Pricing for the Xpeng X9 has been more aggressive than expected, and volume could go upside in the first half of 2024, said Deutsche Bank.

(Image credit: CnEVPost)

Xpeng (NYSE: XPEV) started 2024 with a new model and a rapid expansion of city coverage for its smart assisted driving system, and the advancements look encouraging to analysts.

Xpeng officially launched the X9 MPV (Multi-Purpose Vehicle) on January 1 and said the model had received more than 5,000 firm orders before the launch event was even over.

"Financially, X9 provides a lift to not only volume but also gross margin as it will be the most profitable vehicle in the line-up," Deutsche Bank analyst Edison Yu's team said in a research note sent to investors today.

The X9 -- the highest priced in the Xpeng product array -- starts at RMB 359,800 yuan ($50,350), about RMB 28,000 below initial pre-sale levels.

"Pricing came in more aggressive than expected and gives us confidence volume could upside in 1H24," Yu's team wrote.

The team expects firm orders for the X9 to reach 10,000-15,000 by the weekend, with thousands delivered in January and ramping up further in February and March.

Separately, Xpeng's local counterpart Li Auto (NASDAQ: LI) has pushed back the launch of its Li Mega MPV to March 1 from the originally planned December, which Yu's team believes gives Xpeng a few months head start.

The Li Mega will be Li Auto's first battery electric vehicle (BEV) model and deliveries are expected to begin in early March.

Li Auto's three models currently on sale are the Li L7, Li L8 and Li L9, all of which are extended-range electric vehicles (EREVs), essentially plug-in hybrids. All of Xpeng's models are BEVs.

In addition to launching the X9, Xpeng announced on December 29 that it was expanding the XNGP's coverage to 52 cities after beta testing was completed in an additional 27 cities.

On January 2, XNGP added coverage to 191 cities, bringing the total coverage to 243 cities.

XNGP is Xpeng's Advanced Driver Assistance System (ADAS), similar to Tesla's (NASDAQ: TSLA) FSD (Full Self-Driving).

This reflects the rapid progress in iteration, allowing users to access city NGP features without relying on HD maps, Yu's team said.

Recall at Xpeng's tech day in late October, the company's management planned to expand to 50 cities by the end of 2023 and cover all major cities in China by the end of 2024, the team noted.

($1 = RMB 7.1459)

Factbox: Detailed prices for Xpeng models in 2024