Raphael Stevens

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    Vast government debts are riskier than they appear

    At the annual gathering of central bankers in Jackson Hole, Wyoming, attendees enjoy R&R: research and recreation. The latter usually involves a pleasant hike by the lake, but last year a rainstorm soaked the assembled economists. When they returned on August 23rd a remarkably accurate weather forecast helped them dodge a shower and enjoy some sun. This was apt. A year ago inflation was still too high and investors were placing bets that interest rates would have to stay “higher for longer”, the economic equivalent of a drenching. This year inflation looks all but subdued and central bankers—whose optimistic prognostications have also come to pass—have started cutting interest rates. More

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    Home prices hit record high in June on S&P Case-Shiller Index

    Prices nationally were 5.4% higher than June 2023.
    New York saw the highest annual gain among the top 20 cities, with prices increasing 9% in June, followed by San Diego and Las Vegas with annual increases of 8.7% and 8.5%, respectively.
    Portland, Oregon saw just a 0.8% annual increase in June, the smallest gain of the top cities.

    A recent CreditNews Research study ranked the slowest-selling metro areas in the U.S.
    The Good Brigade | Digitalvision | Getty Images

    Even as mortgage interest rates were rising, home prices reached the highest level ever on the S&P CoreLogic Case-Shiller U.S. National Home Price Index.
    On a three-month running average ended in June, prices nationally were 5.4% higher than they were in June 2023, according to data released Tuesday. Despite being a record high for the index, the annual gain was smaller than May’s 5.9% reading.

    The index’s 10-city composite rose 7.4% annually, down from 7.8% in the previous month. The 20-city composite was 6.5% higher year over year, down from a 6.9% increase in May.
    “While both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index,” noted Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a release. “That is a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen over 1,100% since 1974, but have slightly more than doubled (111%) after accounting for inflation.”
    New York saw the highest annual gain among the 20 cities, with prices climbing 9% in June, followed by San Diego and Las Vegas with annual increases of 8.7% and 8.5%, respectively. Portland, Oregon, saw just a 0.8% annual rise in June, the smallest gain of the top cities.
    Since housing affordability has been a major talking point in this election cycle, this month’s report also broke out home values by price tier, dividing each city’s market into three tiers. Looking just at large markets over the past five years, it found that 75% of the markets covered show low-price tiers rising faster than the overall market.
    “For example, the lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes,” Luke wrote in the release.

    “New York’s low tier has the largest five-year outperformance, rising nearly 20% above the overall New York region,” he continued. “New York also has the largest divergence between low- and high-tier prices. Conversely, San Diego has seen the largest appreciation in higher-tier homes over the past five years.”
    Prices in the overall San Diego market are up 72% in the past five years, but the high tier is up 79% versus 63% for the lower tier.
    The increase in prices came even as mortgage rates rose sharply from April through June, which is the period averaged on the index. Usually when rates rise, prices cool.
    The average rate on the 30-year fixed started April just below 7% and then shot up to 7.5% by the end of the month, according to Mortgage News Daily. Rates stayed over 7% before falling back under that level in July. The 30-year fixed is now right around 6.5%.
    “Mortgage rates have fallen since June, but there is evidence that even the decline in rates has not been enough to bring buyers back into the market,” said Lisa Sturtevant, chief economist at Bright MLS. “Some buyers are waiting for home prices — and not just interest rates — to come down,”
    While home prices should ease month to month going into the fall, due to seasonal factors and more inventory on the market, they are unlikely to drop significantly, and are expected to still be higher than they were last fall.

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    Buy now, pay later firm Klarna swings to first-half profit ahead of IPO

    Klarna said it made an adjusted operating profit of 673 million Swedish krona ($66.1 million) in the six months through June 2024, up from a loss of 456 million krona in the same period a year ago.
    The company said it was focused on “sustainable, profitable growth and leveraging AI to lower costs.”
    After leaning into AI, Klarna said its average revenue per employee increased 73% year-over-year, to 7 million Swedish krona.

