There are some promising electric vehicle players based in China, and XPeng (NYSE:XPEV) is one of them. However, is it a better way to invest in China’s EV industry than its rivals? In this Fool Live video clip, recorded on April 28, Fool.com contributors Matt Frankel, CFP, and Jason Hall and Chief Growth Officer Anand Chokkavelu discuss whether XPeng is worth a closer look for investors.
Anand Chokkavelu: We’ll start with Chinese company XPeng, ticker symbol XPEV. I’m going to share just quick, the market cap and sales. Market cap is about $25 billion, sales are about $900 million. You’ve got 28 times sales there. The tag line is, another Tesla of China. It’s tied with the Tesla of China, NIO, which we’ll get to right afterwards, and this one’s Matt.
Matt Frankel: I actually pick this is as my No. 12. I’ll tell you why. You hit it right on the head, “another Tesla of China.” I mean, we have NIO, we have BYD, which is another big player in the electric vehicle space over there, and we have Tesla. Tesla is actually becoming the Tesla of China.
Jason Hall: That might be changing.
Frankel: Well, we’ll see, but out of those four, the other three all have an advantage in my book. Either they are further along in the technology, or their scale is bigger, or their valuation looks more attractive. XPeng trades at the highest valuation of the four. You think Tesla’s expensive based on its sales, XPeng’s even more so. It delivered 13,000 vehicles in the fourth quarter, which is 300% year-over-year growth. For a company that’s just ramping up, you got to take numbers like that with a grain of salt. It is growing pretty rapidly. The product seems to be very well received. They just recently launched their family sedan. So far, they’ve had an SUV and a performance sedan. It’s called the P5. We’ll have to see how that is received by the market if that really has what the Model 3 did for Tesla, is what to watch right there, but there’s no clear advantage over the other so-called Teslas of China, is why I ranked it as my No. 12. Because it’s a tie, that means at least one of you didn’t rank it as your No. 12.
Chokkavelu: That is true. I think I ranked Nikola No. 12. I know Jason’s more bullish on it and we’ll get to that, but it’s mostly out of just look, I barely know the space. I don’t want to mess around.
Hall: Yeah, good reasons. I ranked XPeng a little bit higher at nine simply because let’s be honest, guys, these all trade for crazy valuations on a sales basis. Historically, if you think about where the automotive industry typically trades for one time sales or lower. The really good companies might trade for 1.2 or 1.3 times sales. I’m thinking about the size of the addressable market and that’s why I put it a little bit higher. I think it’s an easy one to sleep on.
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