Xpeng Shares Pop More Than 10% After Company Reveals Cost Cutting Plan At Shanghai Auto Show

Comments made by electric vehicle maker Xpeng, and its co-president Brian Gu, at the Shanghai International Auto Show have shares up around 10% in the Monday morning pre-market session. 

The company is based in Guangzhou and competes with Tesla, who has slashed prices several times this year, in China. 

Xpeng told reporters this week that it plans to cut its power train costs, including battery cells, by 25% – and that it also has ambitions of saving 50% on intelligent driving features by the end of 2024, Caixin/Bloomberg reported. Together, those two costs amount to more than half of Xpeng’s total EV costs. As the report notes, the company was forced to push its profitability guidance back to 2025 due to poor sales last year. 

They can implement the cuts due to cheaper battery materials and a plan to “reduce its use of laser-based radar, chips, sensors and cameras in its automated driving features”, the report says. It’s also going to be implementing a new design and manufacturing architecture. The first model using the new architecture will be a mid-sized sports utility vehicle that will compete directly with the Tesla Model Y. 

Gu said the company’s intelligent driving software is “a lot better suited for the Chinese market” than Tesla’s. 

Meanwhile the price wars between EV manufacturers look like they could only just be getting started. We noted only days ago that Tesla was slashing prices yet again – this time in Europe, Israel and Singapore. Tesla said it “cut prices in numerous European markets including Germany and France because of a scaling up and improvement in its production capacity”.

Prices in Germany for the Model 3 and Model Y were cut between 4.5% and 9.8%, marking the second price cut for the country this year, the report says. Singapore saw price cuts of between 4.3% and 5% and Israel saw price cuts of an astounding 25% for the base rear-wheel drive Model 3. 

Days prior to that we wrote about the fifth set of price cuts Tesla put into place in order to drive demand. Last week, the company cut the Model S and Model X vehicles by $5,000 to $84,990 and $94,990 and cut its Model 3 and Model Y vehicle by $1,000 and $2,000, lowering their base prices to $41,990 and $49,990.

It looks safe to say that the entire EV market is officially out of the starting gate and that the key to the industry now is going to be trying to gain position by discovering continued, miniscule cost efficiencies. Perhaps this is why the market is celebrating Xpeng’s recent disclosures so much this morning.