Beating Li Auto and NIO, XPeng was the first to release its Q1 2025 earnings report.
For XPeng, which aims to achieve breakeven by late 2025, the results are encouraging: revenue of ¥15.81 billion (+141.5% YoY), a net loss of ¥660 million (compared to ¥1.37 billion in Q1 2024), overall gross margin of 15.6%, automotive gross margin of 10.5%, and free cash flow exceeding ¥3 billion.
He Xiaopeng, CEO of XPeng, expressed optimism: “What excites me most is that our growth potential has only just begun to unfold.”
Over the past year, XPeng launched five models, including the M03, P7+, 2025 G6/G9, and 2025 X9, driving sales upward. In Q1 2025, it delivered 94,000 vehicles, claiming the top spot among emerging EV makers.
Buoyed by strong Q1 performance, XPeng’s Q2 guidance sets new highs: deliveries of 102,000 – 108,000 units (+237.7% – 257.5% YoY) and revenue of ¥17.5–18.7 billion (+115.7% – 130.5% YoY).
While celebrating sales growth, questions linger: Has the sharp drop in average selling price (ASP) due to the M03’s popularity improved per-vehicle profitability? And how will XPeng elevate its brand?
He Xiaopeng addressed these concerns in the earnings call.
Sales Surge and Premiumization Challenges
This was XPeng’s best-selling quarter yet. Deliveries surged 331% YoY to 94,008 units (up from 21,821 in Q1 2024) and rose 2.7% QoQ (from 91,507 in Q4 2024).
The average monthly delivery of 31,300 units came despite weak consumer sentiment in autos and commodities. Even rivals Li Auto and AITO saw QoQ declines.
XPeng’s Q1 deliveries accounted for 49.5% of its 2024 total (¥15.81 billion), while revenue hit 38.7% of 2024’s full-year figure (¥40.87 billion).
Crucially, net losses narrowed significantly: ¥660 million in Q1 2025, down ¥710 million YoY and ¥670 million QoQ. Per-vehicle losses plummeted to ¥7,021 (from ¥62,800 in Q1 2024 and ¥14,500 in Q4 2024).
Scale effects, organizational improvements, and Volkswagen’s contribution (¥1.44 billion in service fees) played key roles. He Xiaopeng attributed this to “AI-driven technology and efficient resource management.”
Volume vs. Premium: The Balancing Act
However, no matter how much systemic capabilities improve, sales volume remains the primary factor influencing profitability.
Looking back at XPeng’s Q1 performance, the M03 and P7+ undoubtedly played pivotal roles in slashing net losses.
The former has delivered over 100,000 units in eight months since launch, while the latter has neared 50,000 deliveries in five months. Beyond boosting sales and revenue, these models have restored market confidence—a stark contrast to last year’s skepticism about XPeng’s survival.
The MONA series, which first reversed XPeng’s sales downturn, will introduce a new model in 2026. What kind of product will this be? He Xiaopeng describes the MONA line as a ¥100,000 – 200,000 offering that combines striking design, advanced intelligence, and high emotional appeal. The upcoming MONA model is expected to amplify these traits, with He calling it “an influential, impactful, and exceptional series in the industry.”
A glimpse of this future may arrive with the MONA Max, launching on May 28. The answer likely lies in XPeng’s signature strength: smart driving capabilities. He emphasized that no ¥150,000-tier vehicle currently offers true end-to-end AI models, 500 TOPS computing power, or city navigation assist—features he deems essential for a “full-stack” smart driving experience.
He aims for the MONA Max to capture a significant share (50 – 70%) of the MONA series, leveraging XPeng’s unique advantage: a higher adoption rate of “full-stack” assisted driving among its users compared to rivals. With its Eagle Vision autonomous driving system and years of R&D, XPeng can democratize advanced smart driving tech even in affordable models—both technically and cost-effectively.
Yet, achieving breakeven—and sustained profitability—requires higher-tier models. XPeng’s 2024 lineup still holds cards to play:
- June: The ¥250,000 G7 SUV
- Q3: A ¥300,000 luxury sports coupe (next-gen P7)
- Q4: Mass production of the Kunpeng super hybrid series, reportedly starting with the large SUV G01
While the M03 and P7+ have cemented XPeng’s reputation for value in sub-¥200,000 EVs, this very success complicates its premium ambitions. Average selling prices (ASP) tell the story: ¥253,900 in Q1 2024 plummeted to ¥152,900 in Q1 2025. Even the 2025 G6/G9’s strong debut (7,500 April deliveries) highlights the challenge—XPeng must now wage an “ASP defense” while boosting appeal for ¥200,000+ models.
The brand needs a new narrative to ascend.
XPeng’s Triple Growth Strategy
At the earnings call, He Xiaopeng unveiled three growth engines:
1. Core: AI-powered vehicles
- The Turing AI chip, taped out successfully in 2024, delivers 3–7x the AI compute of mainstream automotive chips, enabling city driving assist even in ¥150,000 models.
- A 72-billion-parameter cloud foundation model and edge-side models are under development, with Turing chips already deployed in Q2 vehicles. By 2025–2026, XPeng aims to build fully localized VI (Vehicle Intelligence) capabilities.
- He boldly predicts “generational leadership” in key AI areas by 2026, with its foundation model evolving to “surpass seasoned human drivers”—the bedrock for L3/L4 autonomy and future AI hardware.
2. Global expansion
- Overseas sales grew 370% YoY in Q1, supported by 40+ new international stores. He announced plans for “sustained high-speed global growth” over the next three years.
3. Humanoid robots
- The fifth-gen robot, powered by Turing chips, will debut in 2026 for industrial/commercial use. XPeng aims not just for leading intelligence but rapid evolution through mass-production data.
Challenges Ahead
Volatility persists. Annual refreshes for five models in Q2 may cause short-term disruptions, though He calls this “favorable for the mid-to-long term.” As XPeng’s portfolio expands, production prioritization issues will recur.
Two critical questions remain: Can XPeng reclaim the ¥200,000–300,000 market? And will the next quarter bring it closer to profitability? As He declared: “Our growth potential has only just begun to unfold.”
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