XPeng Inc. (XPEV)

Company website 2020 Financial Report Stock Analysis 2020 Sustainability Report

5520

Tons

The amount of greenhouse gases avoided by XPeng's EVs sold in 2020, compared to internal combustion vehicles

35000

Electric Vehicles

delivered as of end of 2020

100^%

Recycling and Reuse Rate

as of May 2021

View Our Analysis

The Path to Drawdown: Electric Cars

The electric vehicle (EV) was first built in 1828, but being unable to surmount the challenge of building a lightweight, durable battery with adequate range meant that internal combustion engines have dominated the automotive and transport landscape since the 1920s.

Today that landscape is changing thanks to supportive policies and falling costs. More than 1 million EVs now take to the roads. The difference in impact on the climate is remarkable. Compared to internal combustion vehicles, CO2 emissions drop by 50% if an EV’s power comes off the conventional grid. If powered by solar energy, emissions are cut by 95%. Once households purchase EVs, their operating costs are often cheaper than gas-based cars, too.

What once used to be a limitation for EVs - the question of how far the car can travel on a single charge - is now much less of a concern. The average range of a battery electric vehicle produced in 2020 is about 217.5 miles, up from 124 miles in 2015.

What’s making this increase in mileage possible is the continuing development in battery capacity. Global EV battery capacity is expected to increase from around 170 GWh per year today to 1.5 TWh per year in 2030. At the same time, the cost of batteries is falling as their production reaches greater scale.

To be on track to remain under 1.5ºC of warming, 100% of passenger cars and vans (p. 138) need to be running on electricity by 2050. This is a jump from 5% of cars and 0% of vans in 2020, respectively. Accomplishing this overhaul of the transportation landscape means EV production and ownership need to continue to expand over the next three decades:

<::marker> 11 million EV cars and vans were on the road in 2020
<::marker> 2 billion EV cars and vans (100% of total global sales) need to be on the road by 2050

This would require a CAGR of 18.94% from 2018-2050

About

XPeng Inc. (stock ticker: XPEV) makes smart electric vehicles in China. They offer SUVs under the G3 name and four-door sports sedan under the P7 name. The company also provides sales contract, maintenance, super charging, vehicle leasing, and ride-hailing services. XPeng Inc. was founded in 2015 and is headquartered in Guangzhou, China.

XPEV's Role in Drawdown

XPeng sells electric vehicles that are targeted at the mid- to high-end segment in China's passenger vehicle market. Their P7 model offers a range of up to 439 miles on a single charge and began to be sold in April 2020. So far, XPeng has delivered 15,062 units of the P7. Their G3 model is an electric SUV and has a range of up to 323 miles. Both models incorporate autonomous driving, parking, and safety features.

XPEV: What We Like

XPeng has a couple of initiatives (p. 72) to enhance energy efficiency and increase their use of clean energy. They're things like:

<::marker> Developing a solar PV carport and roof power project at their Zhaoqing plant, which will have a 22.6 MW generation capacity and reduce !11,000 tons of GHG
<::marker> Constructing solar PV projects at their Guangzhou and Wuhan Manufacturing Plants - expected to start generating energy and connect to the grid in 2023 and 2025, respectively
<::marker> Installing LED light boxes at assembly lines in their manufacturing plants, which are 70% more energy efficient than fluorescent lights in traditional car factories

XPeng also offers EV charging stations for their vehicles. According to the ESG Report (p. 80), there were over 1,000 XPeng Supercharging Stations in their free charging network, covering 160 cities. EV chargers are a critical infrastructure for a wider adoption of EVs, and XPeng is helping this process along.

What We Want to See Improve

Set Clearer Emissions Reduction Goals

We're excited that XPeng has a carbon neutral plan, which includes a promise to reduce carbon emissions throughout the lifecycle of EVs and their industrial chain. But these promises aren't accompanied by specific reduction targets or timelines. In their next ESG report, we want to see science-based targets for GHG reduction, the methods by which XPeng plans to achieve these reductions, and the timeline they plan to adhere to.

Push Suppliers To Reduce Emissions

We like XPeng's stringent supplier selection process, which they discuss in their ESG Report (p. 55). But one crucial consideration that's missing is the suppliers' carbon footprint. In the near future, we'd like to see a supplier code of conduct that includes the need for suppliers and partners to proactively cut their own greenhouse gas emissions to continue working with XPeng.

Report Broader Scope 3 Emissions

We applaud the fact that XPeng reports (p. 92) their GHG emissions - scope 1, 2 and 3. But we're concerned that their scope 3 emissions only captures emissions from the business air travel by employees. Emissions from business travel is only one of 15 categories that should feed into a comprehensive scope 3 disclosure, according to the Greenhouse Gas Protocol. In the near future, we'd like to see XPeng expand the scope of their scope 3 accounting.

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Allocated	Company	Description
5.00%	Tesla Motors, Inc. (TSLA)	Tesla Motors makes EVs, battery energy storage, solar panels and solar roof tiles. They’ve done the most to make EVs cool
4.12%	Nio Inc. (NIO)	Nio Inc. makes EVs and integrate self-driving systems in EVs. They’re helping to electrify the transport system
2.55%	XPeng Inc. (XPEV)	XPeng makes electric passenger cars and SUVs with a long range and autonomous driving capabilities. They’re helping electrify transport
0.69%	Lennox International (LII)	Lennox makes high-efficiency heating, ventilation, air conditioning and refrigeration products, helping building managers cut energy use and emissions
0.66%	Arrival (ARVL)	Arrival makes commercial electric vans and buses through an innovative and efficient manufacturing process. They’re helping electrify transportation
0.30%	Fisker Inc. (FSR)	Fisker makes luxury and high-end electric cars and SUVs with a long range. They’re pushing the electrification of transportation
0.17%	The Lion Electric Company (LEV)	LEV makes electric trucks, school buses and minibuses in North America. They also make batteries and EV charging infrastructure, all key Drawdown solutions
0.16%	Proterra Inc. (PTRA)	Proterra offers electric transit buses, EV batteries and energy storage, as well as EV charging solutions - all key to electrifying transportation
0.12%	Canoo Inc. (GOEV)	Canoo makes a range of electric vehicles designed for families and commercial uses. They’re helping electrify transportation
0.05%	XL Fleet Corp. (XL)	XL Fleet makes hybrid and electric systems so that leading automakers can make more low and zero-emission vehicles
0.03%	Arcimoto, Inc. (FUV)	Arcimoto makes ultra-efficient, fun, pure electric vehicles for passenger transportation. They’re helping electrify transportation.
0.03%	Lightning eMotors, Inc. (ZEV)	Lightning eMotors makes electric commercial vehicles and charging solutions for those vehicles. They're helping electrify transportation
0.02%	Ayro, Inc. (AYRO)	Ayro makes EVs designed for narrow paths, college campus walkways, and last-mile delivery. EVs are key in electrifying transportation
0.02%	GreenPower Motor Company Inc. (GP)	GP makes electric commercial vehicles for delivery, public transit, schools, micro-transit, and shuttles. They’re helping electrify transportation
0.02%	Jiuzi Holdings, Inc. (JZXN)	Jiuzi Holdings and their subsidiaries make EVs for the Chinese market. They’re helping electrify transportation