Shulou(Shulou.com)11/24 Report--

CTOnews.com, August 21 (Xinhua) Xiaopeng Motor said in an interview with CNBC on Monday that the company expects to reduce its losses by reducing costs and working with Volkswagen. On Friday, Xiaopeng reported its biggest quarterly loss since it went public in the US in August 2020, with a second-quarter net loss of 2.8 billion yuan, higher than the 2.13 billion yuan expected by Refinitiv. Its U.S.-listed shares closed down 4.28% on Friday. Xiaopeng's Hong Kong-listed shares rose more than 2% on Monday afternoon.

CTOnews.com noted that Xiaopeng delivered 23205 cars in the second quarter, down 32.58 per cent from 34422 in the same period last year. He Xiaopeng, chief executive of Xiaopeng Motor, said on Friday that the company was cutting costs across the board and expected it to "significantly increase gross profit margins in 2024". The company plans to reduce manufacturing costs, including a 50% reduction in the cost of smart driving by the end of 2024, Bloomberg reported in April.

Gu Hongdi, vice chairman and co-president of Xiaopeng, said on CNBC's "Street signs Asia" program on Monday: "in terms of cost, we have experienced very significant business restructuring and changes, and we are beginning to see that our business is returning to growth momentum."

Xiaopeng is trying to resume business this year as its share price fell more than 80 per cent in 2022 and the company faces macroeconomic challenges and a price war between domestic competitors and Tesla.

Gu Hongdi said: "demand is actually still quite strong. I think it continues to grow despite the economic background. but at the same time, competition intensified in the first half of the year, with more participants launching more new models and being very aggressive in price competition."

"We have also spent a lot of time cutting costs in order to achieve better profitability," he said. "later next year, we expect our vehicle BOM (bill of materials) costs to be reduced by up to 25%, which will improve profitability."

BofA Securities said in a report on Monday that Xiaopeng's partnership with Volkswagen was expected to "improve its financial position and possibly improve its supply chain management". BofA Securities upgraded Xiaopeng from "neutral" to "buy" with a target price of $22 a share, up from $16.3 a share.

In late July, Germany's Volkswagen Group said it would inject about $700 million into Xiaopeng and hold a 4.99% stake in the company. The two sides will jointly develop two new electric vehicles, which will adopt Xiaopeng's advanced driving assistance software for the Chinese market, which is scheduled to be launched in 2026.

Gu Hongdi said: "through the cooperation with Volkswagen, it is expected that this will start to make a meaningful contribution to our profits next year. Therefore, this is another tool that we can use to improve profitability."

In addition to the planned new models, Gu Hongdi said that Xiaopeng will also launch "updated versions of current models" next year. "We expect these new models to bring more favorable gross margins. This will also help to improve our profitability and product portfolio."

The Xiaopeng G6 will be launched at the end of the second quarter and is expected to increase the company's gross profit margin.

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