XPeng, the Chinese electric-car maker based in Guangzhou, announced its financial results for the third quarter. While vehicle sales saw a significant jump, the company reported widened losses. However, XPeng remains optimistic and forecasts a near-doubling of revenue in the final quarter of the year.
Strong Fourth Quarter Outlook
XPeng expects to deliver more than 59,000 vehicles in the fourth quarter, which is over double the amount sold during the same period last year. The company also projects an 86%-99% rise in total revenue, with estimates ranging between 12.7 billion yuan ($1.75 billion) and CNY13.6 billion.
Q3 Revenue Increase and Vehicle Deliveries
Total revenue for Q3 increased by 25% compared to the previous year, reaching CNY8.53 billion. While this fell short of the median forecast of CNY8.88 billion, XPeng delivered over 40,000 vehicles during the quarter, marking a 72% increase from the preceding quarter.
Factors Contributing to Net Loss
XPeng reported a widened net loss of CNY3.89 billion for Q3, primarily due to higher costs. The company experienced a 48% rise in cost of sales, attributed to increased deliveries and inventory write-downs resulting from lower-than-expected demand for one model amidst new launches. Additionally, a non-cash, fair-value loss of CNY971.8 million related to the issuance of shares impacted the bottom line.
Positive Outlook for the Future
Despite the current losses, XPeng's Chief Executive, He Xiaopeng, is confident that changes implemented this year will yield positive results in 2024. Co-President Hongdi Brian Gu also stated that the company expects stronger free cash flow in Q4, marking the beginning of their journey towards long-term scalable profitability.