XPeng has set the price for its new Lidar-equipped EV sedan. What there is to know.

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Chinese electric vehicle manufacturer

XPeng

on Saturday announced pricing for its new lidar-equipped sedan, as competition continues to intensify in the electric vehicle industry.

The new P5 sedan will cost around 160,000 to 230,000 yuan after purchase subsidies, or about 25,000 to 35,000 dollars, according to XPeng (ticker: XPEV). The company also says the new vehicle, which it plans to begin delivery in Q4 2021, is the first production car on the market with automotive-grade lidar.

Lidar, or laser radar, is a key enabling technology for self-driving cars. It’s also expensive: together, a single lidar sensor and the computer system needed to operate it can cost over $ 1,000 per vehicle. Auto industry executives believe lidar costs would need to be cut in half for the technology to be more widely adopted.

That said, the new Xpeng vehicle costs considerably less than what consumers might pay for a vehicle made by another electric vehicle producer.

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(TSLA). A Chinese-made Tesla Model 3, for example, starts at around 250,000 yuan before government subsidies.

Unlike Xpeng, Tesla vehicles do not use lidar. Instead, they use cameras to power their driver assistance functions, such as adaptive cruise control and lane keeping assist. New Street Research analyst Pierre Ferragu thinks it’s a smart move for now. “Humans supervise the cameras,” he says Barron.

Ferragu knows that Tesla’s systems, as well as the driver assistance systems of all other automakers, do not allow fully autonomous driving at this point. Drivers should stay engaged and watch the roads. And to achieve true autonomous driving, automatic governors will need “redundancy”. In Tesla’s case, the required redundancy is human drivers, not expensive new systems.

However, Ferragu believes that when lidar is finally cheaper, Tesla CEO Elon Musk will embrace the technology and use it to help fuel Tesla’s transition to fully autonomous car offering. Ferragu noted that one of his own tweets explaining this scenario was appreciated by Musk himself.

While customers may not yet be able to purchase fully autonomous vehicles, gaining autonomous driving capabilities is both a competitive and a financial issue for businesses. Autonomous driving features can generate recurring sales: Tesla plans to offer the highest levels of its autonomous driving features on a subscription basis.

And although lidar itself is not currently able to give cars fully autonomous driving capabilities, technology can still play a valuable role: While an electric vehicle maker is known to have cutting edge technology, it can still play a valuable role. The image of the company and its stock could be improved.

XPeng shares could benefit from a lift: the stock is down around 9% so far this year, while the

S&P 500

and

Dow Jones Industrial Average

gained 15% and 13% respectively. Still, XPeng shares, at around $ 39, are up sharply from the company’s $ 15 IPO price in August 2020. The stock has also gained more than 25% in the past three months.

“Advertising intelligent electric vehicles and shaping the mobility experience of the future has always been our goal,” said Henry Xia, co-founder and president of XPeng, in a press release. “The P5 will further enrich our product offering and redefine our driving experience by integrating everyday life situations with the digital cockpit, transforming the vehicle into a multifunctional living space. ”

China, for its part, has the world’s largest market for electric vehicles and new cars in general. In addition, the penetration of new energy vehicles or NEV in June reached 14% of Chinese retail sales, according to industry data reviewed by Citigroup analyst Jeff Chung. (NEV is how China refers to zero or low emission vehicles such as electric vehicles, plug-in hybrids, and fuel cell vehicles.)

Chinese electric vehicle stocks have outperformed Tesla of late, in part thanks to strong selling results. The shares of two Chinese electric vehicle makers, NIO (NIO) and Li Auto (LI), rose about 19% and 57% respectively in the past three months. Tesla stock fell around 13% over the same period.

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