XPENG unveils next-gen tech, Chinese EV maker stocks rise

Yahoo Finance Live anchors Brad Smith and Brian Sozzi break down the rise in stock for Chinese EV makers.

Video Transcript

BRAD SMITH: Shares of XPeng on the move after the Chinese EV maker presented its new technology-- its new technology platform with expectations of reducing operating costs. XPeng's Smart Electric Platform Architecture, the "SIPA," if you will. It aims to shorten the research and development cycle for the future models by 20%.

I mean, you know, business talk. We're all about the acronyms. Why not?

BRIAN SOZZI: Yeah, we really are.

BRAD SMITH: Just created one on the fly there.

BRIAN SOZZI: AI--

BRAD SMITH: Actually, no. That's what it's called. Actually I have it here in my notes.

BRIAN SOZZI: SIPA, really--

BRAD SMITH: Here you go. 2.0 actually.

BRIAN SOZZI: It's hard to-- you know, it's interesting because this comes at a time where a Tesla is out there cutting prices across the globe. And now here is XPeng coming out with something to help lower its costs. I think this is a reality of the EV industry. If Tesla is the dominant player in the industry globally-- and it is-- and they're out there cutting prices, some of these other companies that are trying to rival Tesla are going to have to find ways to bring down their cost of production.

And I think this is very much what you're also seeing from legacy US automakers like a GM and a Ford. Now with this will likely come some short-term financial pain for these companies. Maybe it's something that I think a lot of investors don't appreciate. But it's also why you see a GM trying to cut $2 billion out of its costs over the next two years so it can reinvest those profits into lowering its production cost for EVs.

BRAD SMITH: Yeah. Two things here-- one on the models and one on the market where they made this announcement. XPeng is going to be able to roll this out on the models front to their G6 coupe. That also debuting at the Shanghai auto show, Auto Shanghai 2023. And then additionally here, you think about the fact that all of this is being announced in tandem with this broader auto show in mind where Tesla is going to be absent.

And our own Pras Subramanian has kind of broken down the strategy around that. Of course, Tesla has had another major move forward on kind of battery power-- or megapack, rather, production within the region. And being able to chart a path and breaking ground, rather, and then bringing capacity online there.

So perhaps they have what they need, at least for right now, in order to continue to have a good relationship within the region but also continue to develop. But I think for some of the other automakers that are looking to scratch and claw their way into some of the market share-- global market share and the demand that is coming in the EV landscape-- this could be a big auto show that comes forward in Shanghai as well.

BRIAN SOZZI: Right, and with this auto show, a lot of cool EV technology will show up. And I can't help but to think back to what Pras wrote-- it's on the Yahoo Finance home page I believe still-- on Lucid over the weekend. He did a very thorough review of the latest Lucid vehicle.

And the takeaway was, wow, this is a mind-blowing vehicle. But you pull up Lucid shares, shares were down about 65% over the past year. Another EV maker that has to find some way to make money off of these really cool, amazing cars. In order to do that, you have to be making these cars at scale, and you have to be lowering your production costs. And Lucid has not shown that it can do any of that stuff.

BRAD SMITH: Well, Lucid is also growing towards such an affluent consumer that how are you ever going to see mass market unless you take the entire Porsche portfolio client base and say, yeah, we're able to actually just shift all of them over into a Lucid sedan instead of that flashy 911 sports car that they've been able to--

BRIAN SOZZI: I'm not saving up today for a Lucid ride.

BRAD SMITH: No?

BRIAN SOZZI: I'm saving up today for a Porsche. That is a statement car. I don't know anything-- I don't even know what Lucid is about per se. Yeah, the car is cool, but I want a Porsche. I don't want a Lucid.

BRAD SMITH: You can do better.

BRIAN SOZZI: I could do better. I want to the Porsche.

BRAD SMITH: Set you expectations higher.

BRIAN SOZZI: I want the Porsche.

BRAD SMITH: Win Lambo. Win Lambo, Sozzi.

BRIAN SOZZI: It's Porsche. It has the legacy. You look-- you just feel cooler. You feel like, I think, a better person you roll up in a Porsche than a Lucid. No offense to Lucid-- I think your cars are absolutely amazing. But you're saving up today, I think, to buy that Porsche, and then that brings up the other question. You have to bring production costs down if you're Lucid and you're trying to make money off this stuff.

BRAD SMITH: Bro, which Porsche would you get?

BRIAN SOZZI: Doesn't matter. I just want a Porsche.

BRAD SMITH: Just any one.

BRIAN SOZZI: My brother wants the four-door Cayman. He has four kids, so I understand why he wants this. Not my style-- I have no kids, so I'm a two-door Porsche type of guy. But again, I'm saving up for the Porsche, Brad. I'm not saving up for the $150,000 Lucid.

BRAD SMITH: Any Porsche-- I wrote that down. When is the next day that you're hosting with me?

BRIAN SOZZI: I'm just-- well, my next paycheck is coming up soon, brother.

BRAD SMITH: Gotcha. OK. Gotcha. All right. I'll have a surprise for you next time.

BRIAN SOZZI: OK. Thank you. Thank you.