Guangzhou-based Xpeng is one of several Chinese electric car companies that have begun to expand overseas.
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BEIJING – As a sign that Chinese drivers are still willing to buy electric, Xpeng said demand for its cars has gotten rid of the impact of rising prices.
From Nio to Tesla, Chinese electric cars have raised prices over the past few months, citing the impact of rising prices on goods such as battery components.
After rising prices by several thousand US dollars in March, Xpeng noticed a resumption of demand in regions unaffected by recent Covid blockades in China, said Brian Gu, vice chairman and president, in an exclusive interview with CNBC’s “Squawk Box” on Tuesday. . Asia “.
With this ability to pass on to consumers the rising cost of raw materials, Gu said the company can “continue our innovation and investment.”
Last week, Nio CEO William Lee told CNBC that his company’s biggest problem was supply chain disruptions rather than demand for electric vehicles in China.
Car sales in April fell 35.5% year-on-year, but new energy vehicles, which include battery-powered electric cars, rose 78.4%, according to the China Passenger Car Association.
Covid’s control continued to affect Xpeng, whose shares fell 5.5% in overnight trading in the U.S. after giving second-quarter instructions below expectations.
The electric car company said it expects second-quarter total revenue to nearly double from the same period last year, ranging from 6.8 billion yuan ($ 1.02 billion) to 7.5 billion yuan. But that was below FactSet’s previous estimates, which ranged from 7.08 billion yuan to 9.02 billion yuan.
In the first quarter, Xpeng did report a smaller-than-expected loss of 1.8 yuan per share, compared to FactSet’s estimated loss of 1.9 yuan per share. Revenue of 7.45 billion yuan also exceeded FactSet’s expectations by 7.39 billion yuan.
Covid, the shortage of chips – all this is reflected
Gu told CNBC that “the second quarter will be difficult” because of Covid’s exposure, especially in April.
“There are no operations as such in Shanghai and some surrounding areas,” he said on Tuesday.
The southeastern metropolis of Shanghai has been battling Covid since March, and citywide blockades are approaching a two-month mark. In mid-April, the city began prioritizing some businesses – especially in the automotive sector – to resume production under the bubble.
Shanghai also plans to resume normal life and work by mid-June. But last weekend a downtown area banned residents from leaving their residential complexes again, illustrating the problem of a speedy recovery.
Earlier, Gu said during a revenue call that could be accessed through Refinitiv Eikon that Covid’s blockade had affected “important markets” for Xpeng, and that he expected a strong boost of orders as those areas eased restrictions.
In addition to Covid controls, CEO Xiaoping He added during the call that the problem is the constant lack of chips.
“If there was no revival of COVID in China now, I think most of our counterparts or all the new EV manufacturers in China would now actually be limited by the capacity or supply of the chip as a whole,” he said.