What’s Going On Here?Chinese EV maker Xpeng reported a worse-than-expected loss on Tuesday. What Does This Mean?Chinese lockdowns hampered Xpeng’s production last quarter, but it didn’t show in its results: the EV maker still managed to deliver over 34,000 cars, almost twice as many as it did at the same time last year. Layer in the price hike that Xpeng pulled off earlier this year, and its revenue doubled too. So it’s a shame the same can’t be said for its profits: the eye-watering cost of raw materials made short work of that mounting revenue, and sent the carmaker’s gross profit margins lower than the quarter before. That set the scene for a worse-than-expected quarterly loss of around $400 million, more than double Xpeng’s loss from the year before. And after it posted a disappointing forecast for deliveries this quarter, not even the promise of new model launches for budget-conscious customers could win investors over: they sent Xpeng’s stock down 10%. Why Should I Care?The bigger picture: Priorities over profit.
Xpeng might’ve struggled last quarter, but Ford still has no doubt EVs are the way forward. The US carmaker has pledged to invest $50 billion into the space by 2026, and this week announced it’ll cut 3,000 jobs to help it raise some of that cash. That could be a risky move: most of those jobs will come from Ford’s traditional engine division, which the carmaker hopes will be the “profit and cash engine” for the rest of the company. But if that slims down too much, there might not be enough cash to go around.
Zooming out: Follow the leader.
Tesla’s still king of the electric jungle, but it might be dethroned soon: Hyundai – including its affiliate Kia – nabbed the second-top spot in the US by sales volume this year, and its prices and markets are starting to heavily resemble the OG’s. Analysts have seen this pattern before in a different industry: some say it’s similar to when Samsung overtook Apple in worldwide phone sales only two years after it launched its higher-priced smartphones. | 