The XPeng P7.
Courtesy Xpeng
Chinese electric-vehicle maker XPeng said Tuesday that it sent its first shipment of its electric sedan, the P7, to Norway, marking another step in the company’s expansion beyond its home market. That’s good news for XPeng stock, and a little bit of bad news for the competition.
XPeng shares (ticker: XPEV) rose 0.9% in Tuesday trading. The S&P 500 and Dow Jones Industrial Average were up about 0.2% and 0.3%, respectively.
XPeng also shipped its G3 SUV to Norway in late 2020; that model’s sales to consumers began in December. The P7 is the company’s second model on offer in the country. XPeng declined to comment on its Norwegian sales volumes.
Norway is a popular location to start selling EVs. XPeng peer NIO (NIO) also selected Norway as its first market outside of China. The reason isn’t hard to understand: EV penetration in Norway is very high. In 2020, more than 50% of new cars sold in Norway were electric, and more than 10% of all light vehicles on the road are electric. And penetration continues to rise, with 84.7% of new car sales in July 2021 electric—64.1% were all battery electric and 20.6% were plug-in hybrid vehicles.
But the Norwegian car market isn’t very big. Roughly 150,000 cars are sold in Norway in a normal year. Still, EV bulls look at Norway as an example of what EV penetration can look like in any country down the road. What’s more, Norwegian EV buyers are arguably the most sophisticated of any EV buyers in the world. If an EV maker can make it there, it can make it anywhere.
The move represents more competition for non-Chinese auto makers, including Volkswagen (VOW.Germany) and Tesla (TSLA). Still, competition is inevitable, and those stocks aren’t reacting to the news.
Volkswagen stock is up almost 2% in overseas trading. Tesla shares are up about 0.5% in premarket trading.
Coming into Tuesday trading, XPeng stock is down about 7% so far in 2020. Shares have been battered by rising interest rates in the U.S., as well as a semiconductor shortage that has investors wondering if production growth goals can be hit. Still, XPeng has delivered more than 20,000 vehicles over the past three months, up about 367% over the same span in 2020.
Wall Street remains confident in XPeng stock. Almost 90% of analysts covering the company rate shares Buy. The average Buy-rating ratio for stocks in the S&P is about 55%. The average analyst price target is $53 a share, up about 33% from recent trading levels.
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