    “Buy-now, pay-later” firm Klarna aims to return to profit by summer 2023.
    Jakub Porzycki | NurPhoto | Getty Images

    Klarna said it posted a profit in the first half of the year, swinging into the black from a loss last year as the buy now, pay later pioneer edges closer toward its hotly anticipated stock market debut.
    In results published Tuesday, Klarna said that it made an adjusted operating profit of 673 million Swedish krona ($66.1 million) in the six months through June 2024, up from a loss of 456 million krona in the same period a year ago. Revenue, meanwhile, grew 27% year-on-year to 13.3 billion krona.

    On a net income basis, Klarna reported a 333 million Swedish krona loss. However, Klarna cites adjusted operating income as its primary metric for profitability as it better reflects “underlying business activity.”
    Klarna is one of the biggest players in the so-called buy now, pay later sector. Alongside peers PayPal, Block’s Afterpay, and Affirm, these companies give consumers the option to pay for purchases via interest-free monthly installments, with merchants covering the cost of service via transaction fees.
    Sebastian Siemiatkowski, Klarna’s CEO and co-founder, said the company saw strong revenue growth in the U.S. in particular, where sales jumped 38% thanks to a ramp-up in merchant onboarding.

    “Klarna’s massive global network continues to expand rapidly, with millions of new consumers joining and 68k new merchant partners,” Siemiatkowski said in a statement Tuesday.

    Using AI to cut costs

    The company achieved its adjusted operating profit “by focusing on sustainable, profitable growth and leveraging AI to lower costs,” he added.

    Klarna has been one of the forerunners in the corporate world when it comes to touting the benefits of using AI to increase productivity and cut operating costs.
    On Tuesday, the company said that its average revenue per employee over the previous twelve months increased 73% year-over-year, to 7 million Swedish krona.
    It comes as Klarna tries to pitch itself as a primary banking provider for clients as it approaches a much-anticipated initial public offering.
    The firm earlier this month launched its own checking account-like product, called Klarna balance, in a bid to persuade consumers to move more of their financial lives onto its app.

    The move highlighted how Klarna is looking to diversify beyond its core buy now, pay later product, for which it is primarily known.
    Klarna has yet to set a fixed timeline for the stock market listing, which is widely expected to be held in the U.S.
    However, in an interview with CNBC’s “Closing Bell” in February, Siemiatkowski said an IPO this year was “not impossible.”
    “We still have a few steps and work ahead of ourselves,” he said. “But we’re keen on becoming a public company.”
    Separately, Klarna earlier this year offloaded its proprietary checkout technology business, which allows merchants to offer online payments, to a consortium of investors led by Kamjar Hajabdolahi, CEO and founding partner of Swedish venture capital firm BLQ Invest.
    The move, which Klarna called a “strategic” step, effectively removed competition for rival online checkout services including Stripe, Adyen, Block, and Checkout.com. More

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    Xpeng releases mass-market EV with basic driver-assist for less than $20,000

    The basic version of the Mona M03 electric coupe starts at 119,800 yuan ($16,812), with a driving range of 515 kilometers (320 miles) and some parking assist features.
    A version of the Mona M03 with the more advanced “Max” driver assist features and a driving range of 580 kilometers will sell for 155,800 yuan.
    In comparison, Tesla’s cheapest car — the Model 3 — costs 231,900 yuan in China, after a price cut in April.

    Chinese electric car company Xpeng displays its mass-market Mona M03 coupe inside a headquarters’ showroom in Guangzhou, China, on Aug. 26, 2024.
    CNBC | Evelyn Cheng

    BEIJING — Chinese electric car company Xpeng on Tuesday announced that its mass-market brand Mona will start selling some models for less than $17,000.
    The basic version of the Mona M03 electric coupe will be listed at 119,800 yuan ($16,812), with a driving range of 515 kilometers (320 miles) and some parking assist features.

