Sarah Wu
BEIJING/SHANGHAI (Reuters) – Shares in Chinese electric car maker Xpeng soared on Wednesday after it reported rising revenue from research and development services provided to Volkswagen and upbeat comments about the company's goal of improving autonomous driving technology.
Xpeng deepened its partnership with VW in April to co-develop EV architecture, largely due to first-quarter service revenue nearly doubling year-on-year to 1 billion yuan ($138 million). He said this was thanks to these research and development services.
This helped Xpeng's gross margin rise to 12.9%, compared with 1.7% in the same period last year and 6.2% in the fourth quarter.
Xiaopeng also emphasized his company's technological advantages in smart EVs, saying it expects to develop “Level 4” autonomous driving capabilities by next year, but it will take time for the hardware and regulatory environment to catch up. He added that it would take a while.
Level 4 eliminates the need for a human driver within designated areas. Very few automakers are developing Level 4 technology, and most efforts so far have been limited to testing robot taxis in limited areas.
The driver assistance features currently available in China are “Level 2” systems, which require the driver to be ready to take over the wheel. Tesla's “Full Self-Driving” and less advanced Autopilot options are also Level 2 systems that require an attentive driver.
Xpeng stock rose 13% in afternoon trading. The company also said on an earnings call late Tuesday that it expects second-quarter deliveries to increase 25% to 38% from a year ago.
(1 dollar = 7.2383 Chinese yuan)
(Reporting by Sarah Wu in Beijing and Zhang Yan in Shanghai; Editing by Edwina Gibbs)
