Price wars at home, tariffs abroad: Xpeng seek greener pastures
XPeng’s Hong Kong-listed shares reflected this downturn, dropping 2.7% on Wednesday.
On Friday, electric vehicle (EV) company Xpeng, based in China, voiced its opposition to new US tariffs on Chinese EVs, arguing they hinder global efforts towards carbon neutrality and clean energy adoption.
"These tariffs will lead to price increases," stated Xpeng co-president Brian Gu during a media event in Hong Kong, where the company introduced two new EV models. "While this doesn't currently impact Xpeng directly, for the broader market, I believe greater openness allowing global competition is beneficial in the long run," Gu added.
Currently, Chinese-made light-duty vehicles have a limited presence in the US import market.
Gu's comments came during the Hong Kong launch of Xpeng's G6 electric SUV and X9 flagship seven-seater. This expansion reflects the company's strategy to venture beyond China's saturated car market.
A price war and slowing demand within China are pressuring Chinese automakers, prompting them to accelerate overseas expansion to mitigate these challenges.
Other Chinese EV companies, such as BYD and Great Wall Motor, are already established in Hong Kong. According to consultancy CBRE, the number of Chinese-made EV models sold in Hong Kong has grown significantly, from just one in 2018 to 20 in 2023. This highlights the strong growth potential in this Asian financial hub.
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However, this overseas expansion faces headwinds. The European Union (EU) launched an anti-subsidy investigation into Chinese EV imports, while the US recently announced tariff hikes.
"We're evaluating the impact of potential tariff changes in different regions to determine the flexibility we have in our profit margins," Gu said. He added that the company is still assessing the level of EU tariffs that might necessitate production relocation outside of China.
Xpeng currently sells EVs in several European countries, including the Netherlands, Norway, and Germany. The company also plans to enter additional European markets like Italy and the UK. Despite the looming tariffs, Xpeng recently announced its entry into the French market.
Highlighting the intense competition within China, Nio launched the first vehicle under its new budget-friendly brand, Onvo, aiming to compete with Tesla's Model Y.
Volkswagen-backed Xpeng anticipates its upcoming Mona-branded EV to be the first car in China priced under USD 21,000 with advanced self-driving features.