EV - JPMorgan Downgrades XPeng Stock Due To Declining Growth and Price Risk

January, 11 2023 11:57 AM Eaton Vance Corporation

XPeng Stock ( NYSE:XPEV )

JPMorgan warned on Wednesday that the reopening of trade for the Chinese car industry is progressing quickly and may lose momentum in the near future.

The analyst Nick Lai and his colleagues are maintaining their optimistic outlook on the new energy vehicle industry for this year , despite their prediction that the growth rate would slow from around 80% in the previous year to 20% in 2023.

Although XPeng ( NYSE:XPEV ) could profit from the upward trend in general, pricing competition in the mass market is known to be particularly severe, as seen by Tesla’s recent price decreases for the Model 3 and the Model Y.

JPMorgan has lowered its sales projections for XPEV due to the competitive pricing environment.

“According to our most recent projections, the firm will achieve volume growth of 28% this year, reaching 155k units (as opposed to the earlier projection of 210k units), and will increase to 121k units in 2022. On the margin front, taking into account that Xpeng and the majority of OEMs will absorb NEV subsidy shortfalls and share part of this burden with suppliers rather than passing it on to customers, the margin hit could be high, especially in 1Q23, before sequential improvement from 2Q23, driven by volume contribution from new models (for example, an upgraded version of P7 sedan and new B-segment SUV scheduled to launch in 2Q23). This improvement will be driven by volume contribution from new models such as”

The most recent projection from JPMorgan reveals that XPEV sales for 2022-2023 will come in around -13% to -15% below the consensus levels,...

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Company Name:	Eaton Vance Corporation
Stock Symbol:	EV
Market:	NYSE