    A version of the Mona M03 with the more advanced “Max” driver assist features and a driving range of 580 kilometers will sell for 155,800 yuan.
    In comparison, Tesla’s cheapest car — the Model 3 — costs 231,900 yuan in China, after a price cut in April.
    Xpeng CEO He Xiaopeng did not specify a launch date for the standard version of the car in his presentation on Tuesday. The company told investors last week on an earnings call that mass deliveries would begin shortly after Tuesday’s announcement.
    Presales of the Mona M03 began on Aug. 8.

    The Mona M03 standard driver-assist supports parking, including parallel parking. The company says it uses a range of automatic sensors, cameras and light detection and ranging sensors.

    The Max version of driver assist includes features such as automatically backing up a car to a designated position in a dead-end street with the push of a button. Xpeng also plans for it to support the remote control of entering and exiting a narrow parking spot.
    That Max version is set to begin deliveries after the Lunar New Year holiday in 2025, CEO He said. The Chinese holiday runs from late January to early February next year.
    Xpeng’s driver-assist technology is widely considered one of the best currently available in China. Tesla’s version, marketed as “full self-driving,” isn’t fully accessible in China, although it is widely expected to be released in the coming months.
    The Xpeng CEO’s presentation on Tuesday also commemorated the 10th anniversary of Xpeng’s founding. Chinese smartphone company Xiaomi’s founder Lei Jun was among those in attendance
    CEO He said the brand name Mona stands for “Made of new AI.” He emphasized that over the next decade, Xpeng would focus on developing artificial intelligence for cars.
    The company also said Tuesday that it plans to reveal its second-generation humanoid robot in October. It also revealed its own chip, but did not specify what nanometer process — or level of production technology — is used in its manufacturing.
    Premium Chinese electric car startup Nio in late July said it had finished designing a five nanometer automotive-grade chip, the NX9031. The company had teased the chip in December, and plans to use it in its high-end ET9 sedan, set for delivery in 2025.

    Collaboration with Didi

    Xpeng built Mona using tech it acquired from ride-hailing company Didi in August 2023.
    Wu Zhefeng, a Mona project manager, told reporters Monday that the basic version of driver-assist technology in the M03 comes from Didi, while the more advanced version was made by Xpeng.
    Since the battery is the priciest component of an electric car, he said Xpeng was able to bring the cost down for Mona thanks in part to efforts to boost energy efficiency. The coupe uses BYD’s popular “blade battery,” Wu said.
    He said the brand is focused on young people, two or three years after graduation.
    Nearly half of similar cars available in China within this price range are used for ride-hailing, according to Wu. While electric car companies such as BYD have worked with Didi to promote their cars among drivers on the ride-hailing platform, he said Mona would remain focused on consumer drivers.
    BYD, which has quickly become a giant in China’s electric car industry, sells cars across a range of prices and models, including many hybrid-powered versions. Consumers in China have increasingly preferred hybrids to battery-only cars as anxiety persists over how far they can drive on a single charge.
    Geely-owned electric car company Zeekr announced earlier this month that it would launch its first hybrid car next year.
    Other Chinese companies have launched cars this year in direct competition with Tesla.
    Nio, which has focused on premium electric cars, in May announced a lower-priced brand Onvo. Its first car, the L60 SUV, is set to begin deliveries in September. The L60 starts at 219,900 yuan (US$30,439) versus the Model Y’s 249,900 yuan (US$34,617), according to prices shared in May. 
    Chinese smartphone company Xiaomi, meanwhile, in March released its first electric car, the SU7 sedan for 215,900 yuan.
    — CNBC’s Sonia Heng contributed to this report. More

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    Eli Lilly releases new form of weight loss drug Zepbound for half the price to boost access, supply

    Eli Lilly released a new form of its weight loss drug Zepbound for roughly half its usual monthly list price to increase access for patients without insurance coverage for the highly popular injection.
    The move also aims to expand the U.S. supply of Zepbound amid soaring demand and ensure patients are safely accessing the treatment as cheaper copycat versions of the drug gain traction. 
    The company is now offering 2.5-milligram and 5-milligram single-dose vials of Zepbound for $399 per month and $549 per month, respectively, through its direct-to-consumer website.

