XPeng projects lower-than-expected Q3 revenue on stiff competition

(Reuters) -Chinese firm XPeng (NYSE:) forecast third-quarter revenue below expectations and missed June-quarter sales estimates on Tuesday, hurt by stiff competition and a drop in demand for its aging line-up of pricey electric vehicles.

The company, however, expects to deliver between 41,000 and 45,000 vehicles in the third quarter, slightly above 40,008 units a year earlier.

XPeng’s Hong Kong-listed shares fell 2.7% on Wednesday.

The company is planning to refresh its model lineup by launching a range of new EVs in the next three years, priced between 100,000 yuan and 400,000 yuan ($14,001.88-$56,007.51), to grab market share from rivals like BYD (SZ:), Nio (NYSE:) and U.S. automaker Tesla (NASDAQ:).

It plans to launch the MONA M03 mid-sized sedan this month, which is set to compete with BYD’s Seagull, Dolphin and the higher-priced Tesla Model 3.

XPeng has seen its expansion plans temporarily throttled by the European Commission’s move to impose tariffs on electric vehicles made in China to prevent a flood of cars built with state subsidies.

It is among the Chinese companies considering setting up a manufacturing plant in the region to avoid those tariffs.

Vehicle margin in the April-June period improved to 6.4% from 5.5% in the prior quarter. It expects to deliver between 41,000 and 45,000 vehicles in the third quarter, compared with 40,008 units in the corresponding quarter of last year.

XPeng’s revenue rose to 8.11 billion yuan ($1.14 billion), in line with its forecast of 7.5 billion and 8.3 billion yuan, but slightly below analysts’ average estimate of 8.17 billion yuan according to LSEG data.

It expects third-quarter revenue between 9.1 billion yuan and 9.8 billion yuan, compared with analysts’ estimates of 10.4 billion yuan.

($1 = 7.1419 renminbi)