Is XPeng (XPEV) The Best EV Charging Stock To Invest In?
We recently published a list of 11 Best EV Charging Stocks To Invest In. In this article, we are going to take a look at where XPeng (NYSE:XPEV) stands against other best EV charging stocks.
Over the last few years, the electric vehicle (EV) market has experienced significant growth, due to consumer demand, automaker investments, and substantial government support. In the US, the $7.5 billion from the 2021 Infrastructure Investment and Jobs Act and tax credits from the Inflation Reduction Act have also fueled EV growth.
According to the International Energy Agency (IEA), global public charging points are expected to exceed 15 million by 2030 and will increase to nearly 25 million by 2035. In the U.S., the government aims to install 500,000 public charging ports by 2030, with the total number of chargers expected to reach 900,000 in 2030 and 1.7 million by 2035.
Globally, home charging is expected to grow to over 270 million units by 2035, with more than 45% of electricity coming from public or private non-home chargers. Charging infrastructure for heavy-duty vehicles (HDVs) is also expected to grow significantly. By 2035, installed HDV charging capacity is projected to reach 2,000 GW. Policies like the EU’s Alternative Fuels Infrastructure Regulation and U.S. strategies are driving this expansion, alongside private investments.
The Road Ahead for EV Charging: Industry Growth and Challenges
According to PwC’s analysis, the number of charge points in the U.S. must grow from around 4 million today to 35 million by 2030 to meet demand. The PwC report has projected that the number of EVs could reach 27 million by 2030 and 92 million by 2040.
The EV supply equipment (EVSE) market is expected to expand from $7 billion to $100 billion by 2040, at a 15% compound annual growth rate. The market’s primary value pools are hardware, software, installation services, and charge point operators (CPOs). CPOs, which build, operate, and maintain charging stations, are expected to dominate and capture 65% of market revenue by 2040. On the other hand, hardware providers’ share will shrink from 46% today to 20% by 2040.
Despite the clear market opportunities, challenges remain, including educating consumers, financing infrastructure, and ensuring cost-effective solutions across different charging segments. Companies looking to enter or expand in the EVSE market will need to understand evolving customer needs, adopt appropriate business models, and prepare for long-term investments with a focus on strategic partnerships and potential acquisitions.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a luxury electric sports sedan, its sleek body reflecting the energy of progress.
XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 17
XPeng Inc. (NYSE:XPEV) is a prominent player in China’s EV market. It has been actively improving its charging infrastructure to support the growing adoption of its vehicles. As of late July, the company operates a network of 1,300 charging stations, including 1,000 supercharging stations. The company takes a spot on our list of the best EV charging stocks to invest in.
The charging network, which features both self-operated and partner-operated stations, is designed to offer a convenient charging experience for Xpeng owners across China. By June 30, the company had established nearly 1,300 self-operated stations, including 442 ultra-fast XPENG S4 charging stations. It plans to expand this network significantly, aiming for 10,000 self-operated charging stations by 2026, with a focus on 4,500 of these being liquid-cooled ultrafast chargers.
XPeng (NYSE:XPEV) is also set to introduce its next-generation supercharger in the near future, which promises even faster charging capabilities. The new S5 liquid-cooled supercharging station, expected to roll out in the third quarter of 2024, will offer up to 800 kW of charging power.
The new technology will feature a maximum output current of 800 A and a maximum output voltage of 1,000 V, which will allow drivers to gain more than one kilometer of range with just one second of charging. The process from plugging in to starting the charge will take less than 13 seconds. Users will be able to access real-time information about these new stations through the Xpeng App and other digital channels.
For the second quarter, the company reported revenue of $1.12 billion, a 60.2% increase compared to the same period the previous year. Vehicle deliveries also saw substantial growth, with 30,207 units delivered during the quarter, up by 30.2% from the 23,205 vehicles delivered in the second quarter of 2023. Despite a non-GAAP EPS loss of $0.18, the figures are a sign of the company’s strong growth trajectory and its expanding market presence.
In Q2, 17 hedge funds had investments in XPeng (NYSE:XPEV), with positions worth $191.728 million. D E Shaw is the top investor in the company as of Q2. In the quarter, the firm increased its stake by 166% to 12.539 million shares worth $91.9 million.
Overall XPEV ranks 5th on our list of the best EV charging stocks. While we acknowledge the potential of XPEV as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than XPEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure. None. This article is originally published at Insider Monkey.