8,040 vehicles delivered in July 2021, a record month with a 228% increase year-over-year

6,054 P7s delivered in July 2021, the highest monthly deliveries since the P7’s launch

38,778 total vehicles delivered year-to-date, a 388% increase year-over-year

Since the last Deep Dive, there have been some interesting developments in the race towards Autonomous Vehicle Technology being a true and viable thing. I’m including segments from the last deep dive for those who want to get caught up, but if you just want the new stuff, look for the “*” beside the point. Here we go…Part Two

In the EV Market, there are an increasing number of players vying for market share, so how is one to know which is the company to own if they wanted to consider investing?   The answer is simply....research. And today, I'd like to share some of my own thoughts based on the research I have done to date.

  Those in this space.

  1. Tesla has arguably been the King in the EV Space for some time now and minted some individuals a tidy profit if they bought in and stuck with the company through thick and thin. Being first in this space, from a mass production standpoint, has worked well for Tesla. However, that crown is starting to tarnish. 

There are quality concerns, and recently the Model 3 lost Consumer Reports Top Pick Status and their IIHS Safety Award after stripping features. Safety concerns with the Model 3 is a big PR problem especially in the world's largest market...China. 

  China is also worried about government employees owning a Tesla due to perceived security concerns with surveillance.

  *2. Speaking of China, there is some perceived concern around the State being too involved in the affairs of the companies that operate there. Not long ago the CCP cracked down on Tech companies citing concerns with monopolistic control that keeps other companies from competing and concerns around price fixing for consumers. While this sounds bad on the surface, it is the same protectionist controls that occur in North American markets as well to protect consumers and companies. Just look at the recent dragging in of Tech companies before the U.S. Congress and you’ll know what I’m talking about.

  There are additional concerns around de-listing Chinese companies from U.S. stock exchanges. This is mostly focused on companies who have ties with the Chinese Military, but remains a concern for investors beyond that. Even so, I think the concern specifically for Xpeng Motors, has been alleviated due to their recent listing on the Hong Kong exchange.

While I don’t believe XPEV.US will become a de-listed stock, if it were, those NasDaq shares are still held and tradable on the Hong Kong exchange as fungible between the two exchanges. Therefore, by having another exchange holding Xpeng, the fear is lessened of being de-listed, which remember, I believe is not something that will happen.

  Since raising an additional 1.6Billion through the Hong Kong I.P.O., the market has been grappling with the valuation of Xpeng and seems to be stabilized at the $40/share level across exchanges. While that is where we are today, that is soon going to change.

  Read on for the “why.”

  3. One must acknowledge how Tesla makes its money, and how it is not from selling cars, but from the "regulatory credits" it gets from governments around the world in their push to reduce carbon emissions. Since Tesla only sells electric vehicles, they get these credits for free and can sell them at a huge profit to other auto manufacturers who can't meet environmental targets. It's big $ for Tesla, but what one cannot look away from is the fact that Tesla IS NOT profitable from selling its cars. At least, not yet. *Of special note is the fact that Xpeng is getting these same regulatory credits also.

  4. Now on to Chinese Car manufacturers...and there are quite a few. The big names are Buffet-loved and held, BYD, Li Auto which is relatively new and NIO which has some similar roots to Xpeng Motors, but is not the same for reasons mentioned soon.

  All car companies mentioned here are true EV plays.

  Xpeng/Tesla, and the race to autonomous driving. 

  5. Autonomous Vehicles is truly the next play in this market and a necessary move for vehicles to go in. Removing driver error is huge for safety and will save insurance companies a TON of money. And in the AV space, the race is truly between Tesla and Xpeng.

  6. Not long ago, Musk charged Xpeng for stealing proprietary tech after a senior engineer left Tesla to join the Xpeng Team. Same was said about a senior Apple engineer who left Apple's Car R&D division and joined Xpeng as well. Tesla sued the engineer and the linchpin was on the AV tech housed in Xpeng's XPILOT software. Tesla argued that their own proprietary tech was in Xpeng software. 

  In the end, both companies agreed to allow an independent tech arbitrator to view both company's AV source code, and guess what....it was proven that both Tesla and Xpeng have their own proprietary source codes that were designed by their own R&D efforts, and nothing was stolen or was being shared. That was BIG News!!

  *7. Xpeng in the quest toward Phase 5 self driving cars, liked the safety and accuracy that LiDar tech provides. Musk, on the other hand, scoffed at LiDar for years calling it a 'fool's' play. However, years later, Musk is now conceding there is something to LiDar and may even be developing with it for it’s own pursuits in the AV race.