    Eli Lilly on Tuesday released a new form of its weight loss drug Zepbound for roughly half its usual monthly list price to reach millions of patients without insurance coverage for the popular injection, such as those with Medicare. 
    The move also aims to expand the supply of Zepbound in the U.S. as demand skyrockets, and to ensure eligible patients are safely accessing the real treatment as cheaper copycat versions gain traction. 

    The company is now offering 2.5-milligram and 5-milligram single-dose vials of Zepbound for $399 per month and $549 per month, respectively, through its direct-to-consumer website. Patients typically start treatment with a 2.5-milligram dose, gradually increase the amount and later take so-called maintenance doses to keep the weight off.
    The list prices of Zepbound and other popular weight loss drugs, such as Novo Nordisk’s Wegovy, are around $1,000 per month before insurance and other rebates. Those treatments are part of a blockbuster class of medications called GLP-1s, which mimic certain gut hormones to tamp down a person’s appetite and regulate blood sugar. 
    Patients need to use a syringe and needle to draw up the medicine from a single-dose vial — the version of Zepbound Eli Lilly is releasing Tuesday — and inject themselves. That differs from single-dose autoinjector pens, the currently available form of all Zepbound doses, which patients can directly inject under their skin with the click of a button.
    Eli Lilly has said the vials will create additional supply capacity because they are easier to manufacture than autoinjector pens.
    The lower price points will benefit patients who are willing to pay for Zepbound themselves and are enrolled in Medicare or employer-sponsored health plans that do not currently cover obesity treatments, said Patrik Jonsson, president of Eli Lilly diabetes and obesity, in an interview. 

    He noted that Medicare beneficiaries are also not eligible for Eli Lilly’s savings card programs for Zepbound. One program allows people with insurance coverage for Zepbound to pay as little as $25 out of pocket, while another allows those whose insurance does not cover the drug to pay as low as $550.
    Having patients directly pay for single-dose vials of Zepbound also “enables a transparent price by removing third-party supply chain entities,” the company added in a release. 
    There “will be no markups, and we believe that’s super important … that consumers have this predictability in terms of pricing,” Jonsson said. 

    An Eli Lilly & Co. Zepbound injection pen arranged in the Brooklyn borough of New York on March 28, 2024.
    Shelby Knowles | Bloomberg | Getty Images

    Patients with a valid prescription can purchase the single-dose vials from a new “self-pay pharmacy” section on the company’s direct-to-consumer site, LillyDirect. Eli Lilly is partnering with a third-party digital pharmacy, Gifthealth, which will process prescriptions electronically as well as package and send vials to eligible patients.
    People can also choose to purchase syringes and needles from Eli Lilly’s website and will have access to materials on how to correctly administer Zepbound from a vial. 
    LillyDirect, which launched in January, connects people with an independent telehealth company that can prescribe certain drugs if the patients are eligible. The site also offers a home-delivery option if the prescribed treatment is Eli Lilly’s, tapping a third-party online pharmacy to fill prescriptions and send them directly to patients. 
    Eli Lilly said in a release that distributing the vials through the site will ensure patients and health-care providers are receiving “genuine” Zepbound. It builds on the company’s efforts to “help protect the public from the dangers posed by the proliferation of counterfeit, fake, unsafe or untested knock-offs of Lilly’s medications,” according to the release.
    During shortages, the U.S. Food and Drug Administration allows compounding pharmacies to make versions of drugs that are essentially a copy of brand-name medicines. Compounded medications are custom-made alternatives to branded drugs designed to meet a specific patient’s needs. 
    But both Zepbound and Eli Lilly’s diabetes drug, Mounjaro, are under patent protection in the U.S. The company also does not supply the active ingredient of those two drugs, tirzepatide, to outside groups. 
    Eli Lilly has said that raises questions about what some compounding pharmacies and other clinics are selling and marketing to consumers. The company and its rival Novo Nordisk have both stepped in to address illicit versions of their weight loss and diabetes treatments, suing wellness clinics, medical spas and compounding pharmacies across the U.S. over the past year. 
    All doses of Zepbound are now listed as available on the FDA’s drug shortage database. Still, thousands of online platforms offering compounded versions of weight loss drugs from Novo Nordisk and Eli Lilly have cropped up over the past six months, according to Jonsson. 
    “We believe that the U.S. population is actually a target for … untested, unapproved, unregulated anti-obesity medications that we know is far from always containing the drug it’s supposed to,” he said. “This is also an opportunity to make sure that there is access to FDA-approved, quality-approved tirzepatide for consumers in need.”

