Xpeng Poised for Explosive Growth: JPMorgan Sees Catalysts Fueling a Surge in EV Maker's Shares

JPMorgan's analyst Nick Lai has identified several near-term catalysts that could propel a significant rally in Xpeng's stock price. Lai, who has an overweight rating on the Chinese electric vehicle manufacturer, has added Xpeng to the Wall Street bank's positive catalyst watch list, citing the company's upcoming product strategy, advancements in in-house technology, and anticipated strong financial performance.

Unlocking Xpeng's Potential: Analyst Sees Promising Outlook Ahead

Xpeng's New Product Roadmap and Technology Advancements

Xpeng's upcoming technology day later this week is expected to be a significant event, as the company is poised to unveil a new product or powertrain strategy. Lai anticipates the potential introduction of extended-range electric vehicles (EREVs) and a new battery electric vehicle (BEV) model in the first half of next year. This aligns with JPMorgan's forecast that EREVs and plug-in hybrid electric vehicles (PHEVs) will account for around 60% of the new energy vehicle market by 2030, nearly doubling the figure from last year.Furthermore, Lai expects Xpeng to announce a next-generation autonomous driving strategy, which could involve the use of in-house chips to power the company's future self-driving vehicles. The analyst also believes Xpeng will touch on other initiatives, such as Xpeng Robot, likely aimed at business or industrial applications.

Competitive Pricing and Margin Expansion

Lai anticipates that Xpeng's future models will adopt a visual-based solution with a competitive price point for buyers. As an example, he cites the Max version of the Mona 3 sedan, which is expected to be priced at around RMB 150,000 (approximately $21,000) from the first quarter of 2025.Additionally, Lai expects Xpeng's third-quarter results next month to showcase expanded gross profit margins. The analyst also forecasts a 77% increase in fourth-quarter deliveries, further bolstering the company's financial performance.

Positive Outlook for Xpeng's Future Growth

Looking ahead, JPMorgan is optimistic about Xpeng's growth trajectory. The bank forecasts a 72% volume growth in 2025, which should lead to positive free cash flow next year and profitability in 2026, according to Lai.Despite the stock's more than 28% decline this year, Xpeng's shares have advanced over 24% in the past three months and more than 51% in the past six months, indicating that the market is already recognizing the company's potential.

Catalysts Driving Xpeng's Upside Potential

Lai's price target of $14 for Xpeng's stock implies a potential upside of around 34% from the stock's closing price on Friday. The analyst believes that Xpeng's upcoming new product strategy, advancements in in-house technology, solid third-quarter earnings, and strong fourth-quarter vehicle deliveries will collectively support the company's share price.Overall, JPMorgan's positive stance on Xpeng and the identified near-term catalysts suggest that the Chinese EV maker could be poised for a significant rally in the near future, as it continues to execute on its strategic initiatives and capitalize on the growing demand for electric vehicles.