XPeng’s Volkswagen Deal Could Turn Around Tanking Share Price

3 min readAug 22, 2023

Key Takeaways

Shares of Xpeng were down more than 7% in premarket U.S. trade on Friday
Shares then jumped 5.88% in premarket trading on Monday
Cost-cutting measures, robust future plans, and Volkswagen’s 4.99% stake are all reasons for the rebound

Last month, Toyota announced a $700 million investment in Chinese electric vehicle startup, XPeng. As part of that deal, XPeng will produce new battery-powered models that leverage its technology and the Volkswagen brand.

With that deal making headlines mere weeks ago, it’s surprising that, on Friday, XPeng suffered its biggest quarterly losses since listing in 2020. Then shares bounced back on Monday. What’s happening with XPeng? We’ll discuss it below.

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What’s up with XPeng being down?

On Friday, XPeng’s U.S.-listed shares closed 4.28% lower. The company’s Q2 deliveries totaled 23,205, a 32.58% drop from the same period last year. And 2022 wasn’t great for the company to begin with. The share price sank by more than 80% thanks to China’s economic environment and tough competition with other EV companies, like Tesla.

But XPeng leadership insisted that things will turn around. CEO He Xiaopeng said cost cutting measures going into effect now should “substantially drive gross margin improvement in 2024.” Cost-cutting efforts include saving money on manufacturing, for example. That boost from Volkswagen doesn’t hurt either.

What’s Wall Street’s reaction?

Almost as soon as XPeng was down, it was up again. Bank of America upgraded the stock from “neutral” to “buy” with a $22 price target. That Volkswagen partnership was likely a big factor in the upgrade. Shares of XPeng jumped 5.88% in premarket trading on Monday.

Looking ahead, XPeng reportedly plans to break even in 2025. In the meantime, the company’s G6 model deliveries are supposed to increase in September, and did we mention that Volkswagen deal?

“With the Volkswagen agreement, we also anticipate meaningful contribution to our bottom line starting next year. So that’s also another tool we can use to increase our profitability,” Gu said.

The bottom line

EV shares have been volatile across the board. Analysts might not know exactly what’s what with XPeng and the near-future of the EV market, but clearly they’re encouraged by the direction of the business, the Volkswagen partnership, and possible sales outside of China.

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