Xpeng Motors Defies Odds with 93% YTD Gain, Is It Too Late to Buy the Stock?

Xpeng Motors, China's "Tesla", has risen 93% YTD, defying a price war in the EV industry. The company's Q2 2025 earnings exceeded expectations, driven by strong deliveries and improved financial performance. With new models launching and international expansion, Xpeng Motors may continue its rally in 2025 and beyond.

Xpeng Motors, often referred to as China's "Tesla," has seen a remarkable 93% year-to-date (YTD) rise in stock price, despite the ongoing price war in the electric vehicle (EV) industry. The company's Q2 2025 earnings report exceeded expectations, driven by robust deliveries and improved financial performance. This positive trend is likely to continue, with new models and international expansion on the horizon.

Deliveries and Revenue Growth

Xpeng Motors reported 103,181 units delivered in Q2 2025, representing a 242% increase year-over-year (YoY) [2]. Total revenue surged 125.3% YoY to RMB18.27 billion ($2.55 billion), with vehicle sales contributing RMB16.88 billion, a 147.6% YoY increase [2]. This impressive performance is a testament to the company's ability to scale production and meet growing demand.

Improved Financial Performance

The company's gross margin reached 17.3%, up 3.3 percentage points from Q2 2024, indicating cost optimization and pricing power [1]. Vehicle margins also improved, reaching 14.3%, up 7.9 percentage points YoY [1]. Despite these gains, Xpeng still reported a net loss of RMB0.48 billion ($0.07 billion), though this represents a 62.5% reduction from Q2 2024 [2]. The company's cash reserves stood at RMB47.57 billion ($6.64 billion) as of June 30, 2025, providing a significant liquidity buffer [2].

Strategic R&D and Partnerships

Xpeng's R&D expenditure of RMB2.21 billion (up 50.4% YoY) underscores the company's commitment to innovation [2]. Key initiatives include the AI-driven XPILOT platform, 800V battery technology, and a partnership with Volkswagen that reduces R&D costs by 40% [1]. These strategic investments position Xpeng to compete in both pure EV and hybrid markets.

Market Expansion and Infrastructure Growth

Xpeng has expanded its physical and digital infrastructure, operating 677 stores across 224 cities and 2,348 self-operated charging stations [1]. This network not only enhances customer retention but also generates ancillary revenue through charging services. Looking ahead, Xpeng's Q3 2025 delivery guidance implies a 142.8%–153.6% YoY increase, with revenue projections of RMB19.6–21.0 billion (up 94.0%–107.9% YoY) [1].

Investment Implications

For investors, Xpeng represents a compelling case study in transitioning from a capital-intensive growth story to a profit-driven enterprise. The company's improving margins, diversified revenue streams, and strategic partnerships mitigate risks associated with execution on R&D, market competition, and global expansion [1]. However, profitability may still be a year or two away, requiring patience from long-term investors.

Conclusion

Xpeng Motors' Q2 2025 earnings report underscores the company's ability to navigate the EV industry's price war and achieve significant growth. With a focus on AI, software monetization, and global partnerships, Xpeng is well-positioned to continue its rally in 2025 and beyond. Investors should consider a position in XPEV for those with a 3–5 year horizon, with a stop-loss at 30% below current levels.

References:

[1] https://www.ainvest.com/news/xpeng-path-profitability-analyzing-q2-2025-earnings-strategic-leverage-points-2508/
[2] https://finance.yahoo.com/news/xpeng-inc-xpev-q2-2025-070417530.html