By Sarah Wu
BEIJING/SHANGHAI (Reuters) – Shares of Chinese electric car maker Xiaopeng Motor Co Ltd on Wednesday rose on optimistic comments about higher revenue from the research and development services it provides to Volkswagen and its goals for improving self-driving technology. It skyrocketed as a result.
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.
As a result, Xpeng’s gross profit margin increased to 12.9% from 1.7% in the same period last year and 6.2% in the fourth quarter.
Xiaopeng Motor highlighted its technological advantages in smart EVs and said it plans 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 does not require a human driver within designated areas. Few automakers have developed Level 4 technology, and most efforts so far have been limited to testing robotaxis 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)
