Chinese buyers not living in lockdown shake off EV price hikes

Guangzhou-based Xpeng is one of many Chinese electric car companies that have started expanding overseas.

Characteristic China | Edition of the future | Getty Images

BEIJING — In a sign that Chinese drivers are still willing to buy power, start-up Xpeng said demand for its cars had shrugged off the impact of price hikes.

From Nio to Tesla, electric car makers in China have hiked prices in recent months, citing the impact of rising costs for raw materials such as battery components.

After raising prices by a few thousand US dollars in March, Xpeng has seen demand pick up in regions unaffected by the latest Covid lockdowns in China, Vice Chairman and President Brian Gu said in a statement on Tuesday. Exclusive interview on CNBC’s “Squawk Box.” Asia.”

With this ability to pass on rising raw material costs to consumers, Gu said the company could then “continue innovation and investment.”

Nio CEO William Li told CNBC last week that his company’s biggest problem was supply chain disruptions, not demand for electric cars in China.

Passenger car sales fell 35.5% year-on-year in April, but new energy vehicles – which include battery-electric cars – saw sales rise 78.4%, according to the China Passenger Car Association. .

Covid checks further weighed on Xpeng, whose shares fell 5.5% in U.S. trading overnight after giving second-quarter guidance below expectations.

The electric car company said it expects total revenue to nearly double in the second quarter from a year ago, to between 6.8 billion yuan ($1.02 billion ) and 7.5 billion yuan. But that was lower than previous estimates from FactSet ranging from 7.08 billion yuan to 9.02 billion yuan.

In the first quarter, Xpeng reported a lower-than-expected loss of 1.8 yuan per share, compared to a FactSet-estimated loss of 1.9 yuan per share. Revenue of 7.45 billion yuan also beat FactSet’s expectations for 7.39 billion yuan.

Covid, chip shortage is taking its toll

Gu told CNBC “the second quarter will be difficult” due to the impact of Covid, particularly in April.

“There are no operations to speak of in the city of Shanghai and some of the surrounding areas,” he said on Tuesday.

The southeastern metropolis of Shanghai has been battling Covid since March, with citywide lockdowns now approaching the two-month mark. In mid-April, the city began prioritizing certain companies — particularly in the automotive sector — to resume production in a bubble.

Shanghai also plans to restore normal life and work by mid-June. But over the weekend, a downtown neighborhood banned residents from leaving their apartment complexes again, illustrating the challenges of reopening quickly.

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Gu said earlier on an earnings call, accessible via Refinitiv Eikon, that the Covid lockdowns had affected “important markets” for Xpeng, and that he expected strong order momentum as those areas ease the restrictions.

In addition to the Covid checks, the company’s CEO, Xiaopeng He, added on the call that the ongoing chip shortage was an issue.

“If there were no resurgence of COVID in China right now, I think the majority of our peers or all of the new EV manufacturers in China right now will actually be limited by capacity or chip supply in general,” he said. mentioned.

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