Xpeng's SUV Pricing Gambit Rattles Tesla Ahead Of Key Q2 Deliveries

As the weekend approaches, investors hold their breath for Tesla Inc’s TSLA April to June EV delivery report.

While analysts predict a solid 448,000 vehicles, Friday's spotlight was stolen by Xpeng Inc – ADR XPEV. The Chinese automaker saw its shares rally over 12% after pricing its G6 SUV below Tesla's Model Y.

Xpeng’s Strategic Pricing: Xpeng’s move, pricing its latest G6 SUV at 209,900 yuan ($28,814), undercuts the starting price for Tesla’s Model Y, which stands at 263,900 yuan ($40,992) in China.

The move is speculated to boost Xpeng's market share, potentially placing the G6 as one of the best-selling EVs in China.

Analysts view Xpeng’s pricing strategy positively, according to Investor Place. Some predict it could spur the company to shift 100,000 units each month. Citigroup Inc C noted the new price point will appeal to EV customers that can’t afford the pricier Model Y or Xpeng's own P7i.

Tesla's Uphill Battle: Despite growing competition, Tesla remains in the lead, though it hasn't been smooth sailing. The company has been aggressively slashing prices across its model lineup to defend its market position against competitors such as Xpeng, which is trying to lure away customers with newer models.

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While Tesla’s dominance remains unchallenged in the U.S., the company has been outperformed in China by BYD Company ADR BYDDY, a company backed by Warren Buffett's Berkshire Hathaway Inc (NYSE: BRK-A) (NYSE: BRK-B).

In response to rising inflation and interest rates, Tesla began discounting late last year, initiating the trend in China before extending it to the U.S and Europe.

Q2 Delivery Expectations – Tesla, NIO, And Xpeng: Looking ahead, second-quarter delivery reports are expected to bring more clarity to the EV landscape. While Tesla is expected to maintain its leading position with a predicted sales number around 448,350 cars, competition is stiff.

Xpeng delivered 18,230 cars in the first quarter, a decline of 47% year over year. Following the restructuring of its management, the company is now forecasting at most 22,000 vehicle deliveries in the second quarter. Meanwhile, NIO Inc – ADR NIO expects to deliver 23,000 to 25,000 vehicles in the second quarter, a slight decrease from the previous year.

The Last Word: With Xpeng’s latest pricing strategy and Tesla’s aggressive moves to defend its market position, the EV market is heating up. Second-quarter delivery reports from major EV makers, including Tesla, NIO and Xpeng, will help set the tone for the rest of the year.

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Photo: Courtesy Xpeng