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    NFL expected to vote in favor of private equity ownership; select firms to commit $12 billion

    NFL owners are expected to vote on Tuesday to allow select private equity firms to invest at up to 10% of a team stake.
    The initial firms will include Ares Management, Sixth Street Partners and Arctos Partners, Dynasty Equity, Blackstone, Carlyle Group and CVC Capital Partners, people familiar with the matter told CNBC.
    The NFL is the last major sports league to allow private equity investment as rising valuations make it harder for owners to buy in.

    Jacob Kupferman | Getty Images

    The NFL’s most exclusive club is about to let in new members.
    At a special league meeting in Eagan, Minnesota, on Tuesday, the National Football League’s 32 owners are expected to vote in favor of allowing select private equity firms to buy up to a 10% stake of a team. Each fund or consortium will be able to do deals with up to six teams.

    The initial approved firms will include Ares Management, Sixth Street Partners and Arctos Partners, in addition to a consortium nicknamed “The Avengers” that includes Dynasty Equity, Blackstone, Carlyle Group and CVC Capital Partners, people familiar with the matter told CNBC.
    The firms collectively have $2 trillion in assets and intend to commit $12 billion of capital to be raised (inclusive of leverage) over time, the people said. With at least four investor groups able to invest in up to six teams each, that works out to $500 million of added capital on average for each team that receives an investment.
    NFL Commissioner Roger Goodell told CNBC in July that the league has had tremendous interest from private equity.
    The league created a committee last September to look at the possibility of welcoming private equity funding and has been meeting with the selected firms more recently.
    The NFL is the last major sports league to allow private equity investment, and it’s still treading lightly on the issue by allowing only a select group to participate and at a lower rate than the other professional sports leagues.

    The National Basketball Association, Major League Baseball, the National Hockey League and Major League Soccer all allow private equity ownership of up to 30%.
    Goodell told CNBC in July that he believes the 10% is a complement to the existing ownership structure and that the percentage could be raised at some point in the future.
    As NFL team valuations rise, it’s meant a smaller pool of owners have the money to foot the price tag when teams become available.
    That dynamic was on display during the sale of the Washington Commanders last year. The franchise sold for a record $6.05 billion to an ownership group that included Apollo cofounder Josh Harris and 20 other investors.
    Harris said in June that the process “created a little bit of a wake-up call at the NFL.”
    “Unless you’re one of the wealthiest 50 people [in the world], writing a $5 billion equity check is pretty hard for anyone,” Harris told CNBC at the CNBC CEO Council Summit at the time.
    As the NFL opens its doors to new capital, the money will also free up funding for new stadiums and related projects.
    The Buffalo Bills and Tennessee Titans are both currently in the process of building a new stadium, while the Cleveland Browns, Chicago Bears and Washington Commanders are actively pursuing new stadiums in the future. More

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    Bitcoin rally helps create more than 84,000 new crypto millionaires in a year

    The population of crypto millionaires in the world soared 95% over the past year, as bitcoin ETFs and other crypto assets climbed, according to a new report.
    There are now 172,300 individuals worldwide holding over $1 million in crypto assets, according to a report from New World Wealth and Henley & Partners. The number of pure bitcoin millionaires more than doubled, to 85,400.
    The surge reflects the rapid growth of bitcoin ETFs, awhich now have over $50 billion in assets since their launch in January.

