Written by Cláudio Afonso | LinkedIn | X
UBS analyst Paul Gong updated on Monday its valuation in the Chinese automaker XPeng citing the company’s progress on AI and the vehicles deliveries of more than 30,000 units per month. However, the analyst remains cautious due to China’s price competition.
The analyst upgraded the firm’s rating on the Guangzhou-based firm from Sell to Neutral while increasing the price target from $8.80 to $18. Based on Friday’s closing price of $18.40, the updated price target implies a downside of 2.2%.
In a new research note, Gong says investors “are now willing to assign some value for AI potential” after the Chinese startup DeepSeek shaked the industry with the release of their latest in-house developed large language model (LLM).
“After DeepSeek shocked equity markets, we believe investors are now willing to assign some value for AI potential, even remote applications,” he stated. “As we highlighted in our earlier outlook, AI should continue to dominate the debate and XPeng with its focus on AI is a company that warrants such attention in the auto sector.”
The analysts cited a potential shift in risk appetite despite concerns over valuation and the exposure to China’s price competition, especially with BYD.
“With the potential change in risk appetite, we upgrade our rating to a Neutral, despite a relatively rich valuation of 1.4x 2026E P/S, twice that of Li Auto and Nio,” the analyst noted.
Gong also mentioned XPeng’s “sales momentum of over 30k units per month,” before showing concerns over the company’s “vulnerability to price competition in the mass market and BYD’s democratization of autopilot prevents us from being bullish.”
The company said earlier this month that, in the first week after the Chinese Spring Festival, registered 7.6 times more orders than the same period in 2024.
The world’s largest asset manager, BlackRock, reduced its stake in Chinese carmaker XPeng in Q4 to 4.7% after selling 10.03 million shares in the last quarter of 2024.
Earlier this month, the Guangzhou-based brand announced it is now offering a 0% down payment and zero-interest financing program for three years on its P7i sedan and G6 SUV, claiming savings can reach 20,000 yuan ($2,750) and 18,000 yuan ($2,450), respectively.
