Despite the pandemic, some electric vehicle (EV) companies have been able to deliver, and among them is Xpeng (NASDAQ:XPEV). Although XPEV stock soared more than $70, it has been stalling lately.
If you thought that the EV market is ready for a slowdown, you are wrong. The industry is expanding across borders. EV companies have had a huge increase in investor interest over the past year.
Despite the increasing competition in the industry, XPeng has maintained its foothold. XPEV stock is trading closer to its August 2020 level of $22 and has the potential to double. It was recently trading around $27. The company is a major Chinese EV pure-play and has the potential to scale and deliver.
Let’s take a look at two catalysts that make XPEV stock a compelling buy.
Strong Delivery Numbers
XPeng delivered 5,147 EVs in April which is a 285% rise from the same quarter previous year. The company had delivered 5,102 units in March. It delivered 27,000 EVs in 2020.
The EV industry is battling chip shortage and despite its impact, XPeng delivered an impressive number of EVs. The year-to-date deliveries hit 18,487 units. This demonstrated a 413% increase year over year.
The company introduced the smart EV P5 sedan in April and the company expects to begin its deliveries in the fourth quarter. XPeng has a massive market to cater to and its product portfolio is growing.
The company may be battling a chip shortage for now but the long-term outlook is positive. It has the capacity to scale and increase production. This means the delivery numbers in the coming months will be interesting.
Strategic Alliances
XPeng is making the right moves in the industry. The company also has the support of the Chinese government and is working toward increasing capacity and improving service. Executives of the company inked an agreement with the Wuhan city officials to create a new manufacturing facility with an annual capacity of 100,000 units.
The company currently operates two plants in place in Zhaoqing. Both facilities combined have the capacity to build 200,000 cars a year. With the new Wuhan agreement, XPeng increases its production capacity to 300,000.
The third plant will give the company better control over production. And, the ability to increases vehicle output should support taking shares of XPEV stock higher.
Further, the company recently announced an alliance with Zhongsheng Group to provide EV sales and services to vehicle customers in China. The Zhongsheng Group has a well-established dealership network. This agreement will help strengthen XPeng’s growth. Terms of the partnership call for Zhongsheng to invest in and operate XPeng branded dealerships.
The Bottom Line on XPEV Stock
The EV market is growing across the globe and China has the highest adoption of EVs right now. In addition to expanding across China, XPeng has also marked its presence by selling vehicles in Norway. The next few years is expected to see a high demand for EVs. And, the company appears to have the resources and technology to respond to this demand.
XPeng is relatively small player in a vast industry, but the company enjoys great growth prospects. With an expansion in production capacity, the company should post higher delivery numbers. Sales have the potential to surpass the expectations of industry analysts.
Meanwhile, XPeng enjoys strong demand for its products. With the investment in its sales and service segment, the company is offering an end-to-end solution for its customers.
A positive sign for XPEV stock is that the future of the automotive industry is electric vehicles. XPeng is expected to report first-quarter results on May 13. If the company beats analysts’ expectations, XPEV stock will climb. The recent share-price dip is a great opportunity to add the stock to your portfolio for long-term growth.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.