Xpeng (NYSE:XPEV) shares drifted significantly lower during 2022. So far in 2023, however, XPEV stock has held steady, especially over the past month.

Admittedly, this makes sense. Back in April, the China-based electric vehicle maker made a big announcement. This announcement could pave the way for a turnaround.

But while the story with Xpeng might change for the better, don’t assume that means you need to rush into a position today. For one, the first signs that a turnaround is on the verge of taking shape have not appeared just yet.

Much like with one of its main Chinese EV peers, recent results continue to be disappointing. There’s little to suggest that improvements to operating performance are imminent.

With this, let’s take a closer look, and see why “wait and see” is the best course of action for now.

Why Bullishness is Slowly Returning

Although Xpeng stock hasn’t exactly bounced back, investor sentiment for shares has lately been slowing returning to bullish. A big reason for this has been because of the “big announcement” I hinted at above.

So, what is this “big announcement” for XPEV stock? That would be the company’s announced plans to use a new technology platform for future production models.

Dubbing it Smart Electric Platform Architecture 2.0, per management, this “scalable smart EV architecture” is a major positive for the company.

For starters, SEPA 2.0 will help to improve research and development (or R&D) efficiency. This could reduce Xpeng’s R&D cycle by 20%. Management is confident that this platform will allow other cost savings. Lower production costs would of course go a long way in helping to turn this money-losing firm into a much larger, consistent profitable enterprise.

This platform may also help to improve the appeal of/demand for Xpeng’s vehicle models, making it a more formidable competitor. Still, while this announcement is a step in the right direction, keep in mind that it’s unclear whether this new platform will help to spur a turnaround.

Disappointment Persists

The uncertainty surrounding the bull case for XPEV stock is very much like the uncertainty surrounding another high-profile Chinese EV stock, Nio (NYSE:NIO).

I have been critical of the Nio bull case. Nio’s management (and the stock’s biggest supporters) argue that a growth resurgence is just around the corner.

Namely, due to a big production ramp-up, and the launch of new vehicle models. To skeptics such as myself, however, Nio’s underwhelming delivery numbers call into question the prospect of massive growth re-acceleration by year’s end. Perhaps it is a similar situation with Xpeng.

That is, with the launch of SEPA 2.0, plus its own series of recent and upcoming vehicle launches (the P7i and the G6), Xpeng could end up reporting materially stronger results a few quarters from now.

At the same time, though, Xpeng is also (like Nio) continuing to report disappointing delivery numbers.

For instance, in April 2023, Xpeng delivered 7,079 vehicles. This represented only a slight increase in deliveries compared to March 2023 (7,002 vehicles). Xpeng’s monthly delivery also remains down massively compared to the prior year’s month (when 9,002 vehicles were delivered).

Bottom Line

Sure, just because Xpeng has hit a rough patch performance-wise, the EV maker is doomed to continue reporting underwhelming operating results.

The aforementioned technological innovations may just well be a stronger way to take competition from competitors like Tesla, compared to Nio’s much-touted “battery swap” feature.

Still, if you want to go contrarian, and buy ahead of Xpeng ahead of a turnaround, chances are you’ll have plenty of time to do so. In fact, XPEV could soon fall to a more opportune entry point.

Later this month, Xpeng releases its latest quarterly results. Given the delivery number, it is doubtful that the company’s latest financial will elicit a positive reaction from investors.

There’s no need to rush into a position, so sit on the sidelines with XPEV stock.

XPEV stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.