Could Buying Xpeng Stock Make You a Millionaire?

By Larry Ramer

Given Xpeng's (NYSE:XPEV) leadership in Advanced Driving Assistance Systems (ADAS), along with its promising, upcoming initiatives and its strong growth, I expect the company's top and bottom lines to climb significantly in the coming years. 

Consequently, I believe that XPEV stock could indeed make many investors millionaires over the longer term.

Leading ADAS System Getting Ready for Europe

As I noted in a previous column, the company's XNGP ADAS offering became available on all public roads in China as of July 30. What's more, like Tesla's (NASDAQ:TSLA) Full Self-Driving offering, drivers can take their hands off the steering wheel for extended amounts of time with Xpeng's XNGP. 

And due to the system's lack of reliance on maps, it currently works anywhere in China. Earlier this year, Xpeng CEO Xiaopeng He stated that "XNGP's exceptional capabilities are nearly road-ready for Europe!"

Meanwhile, in October, the South China Morning Post's Mark Andrews reported that XNGP "performed flawlessly" during the 61-mile highway portion of his test drive of Xpeng's G6 SUV, "even" when he encountered "a traffic jam and temporary roadworks." Andrews observed that XNG was less proficient in a city in which he came across many different types of vehicles. 

But encouragingly, he reported that "the G6 is not so much a car that you drive, than a car that drives you." And he added that "Xpeng had a slight edge over Tesla in the driving experience."

Emulating Tesla’s ‘Pure Vision’ Approach

In November, Xpeng began deliveries of its P7+ EV sedan. Unlike Xpeng's other electric vehicles, the P7 does not utilize LiDAR sensors, relying instead on "pure vision cameras." In that way, Xpeng is emulating Tesla's approach. 

And the EV reportedly incorporates AI "across several features," according to Elektrek. Although the P7+ was on the market for only 23 days last month, Xpeng was able to deliver over 7,000 of the EVs. In light of the latter data point, I believe that the vehicle is going to be quite popular going forward.

In August, Xpeng unveiled its MONA EVs which also include multiple AI-powered features. Costing as little as 119,800 yuan or $16,500, these EVs have "AI-quantified aesthetics and advanced smart driving features." For less than 200,000 yuan, or $27,550, Chinese consumers can drive the M03 Max version of the MONA which includes the XNGP ADAS system that I described above. Importantly, the M03 Max is reportedly the cheapest vehicle in China that provides drivers with an "urban smart driving" solution. 

In November, Xpeng delivered some 10,000 of the MONA EVS "for the third consecutive month since its launch." Also noteworthy is the August unveiling of Xpeng's Turing chip which reportedly makes neural networks three times more effective than current offerings and will enable the automaker to roll out Level 4 autonomous driving features more quickly. 

And in a rather different genre, Xpeng is looking to produce electric-powered flying cars, known as eVTOLs. In October, the firm began building a plant that reportedly will be able to turn out 10,000 of the vehicles each year. In addition to flying like all eVTOLs, one of Xpeng’s flying cars, called the X3, can be driven on roads. 

And the automaker is also developing an EV which transports a separate eVTOL. Production and deliveries of the latter vehicles are slated to begin in 2026. A conventional eVTOL, the company's X2 vehicle completed a successful test flight in March. 

Offers Strong Growth at Low Valuation

In November, Xpeng's EV deliveries soared 54% over the same period a year earlier, to nearly 30,900. In the first 11 months of the year, its deliveries climbed 26% YOY to 153,373. 

In the third quarter, its revenue advanced 18.4% YOY to $1.44 billion, while its vehicle margin rose to 8.6% from -6.1% in Q3 of 2023 and 6.4% in Q2 of 2024. 

For Q4, the company provided guidance last month for its deliveries to advance 44.6% to 51.3% YOY. Moreover, it predicted that its revenue would climb about 17.2% to 24.1% YOY. 

Given all of Xpeng's strong, positive catalysts and its rapid growth, its forward price-sales ratio of 2.1 is rather low. Rivian Automotive (NASDAQ:RIVN) has a forward price-sales ratio of 2.5, while Lucid Group's (NASDAQ:LCID) forward P/S ratio is 8.25, huge among EV-makers. 

On the market capitalization front, Xpeng weighs in with a valuation of $12.3 billion. Conversely, Tesla's market cap is  $1.19 trillion. Obviously, if Xpeng comes close to equaling Tesla's market cap in the next decade, XPEV stock will mint many new millionaires.

Disclaimer: At the time of writing, the author held a long position in XPEV. The information provided in this article is for educational and informational purposes only and should not be construed as investment advice. Always conduct your own research or consult with a licensed financial professional before making any investment decisions. Past performance is not indicative of future results.

Larry Ramer is currently ranked 243 out of 30,238 financial bloggers analyzed by TipRanks, with a 16.1% return on his buy and sell ratings. He is one of the founding contributors to this newsletter. 

Larry focuses on contrary investing and specializes in the renewable energy and consumer discretionary sectors. Among his highly successful, contrarian picks have been Plug Power, Exxon Mobil, solar stocks, and airline stocks. On the downside, he was an early predictor of the collapse of cryptocurrencies, marijuana stocks, Ocugen, and Meta Platforms.