Chinese buyers living in the lockdown ignore the price increase of EV

Guangzhou-based Xpeng is one of the few Chinese electric car companies to start expanding abroad.

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BEIJING – As a sign that Chinese drivers are still willing to buy electric, start-up Xpeng says demand for its cars has lessened the impact of rising prices.

From Neo to Tesla, Chinese electric car companies have raised prices in recent months, citing the impact of rising costs on products such as battery components.

After raising prices by several thousand US dollars in March, Xpeng has seen a recovery in demand in areas not affected by China’s latest coveted lockdown, Brian Guo, vice chairman and president, told Asia in an exclusive interview with CNBC’s “Squawk Box” on Tuesday.

With that ability to pass on rising raw material costs to consumers, Gu said the company could then “continue our innovation and investment.”

Last week, Nio CEO William Lee told CNBC that his company’s biggest problem was the supply chain disruption, not the demand for electric vehicles in China.

Sales of passenger cars fell 35.5% year-on-year in April, but new energy cars – including battery-powered electric cars – saw a 78.4% increase in sales, according to the China Passenger Car Association.

Covid controls still weighed on Xpeng, whose shares fell 5.5% overnight in U.S. business after giving lower-than-expected second-quarter guidance.

The electric car company said it expects total revenue to nearly double in the second quarter compared to a year earlier, between 6.8 billion yuan ($ 1.02 billion) and 7.5 billion yuan. But it was lower than the previous factset estimate of 7.08 billion yuan to 9.02 billion yuan.

In the first quarter, Xpeng reported an expected loss of 1.8 yuan per share, compared to Factset’s estimated loss of 1.9 yuan per share. Revenue of 7.45 billion yuan also surpassed Factset’s expectations for 7.39 billion yuan.

Covid, chip deficiency is all harmful

Gu told CNBC that “the second quarter will be a challenging one, especially because of the Covid effect in April.”

“There are no regular operations in Shanghai and some surrounding areas,” he said on Tuesday.

Shanghai’s southeastern metropolis has been battling Covid since March, with the citywide lockdown now nearing a two-month mark. In mid-April the city began prioritizing some businesses – especially in the auto sector – to resume production in a bubble.

Shanghai plans to return to normal life and work by mid-June. But over the weekend a downtown district forbade residents to leave their apartment complex again, illustrating the challenges of a quick reopening.

Read more about electric vehicles from CNBC Pro

In an earnings call accessed through Refinitiv Eikon, Gu said earlier that coveted lockdowns had affected “important markets” for Xpeng and that he expected stronger order speeds as easing restrictions in those regions.

In addition to Kovid control, company CEO Xiaoping added in the call that the running chip shortage was a problem.

“If there hadn’t been a revival of the Kovid in China right now, I think the lion’s share of our co-workers or new Chinese EV makers at the moment would have been limited by the supply of power or chips in general,” he said.

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