Chinese EV Maker XPeng Reports Mixed Q3, Gross Margin Turns Positive

Shares of Xpeng Inc – ADR XPEV were advancing Thursday following the release of the Chinese electric vehicle manufacturer's third-quarter results.

What Happened: XPeng reported third-quarter revenue of $293.1 million, up 342.5% year-over-year and 236.9% sequentially. This exceeded the consensus estimate of $287.17 million.

About $279.6 million of the total revenue came from vehicle sales, which increased 376% year-over-year and 250.8% sequentially.

The non-GAAP net loss came in at 864.9 million yuan, or $127.4 million, compared to the year-ago loss of 750.8 million yuan. In the second quarter, the company reported a non-GAAP loss of 769.5 million yuan.

On a per share basis, the non-GAAP net loss was 2.16 yuan or 32 cents, which was wider than the 18-cent-per-share loss estimated by analysts.

"Our commitment to innovation through end-to-end in-house R&D and data-driven capabilities is the cornerstone of our business. This will not only keep XPeng at the forefront of the technologies of Smart EV but also position us well in capturing the significant growth potential in the Smart EV industry," said He Xiaopeng, chairman and CEO of XPeng.

Related Link: Why BofA Is Bullish On Chinese EV Manufacturer Xpeng

The gross margin improved from negative 10.1% to positive 4.6% year-over year, and from negative 2.7% in the second quarter of 2020.

"Achieving our first positive gross profit also underscores our growth and our ability to realize economies of scale," said XPeng President Brian Gu.

Vehicle deliveries increased 265.8% year-over-year and 165.7% sequentially to 8,579, with the P7 clocking in sales of 6,210 after its commercial launch in late June.

As of Sept. 30, the company had cash and cash equivalents, restricted cash and short-term investments of RMB19,998.4 million ($2.95 billion), comprising primarily net proceeds from its IPO in August and Series C+ round financing.

Why It's Important: XPeng is in the sweet spot of a burgeoning EV market in China.

Despite the competition, XPeng has carved a niche for itself with its focus on technology and price competitiveness.

The quarterly results vouch for the company's standing in the hot-and-happening Chinese EV market.

What's Next: For the fourth quarter, the company guided to vehicle deliveries of 10,000 units, representing a 210.8% year-over-year increase, and total revenue of 2.2 billion yuan (roughly $332.14 million). This compares to the consensus estimate of $358.31 million.

XPEV Price Action: In premarket trading Thursday, XPeng shares were advancing 6.08% to $35.57.

Related Link: Tesla Vs. Nio Vs. Xpeng: A Look At The Chinese Electric Vehicle Market

Photo courtesy of XPeng.