Chinese EV manufacturer Xpeng (NYSE:XPEV) has been performing well this year, sustained by what appears to be strong bullish sentiment. Monthly deliveries have improved notably for XPEV stock, with September deliveries coming at 15,310, up 81% year-over-year. In Q3, the company delivered 40,008 units, a 72% increase from Q2. Xpeng expanded its reach to European markets, providing the Xpeng G9 SUV to the Netherlands, Sweden, Denmark, and Norway.
Xpeng also formed a long-term partnership with Volkswagen Group to develop two Volkswagen-branded vehicles collaboratively. The company also ventured into the eVTOL sector, obtaining China’s first crewed eVTOL flight permit. XPEV stock has seen a 38% gain this year and holds a “B” rating in Portfolio Grader.
Here are some additional reasons investors may want to consider investing in XPEV stock over the long term.
Analysts Remain Bullish on XPEV Stock
Citi analyst Jeff Chung maintained a “buy” rating on XPEV as a top pick post-earnings. HSBC analyst Yuqian Ding initiated XPeng coverage with a “buy” and a $37 price target, praising XPeng’s advanced autonomous driving system for highway pilot driving.
On August 21, China-based EV manufacturer XPeng witnessed a pre-market surge of over 6% after BofA Securities upgraded the company from Neutral to Buy, with a raised price target from $16.30 to $22.00. BofA Securities analyst Ming Hsun Lee upgraded XPEV to “buy,” projecting profitability and positive free cash flows in 2024, potentially eliminating the need for further capital raising.
The analyst also anticipated the company’s shift from a net loss to profitability in 2025E, citing its partnership with Volkswagen (OTC:VWAGY), which validated XPeng’s autonomous driving capabilities and improved its supply-chain management.
BofA anticipated that XPeng would enhance its gross profit margin through an improved product mix and cost control. The company was also expected to grow sales volume with a new model pipeline from H2 2023 through 2025.
XPeng Innovations in 2024
Xpeng is intensifying its development of the X NGP (Navigation Guided Pilot) advanced driver assistance system (ADAS). Currently available in five Chinese cities, this ADAS will expand to 50 cities by December, enabling autonomous navigation for select models like P7, G9, P5, and G6.
Xpeng introduced an advanced version, City NGP, comparable to Tesla’s Full Self-Driving software. City NGP handles complex driving tasks such as intersections, obstacle avoidance, traffic signals, and turns. It utilizes an XNet deep learning neural network and a closed-loop AI and data system to expand its capabilities through learning from real-world driving experiences. The pilot program began in September last year and was officially launched this year with coverage on Beijing’s major ring roads and highways.
Xpeng shares a goal with Tesla for fully autonomous driving, but their approach differs in hardware. While Tesla relies on a vision-only system using cameras and neural network processing, Xpeng, like many in this field, uses a sensor suite, including cameras, radar, and LiDAR. During Xpeng’s October 24 Tech Day event, they introduced XBrain and XPlanner, components supporting spatiotemporal understanding and human-like learning and decision-making.
More Expansions in Europe
Xpeng extended its presence into European markets, including Germany, France, and the UK. Compliance with strict data protection regulations in Europe became a significant concern. Due to state subsidies, European markets are attracting Chinese EV manufacturers, potentially causing competition issues. This leads the EU to initiate an inquiry and consider tariffs to ensure fairness for European players.
Amid this uncertainty, Xpeng aimed to launch its NGP product in Europe by late 2024, pledging complete adherence to European regulations.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.