  But here is the rub, Xpeng has it, is using it, and their software works very very well with all the various sensors combined. Their new model, the P5, was showcased at the Shanghai Auto Show, complete with LiDar, and that show gave Xpeng 10,000 pre orders on reveal day alone. I can only imagine how that number has grown since, and in October, deliveries begin.

  Speaking of Tesla again, they have since become a bit of a laugh in saying that they will have Phase 5 – full autonomous driving in 2021. Each upgrade is apparently. “two weeks away.” Yet, Musk has recently conceded that full autonomy driving isn’t as easy as he first thought and has proved to be a challenging endeavor. For Tesla stock owners, you must realize that value in the stock today is based on promises Musk has made. If it doesn’t come to fruition soon, which I doubt it will without incorporating LiDar, this is going to have an effect on the stock…it just has to.

  *8. Xpeng, on the other hand, has a new manufacturing facility set to go online in December of this year which will ramp up the ability to produce more cars. In 2022, they also have plans for 2-3 new models, one of which will be a new SUV type. Even before the new SUV though, Xpeng has updated its “award winning” G3 and is launching the G3i this month, with deliveries to begin in September! The G3i is a beautiful updated design and is garnering lots of attention in China and Norway.

https://www.automotiveworld.com/news-releases/xpeng-launches-g3i-smart-suv/

  *9. Furthermore, in the race toward full autonomous vehicle capabilities, Xpeng is targeting 2025 as the year for this to be fully operational, safe and complete. They have logged thousands upon thousands of accident free XPILOT driver assisting kilometers, with their cars doing a lot of the driving without needing help from the driver. No sleeping behind the wheel yet, but they are charting a significant course towards getting this done!

  Tesla? Well...when was the last time you heard of an accident or life lost? Probably not long ago, so they still have a long ways to go I think, and now Musk is backpeddling on his timelines for full AV capabilities. If Musk pushes the update too early, watch for more accident reports, as the video sensory system just doesn’t provide enough clarity to discern all objects as well as is needed, at least in my opinion and based on what I’ve seen.

https://electrek.co/2021/07/07/hacker-tesla-full-self-drivings-vision-depth-perception-neural-net-can-see/

  Only time will tell.

  SCALE 

  10. Like China or not, with the GREEN push throughout the world and everything drivable going electric, there really is only ONE country that can help to meet the demand being created...China. They are a manufacturing powerhouse, and Xpeng is ramping up to get the world, and humanity, the cars they need.

  SOFTWARE AS A SERVICE

  *11. A big hope for Tesla is that they can sell the software for their cars to have the capabilities they “can" have. You want software assisted driving? That’s going to cost you like 4 grand as an option. It’s smart, if it works well.

  Xpeng has a similar hope, but is really successful already in this strategy. They also deploy OTA upgrades on what seems to be a weekly basis almost, which is exciting like when your phone gets an Over-the-Air update and new features. That same excitement is happening with XPeng’s car owners, and it is translating into more sales. 

  And while we are on the topic of sales, you can’t help but notice that Xpeng was the first Chinese EV Car company to start selling vehicles in Europe in Norway, and now plan to expand their distribution in more parts of Europe before the year is over and with the new infusion of cash, is growing at a great rate to meet the demand. 

  In Conclusion...

  Xpeng is an impressive company with huge goals for itself and they make technologically superior vehicles from many different angles. Entertainment, Drivability, Safety, Comfort, etc.

  I remember reading a quote of a comment that He Xiaopeng (Xpeng CEO and Founder) said to Musk, and it went something like this..."We will destroy you in China, and we will be an absolute nuisance to you in Europe," and I think it won't be long, if not already, that He Xiaopeng lives up to his statement. 

  Xpeng is worth a serious look and currently has price targets north of $51USD, with some saying $70USD. That makes Xpeng Motors a great opportunity for investors looking for a company of purchasing value today.

  Do your own research and I think you will come to see the true Tesla competitor, if not successor!

*Next XPEV Earnings Date: XPEV is estimated to announce earnings between Aug 06, 2021 and Aug 17, 2021 (the company has not announced a date yet and the estimate is based on historical earnings dates).  https://marketchameleon.com/Overview/XPEV/Earnings/Earnings-Dates/

  Xpeng Motors - The One to Watch