Citi reiterated a Sell rating on Xpeng (NYSE:XPEV) with a 12-month price target of $15.00 on the stock after the Chinese electric vehicle maker released a lower price trim for their G9 electric SUV, entering the cheaper and below RMB 300k (RMB 1 = $0.14) 2nd tier luxury ASP segment.
Xpeng aims to enhance the appeal of its top-tier flagship product by introducing more cost-effective features, resulting in three out of five new G9 versions being priced below RMB 300k. This strategy is designed to attract a larger customer base through improved value for money.
“We believe the new model launch is overall neutral to Xpeng stock price as the company should marginally gain some volume but lose its premium status,” analysts wrote in a note.
Citi expects that the current stock price has already factored in the VW-Xpeng partnership and the potential sales run-rate exceeding 20,000 per month by the fourth quarter of 2023. Looking ahead to 2024, Citi foresees further price competition in the industry due to the low utilization rate of the sector.
Shares of XPEV are down 2.94% in pre-market trading Thursday morning.