    In this photo illustration, a visual representation of the digital Cryptocurrency, Bitcoin is on display in Paris, France, on March 5, 2024.
    Chesnot | Getty Images News | Getty Images

    The population of crypto millionaires in the world soared 95% over the past year, as bitcoin ETFs and other crypto assets climbed, according to a new report.
    There are now 172,300 individuals worldwide holding over $1 million in crypto assets, up from 88,200 last year, according to a report from New World Wealth and Henley & Partners. The number of pure bitcoin millionaires more than doubled, to 85,400.

    The ranks of the crypto rich have grown all the way up the wealth ladder. There are now 325 crypto centi-millionaires (those with $100 million or more in crypto holdings), and 28 crypto billionaires, according to the report.
    The surge reflects the rapid growth of bitcoin ETFs, which now have over $50 billion in assets since their launch in January and have touched off a wave of institutional participation.

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    The price of bitcoin has jumped 45% this year to about 64,000. As other coins have increased in value, the market cap of crypto assets has increased to $2.3 trillion, according to Henley, up from $1.2 trillion last summer.
    Of the six new crypto billionaires created over the past year, five can attribute their newfound wealth to bitcoin, “underscoring its dominant position when it comes to attracting long-term investors who buy large holdings,” according to Andrew Amoils, head of research for New World Wealth.
    According to Forbes, the richest crypto billionaire (for the third year in a row) is Changpeng Zhao, the founder and former CEO of crypto exchange Binance, who’s worth an estimated $33 billion. Zhao pled guilty to U.S. money laundering charges in November and agreed to pay a $50 million fine. His wealth has soared by more than $10.5 billion over the past year.

    Changpeng Zhao, founder of Binance, attends the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris on June 16, 2022.
    Benoit Tessier | Reuters

    Ranking second is Brian Armstrong, the co-founder of Coinbase, worth an estimated $11 billion, according to Forbes. He’s followed by Giancarlo Devasini, the chief financial officer of Tether; and Michael Saylor, the cofounder of MicroStrategy, according to the list.
    Granted, many crypto assets are still below their 2021 highs, and bitcoin’s recent rise essentially marks a three-year round-trip to those levels. Crypto assets reached a market cap of $3 trillion in November of 2021.
    Yet the growing acceptance of crypto assets among big asset managers like BlackRock and Fidelity, with help from Morgan Stanley’s salesforce of 15,000 brokers, could fuel further wealth creation among large crypto holders.
    Crypto will not only create more millionaires and billionaires, but it will also change where the rich live and work. According to Henley, many of the newly crypto rich are looking to move to tax-friendly and crypto-friendly jurisdictions.
    “We’ve seen a significant uptick in crypto-wealthy clients seeking alternative residence and citizenship options,” said Dominic Volek, head of private clients at Henley & Partners.
    To better advise the new crypto nomads, Henley created a “Crypto Adoption Index,” ranking countries according to their tax and regulatory approach to crypto. Singapore ranks first on the index, due to its “supportive banking system, significant investment, comprehensive regulations such as the Payment Services Act, regulatory sandboxes, and alignment with global standards,” according to Henley.
    Hong Kong ranked second, followed by the United Arab Emirates and the United States. In the U.S., according to the report, 15% of the population owns cryptocurrencies: “This is supported by strong infrastructure, with a high density of crypto ATMs, crypto-friendly banks, and an increasing number of businesses accepting cryptocurrency,” the report said.
    Correction: This story has been updated to correct a headline that misstated the number of crypto millionaires created by the bitcoin rally.

