Xpeng Motors will unveil the P5 sedan on April 14, 2021 at an event in Guangzhou, China. The P5 is the third series model from Xpeng and has what is known as Lidar technology.

Arjun Kharpal | CNBC

BEIJING – The Chinese electric car start-up Xpeng assumes that the global chip shortage will continue for at least three months.

Automakers around the world have had to cut production due to a shortage of semiconductors or chips. The high demand for electronics, trade tensions between the US and China, and a large factory fire have hampered the ability of the highly specialized industry to produce enough chips.

“We have seen this tense situation continue into the next quarter,” said Brian Gu, vice chairman and president of Xpeng, on CNBC’s “Squawk Box Asia” on Friday.

The challenge is to “ensure the visibility of chip shipments by the minute,” Gu said. “We’re paying very, very close attention to the situation. Right now, the impact is limited and is reflected in our guidelines.”

Xpeng’s US-listed shares fell nearly 4.9% Thursday, despite the start-up’s first-quarter revenue of 2.95 billion yuan ($ 456.7 million).

The stock is down nearly 45% year-to-date but is still holding gains of more than 50% after going public in August.

Xpeng expects to ship between 15,500 and 16,000 vehicles in the second quarter. The company announced that it had delivered 13,340 cars in the first three months of the year, exceeding its forecast for 12,500 cars.

Growing income from software

While auto sales make up the bulk of Xpeng’s revenue, the company found that its first quarter results were helped by customer demand for its assisted driving software. The start-up announced that it started seeing revenue from the software in the first quarter after rolling out an upgrade for paying customers.

Gu said on CNBC that more than 25% of customers paid for the assisted driving software last month, up from 20% in the last quarter. He believes that greater use of the Xpeng software and lower vehicle production costs will increase the company’s margin in the near future.

Later this year, Xpeng plans to roll out a second electric sedan, the P5, that will support the startup’s latest version of the assisted driving software.

The vehicle margin, a measure of profitability, rose to 10.1% in the first quarter after 6.8% in the previous quarter. The company posted a year-over-year net loss increase of 786.6 million yuan for the first quarter compared to 649.8 million yuan for the same period last year. Research and development costs increased 72.2% year over year to 535.1 million yuan.

On to Europe

Xpeng continued its European expansion plans in the first quarter and shipped more than 300 units of its G3 SUV to Norway, according to the company. The start-up launched 100 cars in December. Xpeng is expected to begin delivering its P7 sedan to Norway in the second half of the year.

Competition in this overseas market will intensify with rival Chinese electric car maker Nio’s plans to open a showroom and begin deliveries in Norway later this year. Nio’s shares fell 7.3% on Thursday and are down nearly 36% year-to-date.