Chinese EV startup Xpeng stunned markets Wednesday with news of a roughly $700 million stake from Volkswagen to jointly develop two cars for China, the largest auto market in the world. Xpeng's stock soared. U.S.-traded shares are up 135% year to date through Friday's close. A few months earlier, the stock was in the red for 2023. Everbright Securities upgraded the stock to buy, expecting it to outperform the broader market by at least 15% in the next six to 12 months.
Volkswagen attributed the recent drop to a parts shortage and "increasing intensity of competition." China's homegrown electric car brands from BYD to Zeekr have piled into the local market, where Tesla still commands a hefty share. Nio , whose cars sell in a higher price range than Xpeng's, warned in June that lackluster deliveries were affecting its cash levels.