XPeng Launches New EV in Europe. It’s Low-Priced Competition for Tesla Model 3.

Text size

Chinese electric-vehicle maker

XPeng

is pushing further into Europe, selling another vehicle model in multiple countries. The coming car is XPeng’s new, low-priced sedan. It will compete for market share against many EVs, including the hot-selling

Tesla

Model 3.

XPeng (ticker: XPEV) announced Thursday it was taking reservations for its P5 sedan in four European countries: Denmark, the Netherlands, Norway, and Sweden. The P5 in China retails for as low as $25,000, making it a compelling offering in lower-price segments of the car market.

“The Xpeng P5’s arrival in four key European markets is a new demonstration of our commitment to Europe,” said XPeng vice president, Leon He, in the company’s news release. “Each new XPeng model achieves a new level of technology sophistication. The P5 brings a host of differentiated features to a new customer base in Europe, a market where we are building ourselves as a long-term player.”

Another EV sedan in Europe amounts to more competition for Tesla (TSLA). The Tesla Model 3 is a strong product in Europe. It was the top seller of any vehicle, traditional or electric, offered in Europe in September 2021, selling more than 24,000 units.

A Model 3 starts at about $45,000.

The P5 is XPeng’s third model for sale in Europe. The company started selling its G3 crossover vehicle in Norway back in 2020. The P7 is a slightly larger, sportier, more expensive sedan starting around $50,000. XPeng started selling that in Norway in 2021.

Chinese companies have gone into Norway first, most likely because Norway is the most EV-friendly country anywhere. EV penetration of new car sales in Norway has exceeded 90% in recent months.

European expansion is a good thing, but XPeng shares were sinking Thursday. Growth and expansion are expected and what is going on in the broader market were overwhelming launch news.

XPeng stock was down 10.7% in midday trading. The pain in the Chinese EV stocks was widespread.

NIO

(NIO) shares fell 13.5% and

Li Auto

(LI) was down 7.9%. The

S&P 500
and

Dow Jones Industrial Average
fell 1.5% and 1.2%, respectively.

It’s a bigger-than-market drop, but XPeng shares on Thursday were down following a day when shares rose 10.3%.

The Wednesday bump was a reprieve for investors. Coming into Thursday trading, XPeng shares were still down 43% year to date, and down about 49% from their December 2021 52-week high of more than $56 a share.

Rising interest rates, inflation, and the Russia-Ukraine war have sapped some investor willingness to hold high-growth stocks. The

Russell 1000 Growth Index
has underperformed the

Russell 1000 Value Index
by more than 10 percentage points so far in 2022.

XPeng qualifies as a growth stock. The company isn’t expected to be profitable in 2022, but sales are expected to rise by about 100%.

Write to Al Root at [email protected]