Friday, the company reported it was recalling 13,399 G3 sport-utility vehicles manufactured between March 2019 and September 2020 due to an inverter issue. Inverters are parts that take direct electrical current from batteries and convert it to alternating current for electric motors.
“The company proactively identified the issue and voluntarily initiated the recall plan in order to best protect its customers’ safety and interests,” said a company spokeswoman in a statement. The recall is a first for XPeng [$XPEV], per the company. No damage resulted from a defective part and the recall isn’t likely to affect profits, but the parts supplier will have to eat some crow for some of the added expense.
Recalls aren’t at all uncommon. Heck, oftentimes they aren’t even in the news. But for Ev stocks, everything matters these days. XPeng shares are up about 230% from the company’s August $15 IPO price. Investor interest in the sector is sky-high, mobilized by the success of Tesla [$TSLA]. Investors, and a growing number of Wall Street analysts, have become convinced EVs are the future of personal transportation.
The recall isn’t the headline the company managed to grab this week; XPeng launched a software upgrade for its P7 sedan. The upgrade enhances voice-activated control and offers other enhancements, such as customized climate-control options and new music interface designs. The update news didn’t move the stock, but it shows, for investors, how software is starting to drive car improvements.
Demand remains stable, especially in China, where EV purchase incentives are high. But the valuation multiples are concerning, especially with more competition coming in China and around the world from new and existing auto makers. Analysts just can’t get on the same page, as about two-thirds of them rate XPeng stock Buy. The average Buy-rating ratio for stocks in the Dow and S&P 500 is about 55%, while the average analyst price target for XPeng is about $54 a share.