Chinese buyers not living in lockdown shake off EV price hikes

BEIJING — In a sign Chinese drivers are still willing to buy electric, start-up Xpeng said that demand for its cars has shaken off the impact of price hikes.

From Nio to Tesla, electric car companies in China have raised prices in the last few months, citing the impact of rising commodities costs such as those for battery components.

After hiking prices by a few thousand U.S. dollars in March, Xpeng has seen a recovery in demand in regions not affected by the latest Covid lockdowns in China, Brian Gu, vice chairman and president, said Tuesday in an exclusive interview on CNBC’s “Squawk Box Asia.”

With that ability to pass on rising raw materials costs to consumers, Gu said the company can then “continue our innovation and investments.”

Last week, Nio CEO William Li told CNBC his company’s biggest problem was supply chain disruptions, not demand for electric cars in China.

Passenger car sales fell by 35.5% year-on-year in April, but new energy vehicles — which include battery-powered electric cars — saw sales surge by 78.4%, according to the China Passenger Car Association.

Covid controls still took a toll on Xpeng, whose shares fell 5.5% in overnight U.S. trading after giving second-quarter guidance below expectations.

The electric car company said it expects total revenue to nearly double in the second quarter from a year ago, to between 6.8 billion yuan ($1.02 billion) and 7.5 billion yuan. But that was below prior FactSet estimates ranging from 7.08 billion yuan to 9.02 billion yuan.

In the first quarter, Xpeng did report a smaller-than-expected loss of 1.8 yuan per share, versus the FactSet estimated loss of 1.9 yuan per share. Revenue of 7.45 billion yuan also beat FactSet expectations for 7.39 billion yuan.

Gu told CNBC “the second quarter will be a challenging one” because of the impact of Covid, particularly in April.

“There are no operations per se in the city of Shanghai and some of the surrounding areas,” he said Tuesday.

The southeastern metropolis of Shanghai has been battling Covid since March, with citywide lockdowns now nearing the two-month mark. The city in mid-April started to prioritize some businesses — especially in the auto sector — for resuming production within a bubble.

Shanghai also plans to restore normal life and work by mid-June. But over the weekend a downtown district banned residents from leaving their apartment complexes again, illustrating the challenges to reopening quickly.

Gu said earlier on an earnings call, accessed through Refinitiv Eikon, that the Covid lockdowns have affected “important markets” for Xpeng, and that he expected strong order momentum as those areas ease restrictions.

In addition to Covid controls, the company’s CEO Xiaopeng He added on the call that the ongoing chip shortage was a problem.

“If there weren’t any COVID resurgence in China right now, I think the majority of our peers or all of the new EV makers in China right now will be actually restricted by the capacity or the supply of the chip in general,” he said.