COVID shutdowns & supply chains: 'We just have to be very nimble,' XPeng exec says – Yahoo Finance

XPeng (XPEV)’s Vice Chairman Brian Gu says the Chinese electric vehicle (EV) maker has the wherewithal to navigate issues like shutdowns and component shortages due to the company’s reliance on numerous suppliers and its ability to stay “nimble” in light of the challenges.

“We have to find multiple sources of suppliers in case one gets impacted by the shutdown, and also to find alternative suppliers for the same component,” he told Yahoo Finance Live. “So we have spent a lot of money on testing to make sure that we have backup suppliers that we can use … We just have to be very nimble and also make sure that our operation flexibility we’re building into our business plan.”

The company reported a mixed fourth quarter yesterday. Revenue for the quarter climbed to $1.34 billion, up nearly 200% from a year ago and nearly 50% from the third quarter. XPeng reported a EPS loss of $0.22 cents on an adjusted basis, or $202 million in the quarter, a narrower loss than Wall Street expected.

Looking ahead, the company sees deliveries for the first quarter of 33,500 to 34,000, representing year-over-year growth of over 150%.

While the company grew last quarter, Gu said the quarter could have been even better.

“I think the chip shortage issue continued to impact the industry, and we are feeling that impact as well. I think our results, although growing triple-digits, still is constrained somewhat by these chip supply shortages,” Gu said. “We think the outlook for [the] chip bottleneck will probably alleviate in the next one to three quarters, hopefully by the end of the year or early next year, we see a normalization of that situation.”

XPeng saw vehicle sales rise in the fourth quarter, even forecasting rising sales in the Q1, despite challenges also coming from rising component costs, which has meant rising prices for consumers.

SHANGHAI, CHINA – DECEMBER 10: A Xpeng P7 car is on display at a Xpeng experience store on December 10, 2021 in Shanghai, China. (Photo by Wang Gang/VCG via Getty Images)

“Just a few weeks ago, we increased prices by around 5% to 8% to really make up for the cost increases that we’re seeing in battery and in chips to make sure that we cover our costs adequately,” he said. “I think in the long run, I think this material cost increase will continue to pressure the industry and price increases we’re seeing across the industry in China right now.”

With a record order book and strong demand, Gu said the Q1 forecast could have been even stronger, if not for ongoing COVID-19 shutdowns like those in two of China’s largest cities Shenzhen and Shanghai.

“We could have done probably a few thousand more in terms of deliveries this month if there’s no shutdown in those cities,” Gu said.

ADR shares of XPeng listed on the NYSE traded little changed on Monday.


Pras Subramanian is the senior autos reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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