Xpeng shares surge on tech service income, upbeat comments on self-driving tech

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By Sarah Wu

BEIJING/SHANGHAI (Reuters) – Shares in Chinese electric vehicle maker Xpeng jumped on Wednesday driven by revenue growth from research and development services offered to Volkswagen as well as upbeat comments about its goals for gains in self-driving tech.

Xpeng, which deepened its partnership with VW in April to co-develop EV architecture, said that those R&D services were primarily responsible for its revenue from services nearly doubling to 1 billion yuan ($138 million) in the first quarter from a year ago.

That helped Xpeng’s gross margin climb to 12.9% compared with 1.7% a year earlier and 6.2% for the fourth quarter.

Emphasising its technological edge in smart EVs, Xpeng also said it expects to have developed capabilities for “level four” autonomous driving by next year, but added that it would take time for hardware and the regulatory environment to catch up.

Level four does not require a human driver within designated areas. Very few automakers have developed level-four technologies, with most efforts to date confined to robotaxi tests that are done in limited areas.

Driver-assistance features now offered in China are “level two” systems, which require a driver to be ready to take over. Tesla’s “Full-Self Driving” and less advanced Autopilot option are also level-two systems requiring attentive drivers.

Xpeng shares were last up 13% in afternoon trade. It also said in its earnings call late on Tuesday that it expects second-quarter deliveries to rise between 25% and 38% from a year earlier.

($1 = 7.2383 Chinese yuan)

(Reporting by Sarah Wu in Beijing and Zhang Yan in Shanghai; Editing by Edwina Gibbs)

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