Xpeng Inc. (NYSE:XPEV), a Chinese EV maker with just over 13,000 employees, is about to hire 6,000 more in a bid to expand its EV operations across the globe. Even though the company does not operate inside the US, it is a decent player in the Chinese EV market and with its future plans, is about to become a thorn in the side of the struggling European market as well.
In a letter sent out to employees, the company’s CEO He Xiaopeng mentioned the aggressive launch of new models that would feature its latest AI technologies. What stands out in his letter is the confidence with which the CEO says that the company’s technology will have no competitors.
Xpeng is a founder-led company and the Founder & CEO’s plans should be taken seriously. Xiaopeng predicts a round of price wars in the EV industry in 2025. Price wars usually happen when an industry is mature and users have the luxury of switching to competitors with ease. The EV industry and its associated AI technologies are still under development, so a price war seems surprising. However, this would come as a blow to Europe and the USA’s EV plans as it signals a maturity of the Chinese market. This maturity is also confirmed by Xpeng’s plans to expand into 60 markets in 2025. This would only be possible if the company was comfortable with its pace of innovation in China. It seems the EV maker is confident it has a strong foothold in its home country and is ready to expand aggressively. It plans to generate more than half of its sales from overseas markets within the next decade and now is when that plan kicks off.
The company’s success within China is further confirmed by its increasing sales and improving margins. As it scales its autonomous driving technology, these margins are only going to further improve. Europe will continue to pressure Chinese EV makers through tariffs, but it seems Xpeng is ready to take that challenge head-on. We are bullish on the company’s prospects, just like its CEO, and believe the company’s technical collaborations with Volkswagen, the German automaker, position it favorably in the European market despite tariffs.
Xpeng Inc. (NYSE:XPEV) is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held XPEV at the end of the third quarter which was 17 in the previous quarter. While we acknowledge the potential of XPEV as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as XPEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
