Sarah Wu
BEIJING/SHANGHAI (Reuters) – Shares of Chinese electric vehicle maker Xpeng (NYSE:) jumped more than 10% on Wednesday, boosted by rising revenue from research and development services offered by Volkswagen (ETR:) and upbeat comments about its goals for the future. advances in unmanned technology.
Xpeng, which in April deepened its partnership with VW to jointly develop electric vehicle architecture, said these R&D services are primarily responsible for its services revenue, which nearly doubled to 1 billion yuan ($138 million) in the first quarter compared to a year earlier.
That helped Xpeng’s gross margin rise to 12.9%, up from 1.7% a year earlier and 6.2% in the fourth quarter.
“The company has paved the way for a new business model of smart technology sales to improve profitability,” Huatai Securities analysts said in a report.
One of China’s most advanced automakers in smart electric vehicles, Xpeng also said it expects to develop “level four” autonomous driving capabilities by next year, but added that it will take time for hardware and regulations to catch up.
The fourth level does not require the presence of a human driver in designated areas. Very few automakers have developed Level 4 technologies, with most efforts to date limited to testing robotaxis in limited areas.
Driver assistance features currently offered in China are “level two” systems that require the driver to be willing to take control. Tesla’s (NASDAQ:) “fully self-driving” and less advanced Autopilot option are also second-tier systems that require attentive drivers.
Xpeng’s Hong Kong-listed shares were last up 12% in afternoon trading. The company also said in its earnings report Tuesday that it expects second-quarter shipments to rise 25% to 38% from a year earlier.
Xpeng added that it expects its MONA-branded mass-market EV, which will cost less than 200,000 yuan ($27,630) and go on sale next month, to offer Level 2 autonomous driving features. This will be MONA’s first vehicle on the road after Xpeng took over the project from taxi giant Didi last year.
Consumers of cars priced between 100,000 and 200,000 yuan are more likely to use self-driving features, although until now they could not afford the technology, said He Xiaopeng, CEO of Xpeng.
“Once cars become affordable, these consumers will be using self-driving cars everywhere,” he said. “And I believe that next year, in 2025, we will see this become a reality.”
($1 = 7.2383)