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Xpeng said it expects deliveries to rise in the second quarter as price cuts draw in more buyers to its electric vehicles in the competitive Chinese market, sending its U.S.-listed shares 6% higher in premarket trading on Tuesday.
The company said it expects to hand over between 29,000 and 32,000 vehicles, an increase of about 25% to 37.9% from the previous year.
The forecast signals that promotions and discounts as well as heavy investments in new technology, including artificial intelligence and self driving, were paying off.
Xpeng reported a gross margin of 12.9% in the first quarter, compared with 1.7% a year earlier.
Experts see discounts for Xpeng’s G6 and G9 electric SUVs boosting deliveries volume in the near term, but warn that new entrants such as Xiaomi will pressure Xpeng’s sales in the long run.
“The launch of Xiaomi SU7 didn’t have a big impact on Xpeng. However, with the launch of SU8, it will have a big impact on Xpeng’s SUV series,” said Third Bridge analyst Rosalie Chen.
Xpeng’s first-quarter revenue of 6.55 billion yuan (USD 905.21 million) beat the LSEG estimate of 6.17 billion yuan, while the company reported an adjusted loss per share of 1.45 yuan compared with estimates of 1.94 yuan.
To combat new challenges and boost its revenue, Xpeng is also looking to expand into overseas markets and capitalize on EV subsidies that many countries are offering as part of their efforts to cut fossil fuel consumption.
Xpeng already sells in the Netherlands, Norway and Germany and has plans to enter other European markets including France, Italy and the UK, but fears of the European Commission’s tariff imposition has made the company rethink its expansion plans.
