Finimize - 🚗 Auto extinction

What’s going on here?

Chinese EV upstart Xpeng is looking sore and sorry, after results that seem more like a shock to the system than a power surge.

What does this mean?

The EV industry is more crowded than a California freeway during rush hour, with established brands and ambitious startups all trying to outpace each other. And while BYD is cruising in the fast lane, Xpeng is experiencing some serious engine trouble. That hasn’t been helped by Tesla’s aggressive price slashing either, which keeps luring away potential customers.

The numbers showed the full damage: Xpeng’s deliveries last quarter were about half of those notched up at the same time last year – meaning both revenue and profit missed expectations by miles. Rubbing salt in that wound, Xpeng’s forecast for this quarter predicted a grim 40% drop in deliveries. So while the company said it’s rejigging its structure to boost growth, the reaction of investors was icy, and its shares dropped 11%.

Why should I care?

Zooming in: Xtinction event.

The firm once said it sees the global car industry shrinking to just ten big players over the next ten years – so if Xpeng doesn’t want to be Xpunged, it’s going to have a lot of work to do. In a nutshell, the company thinks Chinese carmakers need to sell about three million cars a year, and export a good chunk globally, to survive. That’s got it counting on its upcoming SUV launch to kickstart sales and rejuvenate its brand image. Great Xpectations, but let’s see if Xpeng actually delivers.

The bigger picture: Park those hopes.

China’s revving up to overtake Japan as the world’s top car exporter. But while Xpeng is steering towards Europe this year, US plans are parked for now due to frosty US-China relations. You can bet it’s not the only Chinese firm thinking that way either – and that could leave American drivers missing out on broader choices and potentially lower prices.

What’s going on here?

Data out on Wednesday showed that UK inflation shrank into the shadows last month – but that doesn't mean it's gone away.

What does this mean?

The price of goods and services in the UK rose only 8.7% in April versus the same time last year – the first time the inflation monster has been tamed into single digits in eight months. But that dropoff – down from 10.1% in March – doesn’t mean the price-hike beast has lost its claws. See, the cooldown wasn’t quite as chill as the Bank of England (BoE) expected, and while energy prices let up, the cost of groceries clung on near a 45-year peak. Plus, core inflation (which strips out volatile factors like food and energy) leaped from 6.2% in March to 6.8% last month – scary enough to sustain Brits' heebie-jeebies.

Why should I care?

For markets: Hiking higher.

The BoE has already said that it’ll only ease up on interest rate hikes when there are clear signs of ebbing inflation, and “clear” this mixed bag is decidedly not. With the country’s inflation still outpacing its major peers (like the eurozone’s 7% and 4.9% in the US), the BoE will be keen to nip this in the bud with even more rate hikes. That means economists’ Magic 8 Balls are saying “Without a doubt” to another hike – and traders are betting rate increases will total nearly a full extra percentage point by the end of the year.

The bigger picture: Staying the course.

The IMF might’ve tipped the UK to sidestep a recession and outpace Germany’s growth this year, but Wednesday’s data shows the fight against inflation is still raging. And sure, that’s in line with the IMF’s warnings that more hikes could be called for – but to make good on the organization’s other predictions, the BoE and the British government can’t let off the gas anytime soon.