Shares for Chinese electric vehicle maker Xpeng Motors climbed more than 40% in its $1.5 billion debut on the New York Stock Exchange on Thursday.
Why it matters: Xpeng’s wild first day of trading reflects a growing demand for EV stocks, as investors become increasingly bullish on Chinese new energy vehicles. However, some analysts warned about the potential for an EV bubble.
- Xpeng’s first sedan, the P7, will be facing tougher competition from Tesla’s China-made Model 3, Bernstein analysts wrote earlier this week in a report. The US EV giant will reportedly release a cheaper version with LFP batteries this year.
- Meanwhile, JL Warren Capital questioned the competitiveness of the P7 compared with the Model 3, given their similar price ranges and the effects of their ongoing legal dispute over intellectual property theft.
Details: The six-year-old EV maker now has a market capitalization of nearly $15 billion, nearing the size of a number of giant Chinese automakers, including Toyota’s Chinese partner GAC Group and BMW’s partner, Great Wall Motor.
- The offering of 99.7 million American depositary shares was priced at $15 per share, higher than the target price range of $11 to $13. The stock opened at $23.1 and rose as high as $25. It closed up 41.5% at $21.22 on Thursday.
- There has been strong appetite for Chinese electric vehicle businesses in the US stock market, helped by Tesla’s strong performance, (our translation) said Wu Tianhua, founder and CEO of Chinese online brokerage firm Tiger Brokers, an underwriter for Xpeng’s IPO.
- Xpeng, backed by Chinese tech giants Alibaba and Xiaomi, followed domestic peers Nio and Li Auto in listing in the US. The three companies now enjoy a market cap range between $15 billion and $23 billion.
- Nio has so far delivered a cumulative 49,615 vehicles as of July over a two-year period. Xpeng began mass deliveries in February 2019 and has delivered a total of 20,707 units, and Li Auto has cumulative deliveries of 12,989 since December. All three are still operating at a loss.
Context: Unlike its counterparts, Xpeng lays claim to a strong capability in developing self-driving technology, positioning its automated driving system Xpilot head-to-head with Tesla’s Autopilot.
- In the latest IPO filing, the company said it is planning to roll out early next year the Xpilot 3.0 version with functions for autonomous lane changing on highways. However, small-scale testing will begin among customers as early as October, according to multiple people familiar with the matter.
- P7 currently has a post-subsidy price range of between RMB 229,900 and RMB 349,900 ($33,470 to $50,945). The standard-range China-made Model 3 is priced at RMB 271,550 after purchase subsidies.
- Tesla in March 2019 filed a lawsuit against a Xpeng employee for allegedly stealing trade secrets related to its automated driver assistance software Autopilot. Xpeng Motors is a third party in the suit.