatic increase in vehicle deliveries. The company delivered 94,008 vehicles in Q1 — a staggering 331% increase from the same period in 2023, making it one of the fastest-growing players in China’s EV sector.

Xpeng’s net loss narrowed significantly to 664 million yuan ($91.7 million) from 1.37 billion yuan in Q1 2023, while its gross margin rose to 15.6%, up from 12.9% a year earlier.

The strong financial performance caused its U.S.-listed shares to surge 13%, closing at $22.25 on Wednesday, and bringing its year-to-date gain to over 88%.

Analysts Bullish on Future Profitability

Several brokerages have raised their outlook on Xpeng, citing improved margins, robust delivery momentum, and a growing product pipeline.

UOB Kay Hian forecasts the company will reach breakeven in Q4 2025 and turn profitable in Q1 2026. The firm reiterated its “buy” rating and set a target price of 150 HKD (up from 85.5 HKD), which represents a 76% upside from current levels.

The brokerage added, “Gross margins will steadily improve in 2025, supported by rising sales of premium models and operational efficiencies.”

Driving Growth: New Models and Autonomous Tech

Xpeng’s growth is fueled not only by scale but by innovation. The automaker launched the mass-market MONA brand in August 2023 and refreshed its X9 flagship model with cutting-edge autonomous driving features.

Most notably, the company plans to begin mass production of Level 3 autonomous vehicles in China by the end of 2025, placing it at the forefront of smart EV development.

Key upcoming models include:

• MONA M03 Max
• Updated versions of the G7 and P7

These are expected to serve as critical sales catalysts in the latter half of 2024.

Strong Q2 Forecast and Market Position

Xpeng projects Q2 revenue between 17.5 billion and 18.7 billion yuan, exceeding the 17.2 billion yuan consensus forecast compiled by LSEG. Vehicle deliveries are expected to hit as high as 108,000 units, more than doubling from Q2 2023.

According to Nomura analyst Joel Ying, these upcoming model launches represent key drivers for continued stock momentum. Ying has set a target price of $30 for Xpeng’s U.S.-listed shares.

Competition Heating Up

Xpeng isn’t the only EV stock on fire:

• BYD has rallied 74% in Hong Kong year-to-date
• Li Auto is up 22%
• NIO, however, is down 11%

Still, Xpeng’s current valuation is far from its all-time high of $72 per share, reached in November 2020, suggesting potential for a further rebound if execution remains strong.

Investor Takeaway

Xpeng’s story in 2024 is one of resilience, innovation, and rapid expansion. While the stock has already posted massive gains, its aggressive product rollout, improving financials, and the push toward autonomy paint a promising picture.

If Xpeng maintains its momentum and hits its profitability targets, the EV firm could not only reclaim past highs but set new records in both the Hong Kong and U.S. markets.

For investors looking to ride the EV wave, Xpeng remains a name to watch closely.

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