It was apparently last year but having such little history, in a nascent market, the data points couldn't be trusted, yet. However I took a large position in Xpev over NIO for a few reasons.
1) They are not competitors, from a price point perspective. Xpev makes a car by my estimate 90% as good as NIOs and 80% as good as Tesla, but they sell for 50-60% of the cost. Nio is a direct competitor of Tesla. Being a start-up funding/attrition is key and fighting Tesla is capital intensive.
2) Speaking of, Xpev is copying more than innovating, though slilght innovations on the things they copy exist. It's cheaper and faster to copy than it is to innovate. NIO made a bold move adopting a battery swap format. It could work in time but that's the problem, in time. It's a capital intensive and geographically disadvantaged strategy to build swap stations, though it's innovative and clever to offer cars at sale prices minus the battery, and leasing the battery to the customer. I like that recurring revenue and lower entry point potential, but again it's a battle of attrition and NIOs strategy is so capital intensive that even it's short term prospects are murky. Xpev is simple. Simple i like.
3) As you can see in the chart this is playing out on the balance sheet and revenue. Xpev from a unit sales perspective has been catching up to NIO, I attribute much of that to their price point and marketing. But also from a balance sheet perspective they are burning less cash so while margins are lower per unit sold, their capex is also lower compared to NIO to balance that out in favor of XPEV.
4) Bonus reason, XPEV is focused. Mainly China/Asia customer base with no plans to expand to NA. Currently testing select parts of Europe. Again, simple is good. Transport logistics, local regulations, taxes/tariffs all create levels of complexity, complexity increases cost an lowers margins. Simple is good.
I see XPEV out performing NIO throughout 2022. Although I do believe should the overall EV market expand fast enough, NIO will do just fine and a rising tide will certainly float their boat as well.
1) They are not competitors, from a price point perspective. Xpev makes a car by my estimate 90% as good as NIOs and 80% as good as Tesla, but they sell for 50-60% of the cost. Nio is a direct competitor of Tesla. Being a start-up funding/attrition is key and fighting Tesla is capital intensive.
2) Speaking of, Xpev is copying more than innovating, though slilght innovations on the things they copy exist. It's cheaper and faster to copy than it is to innovate. NIO made a bold move adopting a battery swap format. It could work in time but that's the problem, in time. It's a capital intensive and geographically disadvantaged strategy to build swap stations, though it's innovative and clever to offer cars at sale prices minus the battery, and leasing the battery to the customer. I like that recurring revenue and lower entry point potential, but again it's a battle of attrition and NIOs strategy is so capital intensive that even it's short term prospects are murky. Xpev is simple. Simple i like.
3) As you can see in the chart this is playing out on the balance sheet and revenue. Xpev from a unit sales perspective has been catching up to NIO, I attribute much of that to their price point and marketing. But also from a balance sheet perspective they are burning less cash so while margins are lower per unit sold, their capex is also lower compared to NIO to balance that out in favor of XPEV.
4) Bonus reason, XPEV is focused. Mainly China/Asia customer base with no plans to expand to NA. Currently testing select parts of Europe. Again, simple is good. Transport logistics, local regulations, taxes/tariffs all create levels of complexity, complexity increases cost an lowers margins. Simple is good.
I see XPEV out performing NIO throughout 2022. Although I do believe should the overall EV market expand fast enough, NIO will do just fine and a rising tide will certainly float their boat as well.
Note
Q3 early numbers are out Xpeng had another 10k sale month, that's 2 in a row since hitting the milestone. 3x from year ago.Note
And the trend continues.NIO posted 308m revenue while Xpev posted 126m. The gap continues to close now at 2.47x it was 6.5x 12 months ago. Should this continue sometime in mid/late 2022 Xpev should be doing 50%-75% of NIO's business, that's a lot of upside at todays prices.
Again, not knocking NIO but the two begs for comparison and if one wants to make a bet, this is my reasoning why Xpev in the near term should outperform.
Note
The gap continues to widen.NIO sold 25k units in Q1 vs 34k units sold by Xpeng. Li and Xpeng experiencing 2-3x YoY growth in sales while NIO is sub high 70%s, still very early days of the transition so hthey can turn this around quickly.
Quick word about Xpeng financials: revenue up over 3x YoY from 846m to 3.2b, gross profit almost 9x YoY, from 47m in 2020 to 406m in 2021.
Contrasting that with a operating loss of -1.05m up from -624m, i'm liking the financials.
Expenditure growth esp. in a infrastructure heavy industry like autos is expected for a company growing capacity. But its a bad sign when that capex growth exceeds revenue growth that means something is broken when the business model.
Fortunately, the opposite is true for Xpeng. They are reaping the benefits of scale and operating leverage. As more units get sold the costs are spread over a larger number, thus increasing profit margin as we see with Xpeng.
Looking good.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.