By Michael Elkins
A Morgan Stanley analyst remains bullish on electric vehicle company’s Li Auto (NASDAQ:LI) and Xpeng (NYSE:XPEV) with price targets of $53 and $41, respectively.
Li Auto’s pessimistic 3Q volume guidance suggests to the analyst that the EV maker expects the company’s delivery slump to extend into august. However, with the L9 gaining traction, and a Rmb7k discount on the Li ONE, the anlayst sees potential for an easy 3Q beat.
According to Li Auto, total monthly rate for L9 could ramp up to 15k units into 4Q22. The EV maker also indicated that it plans to launch and start delivery of L8 faster than expected. Management is now expecting the model to launch in September (vs. previous anticipation of October). With a shorter launch-to-delivery time compared to the L9, management believes that the L8 should start delivery soon after launch and meaningfully contribute to 4Q volume.
XPeng remains an attractive buy as the company finished a launch event for its new supercharging technology. XPEV launched its first S4 supercharger together with the rollout of its 1000th self-charging station.
The S4 supercharger is 2-3x faster than existing superchargers, allowing for XPeng vehicles to run with a range of more than 200km on a five-minute charge, according to the China Light-Duty Vehicle Test Cycle (CLTC). Using liquid cooling technology to enhance safety and efficiency, charger activation time is reduced to below 15 seconds. The S4 supercharger will be compatible with XPeng's newest model G9 and upcoming models built on 800V platform.
XPeng management introduced an aggressive plan to install thousands of S4 superchargers by 2025. However, the analyst believes that the prevalence of 800V/480kWh supercharging would call for an upgrade of China's power grid. Also, the high cost of SiC, a critical component of HPC architecture, remains a hindrance to rapid adoption.