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The XPeng P5 sedan is an electric vehicle priced as low as $ 25,000.
Business Wire
Electric vehicles hit another milestone on Wednesday. There is a sophisticated EV equipped with lidar that can be purchased for less than $ 25,000. The vehicle is not from the EV leader
Tesla,
But.
Chinese manufacturer of electric vehicles
XPeng
(ticker: XPEV) launched its third production model, the P5 sedan. A lidar-equipped vehicle that starts at less than 160.00 Chinese renminbi, or less than $ 25,000.
There are low-priced electric vehicles on the market, but not with advanced driver assistance systems enabled to deal with and not with the P5 range.
Lidar is essentially a laser-based radar and helps enable autonomous driving functions. XPeng quickly points out that its driver assistance functions, like all others available in passenger vehicles purchased by consumers today, still require drivers to always be alert on the road. Autonomous driving systems can do a lot, even make unprotected left turns on city streets, but they are not yet autonomous.
Lidar is unusual in a car for consumers. It is an impressive feature for low cost electric vehicles. In addition, the P5 sedan will go approximately 290 to 375 miles on a single charge, depending on the configuration purchased. This also compares favorably with more expensive electric vehicles.
The most affordable electric vehicles open up a new market segment for the battery-powered electric car industry. Only a few segments of the auto universe have competitive vehicles for sale. Now light trucks arrive. Rivian is expected to begin delivering its pickup in 2021. And a Tesla Model 3, as well as a Chevy Bolt, two popular EV models, can sell for between $ 40,000 and $ 60,000. Both are more expensive than Honda Civic or Toyota Corolla type vehicles. Tesla is working on a model at a lower price, starting at about $ 25,000 as well. Investors expect this model to arrive by 2023.
Despite the low purchase price of the P5, XPeng chairman Brian Gu says the profitability of the P5 should lie between the less profitable G3 SUV and the more profitable P7 sedan. XPeng’s gross profit margins from car sales have been positive over the past four quarters, reaching approximately 11% in the second quarter of 2021. Vehicle profit margins have improved as volumes and after the company introduced the P7 sedan.
However, the actions do not react too positively to the ad. Shares fell 3.7% on Wednesday in trading. He
S&P 500
increases by 0.5%, while the
Dow Jones industrial average
increases by about 0.3%. Shares of Tesla (TSLA) increase by around 0.6%
The P5 looks like a winning product, so it’s likely that the launch disappointment isn’t responsible for the stock price weakness. Other aspects that emerged at the company’s launch conference could be related to investors. Two areas addressed by Gu, in response to questions, were the number of electric vehicle companies in China and the competition from foreign competitors.
There are hundreds of electric vehicle companies in China and the government wants fewer. Still, companies like XPeng are the biggest and most established players. It will be up to them and other traditional car manufacturers to eliminate excess capacity. This could be an oversupply, but XPeng could have a chance to get a manufacturing capability at a discount.
Gu also said he believes foreign carmakers could be successful selling electric vehicles in China. This could also upset investors, but Gu noted that his company has significant potential that offers products at attractive prices for Chinese buyers.
China is the world’s largest market for new vehicles and electric vehicles. About 10% of all new cars sold in China this year have been all-electric or plug-in hybrids.
Shares of XPeng have fallen about 13% to date, behind the S&P 500’s 19% gain. However, shares have risen about 77% in the last twelve months. The S&P is up about 31% over the same period.
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