This means the team sees Xpeng outperforming the overall market by 10-20 percent within the next six months.

(Image credit: CnEVPost)

Chinese brokerage Ping An Securities initiated coverage on Xpeng Motors in a research note on Friday, bullish on the company's efforts in autonomous driving and intelligence.

Analyst Wang De'an believes Xpeng is on track to achieve profitability for the first time in 2024 and gave it a "Recommend" rating without a price target.

At Ping An Securities, a "Recommend" rating means they believe a stock will outperform the overall market by 10-20 percent within six months.

Ping An Securities notes that Xpeng's product matrix continues to grow, with four models already unveiled and at least two to three new models to be launched each year from 2023, all of which will be equipped with XPILOT 4.0 system.

Xpeng's product price band covers the range of RMB150,000 ($23,500) to 400,000, with a wide market space, the report said.

Xpeng, with intelligence as its core competency, is an early car company to end cooperation with Mobileye and start in-house development of self-driving perception algorithms, and its capability of self-driving full stack development is in the leading position in the industry, according to the report.

Xpeng launched XPILOT 3.0 system in 2021, becoming the first automaker in China to achieve full-stack development of autonomous driving and equipped with mass production vehicles, Ping An Securities noted.

Xpeng's assisted driving features were launched early, with longer cumulative mileage and better intelligent experience, the report said.

The company will launch navigation-assisted driving for urban scenes in 2022 and full-scene navigation-assisted driving in 2023, with the pace of autonomous driving feature launches in the industry's top tier, according to the report.

Compared with Li Auto and Nio, Xpeng's vehicles are priced lower, which facilitates its rapid fleet expansion, Ping An Securities said.

Although Xpeng's gross margin is lower, it is on the upswing, and the company's gross margin is expected to improve in the future as deliveries increase, Ping An Securities said.

Xpeng has a higher net loss than Nio and Li Auto mainly because of its lower vehicle unit price, lower gross margin and high R&D investment, the report said.

Ping An Securities expects Xpeng's revenue to be RMB 20.8 billion, RMB 39 billion and RMB 64.7 billion, respectively, and net profit to be RMB -5.6 billion, -5 billion and -1.5 billion in 2021-2023.

By 2024, Xpeng is expected to be profitable, the report said.

Xpeng fell 1.41 percent to $32.15 in the US on Friday. The stock is down about 36 percent so far this month amid a decline in the broader US stock market.