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    Volkswagen China is spending lots of time at Xpeng to make new EVs

    Hundreds of Volkswagen staff are spending time at Xpeng as the German auto giant and Chinese startup work to create electric cars for China, Xpeng co-president Brian Gu told CNBC.
    Volkswagen in July 2023 announced a $700 million investment into Xpeng to jointly develop two electric cars for delivery in China, expected in 2026.
    The partnership will help Xpeng’s global ambitions, Gu said.

    Top Volkswagen and Xpeng executives pose at the German automaker’s launch event in Beijing, China, on Aug. 24, 2024.
    Bloomberg | Bloomberg | Getty Images

    BEIJING — Hundreds of Volkswagen staff are spending time at Xpeng as the German auto giant and Chinese startup work to create electric cars for China, Xpeng co-president Brian Gu told CNBC on Monday.
    He also said the partnership will help Xpeng’s global ambitions.

    Volkswagen in July 2023 announced a $700 million investment into Xpeng to jointly develop two electric cars for delivery in China in 2026. The vehicles will be based on the platform for Xpeng’s G9, a midsize electric crossover SUV.
    The German company’s workers are spending more time at Xpeng’s offices than the startup’s are at Volkswagen’s, Gu said. They are learning about the startup’s technology.
    Xpeng’s driver-assist technology is widely considered one of the best currently available in China. Tesla’s version, marketed as “full self-driving,” isn’t fully accessible in China.
    The German automaker did not immediately respond to a request for comment.

    Gu emphasized the forthcoming vehicles will be “very different” from those that currently sold by Xpeng or Volkswagen. He said the cars would likely have “better range, charging, much smarter driving, more feature luxury technology, for the same price, potentially.”

    China is a key market for Volkswagen. The German automaker delivered 3.2 million cars in China last year, more than the 3.1 million in all of Western Europe.
    But like many traditional foreign auto giants, Volkswagen has also struggled in China as the local market rapidly shifts towards battery-only and hybrid powered vehicles. The company’s China deliveries plunged by 19.3% in the quarter ended June from a year ago.
    While Xpeng saw second-quarter deliveries grow by 30% year-on-year to more than 30,200 vehicles, the startup lags behind many of its Chinese rivals.

    Looking overseas

    The company has, meanwhile, pushed overseas, as have Chinese electric car companies BYD and Nio. In the second quarter, Xpeng said its overseas sales exceeded 10% of total revenue for the first time.
    Xpeng CEO and Founder He Xiaopeng told Bloomberg last week that the Chinese automaker is in preliminary stages of selecting a site in the European Union as part of future plans for localizing production. The interview was published Tuesday.
    Asked for comment, Xpeng said it shared during the Beijing auto show in the spring that the company is considering the possibility of overseas production.
    Gu separately told reporters Monday that localization efforts in Southeast Asia would likely happen earlier than any in Europe.
    He said the 10-year-old startup aims to reach at least 40 countries and regions by the end of this year, up from around 30 so far.
    Xpeng launched in Thailand, Hong Kong and Macao earlier this month. Gu said that this week, the startup is launching in Malaysia, and officially unveiling its entry into Singapore, where Xpeng has a pop-up store.
    The startup also plans to enter Australia, New Zealand, the U.K. and Ireland, Gu said.

    Supply chain partnership

    Speaking on how the Chinese company is learning from its German partner, Gu said that Xpeng staff visit Volkswagen offices in the city of Hefei, the capital of China’s Anhui Province, for design and technology, and Beijing for supply chain discussions.
    The two companies in February announced that they had entered a “joint sourcing program” for auto parts.
    Xpeng has invested in robotics since 2020 and is now focused on humanlike robots that can handle multiple tasks in factories, Gu told CNBC. He indicated Xpeng would likely reveal more details soon.
    But when asked whether that humanoid integration included Volkswagen-related supply chains, he said it was too early for such implementation.
    — CNBC’s Sonia Heng contributed to this report. More