Morgan Stanley Maintains Bullish Outlook as Seasonal Surge Propels XPeng Beyond Expectations

By Michael Elkins

Morgan Stanley has maintained an Overweight rating with a $12.00 price target on Xpeng following the company’s December performance. While Xpeng’s December deliveries fell by 29% year-over-year, there was a significant month-over-month increase of 94%, totaling 11,292 units and slightly exceeding the management’s guidance of 20,000-21,000 units with a quarterly total of 22,204 units for Q4 2022.

Analysts from Morgan Stanley noted that the rise in deliveries at the end of the year was primarily attributed to seasonal demand and a boost in deliveries of the G9 model, totaling 4,020 units. For the entire year of 2022, Xpeng delivered 120,700 units, marking an increase of 23% compared to the previous year.

In a recent announcement, Xpeng confirmed its intention to continue offering new energy vehicle (NEV) purchase subsidies, ranging between RMB 10,000 and 13,800 per vehicle, despite these incentives having originally expired on December 31, 2022. Furthermore, the company stated that it would maintain the manufacturer’s suggested retail price (MSRP) for its current model lineup throughout 2023.

Previously, Xpeng had indicated that it would remain open to subsidizing NEV sales even after government incentives conclude, as the benefits from these subsidies have been diminishing. Morgan Stanley predicts that other original equipment manufacturers (OEMs) are likely to adopt similar strategies.

On Tuesday, shares of Xpeng experienced a 5.63% increase in pre-market trading.