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The cooperation agreement between Chinese EV maker Xpeng Motors and Volkswagen is an important milestone for the development of autonomous driving in China, said HSBC Global Research in a note.
The deal has boosted Xpeng’s recent share price performance, which has jumped by 26% in the US and 28% in Hong Kong since July 24, far outperforming the broader market. Xpeng is an industry leader in autonomous driving and it offers city navigation pilots on selected routes in five cities, including Beijing and Shanghai, with plans to expand the pilots to 50 cities by the end of the year, it said.
As electric vehicles become increasingly commoditized, differentiated software will be a key competitive advantage to drive sales and partnership with global brands such as VW will also increase its appeal to consumers, it said.
HSBC expected XPeng’s net loss to narrow by 1% in 2024 and by 8% in 2025, due to increased sales volume and software service revenue, and raised its revenue forecast by 7% and 17% in 2024/2025 respectively.
The broker raised the target price for Xpeng’s H-shares from HK$60.2 to HK$87 and upgraded its rating from Hold to Buy. Xpeng’s H-shares slid nearly 4% to close at HK$71.7