XPENG: The Story of the "Eastern Tesla" Unfolds. Does Selling Cars Still Matter?
XPeng Motors released its Q3 2025 financial report after the Hong Kong stock market closed and before the U.S. stock market opened on November 17, 2025, Beijing time. Overall, XPeng's car - selling business was a bit "chilly":
1) Revenue fell short of expectations, mainly due to the poor performance of car - selling revenue: The total revenue this quarter was 20.38 billion yuan, lower than the market expectation of 20.47 billion yuan. The shortfall was mainly dragged down by the car - selling business.
However, the revenue from services and other businesses this quarter was 2.33 billion yuan, significantly higher than the market expectation of 1.66 billion yuan. This was mainly because an important milestone was reached in the cooperation with Volkswagen, and the recognition of technical R & D service revenue from Volkswagen increased quarter - on - quarter.
2) Car - selling revenue was dragged down by the quarter - on - quarter decline in the average selling price of cars: The car - selling revenue this quarter was 18.05 billion yuan, significantly lower than the market expectation of 18.82 billion yuan. The average selling price of XPeng's cars did not stabilize and declined by 0.8 ten thousand yuan quarter - on - quarter to 15.6 ten thousand yuan, while the market expected only a slight quarter - on - quarter decline of 0.2 ten thousand yuan.
Dolphin Research believes that the main reasons for the quarter - on - quarter decline in the average selling price of cars were the increased promotional discounts in the third quarter, a slight decline in the overseas sales proportion, and the continuous downward shift of the vehicle model structure, which did not follow the upward - trending model structure route as XPeng expected.
3) The overall gross profit margin performed well, still due to the high - margin technical service revenue: The gross profit margin this quarter was 20.1%, up 2.8 percentage points quarter - on - quarter, significantly exceeding the market expectation of 17.8%. The main reason for exceeding the market expectation was still that the gross profit margin of services and other businesses increased by 21 percentage points quarter - on - quarter to 74.6%. The reason for the increase was also the recognition of a large amount of almost pure - margin technical R & D service revenue this quarter.
4) However, the car - selling gross profit margin continued to decline quarter - on - quarter: This quarter, due to the quarter - on - quarter decline in the average selling price of cars, although the cost per vehicle decreased due to economies of scale, the cost - reduction efforts were still insufficient. Finally, the car - selling gross profit margin still declined by 1.2 percentage points quarter - on - quarter to 13.1% this quarter, lower than the market expectation of 14.4%.
5) The revenue guidance and sales volume guidance for the fourth quarter both fell short of expectations: The sales volume guidance for the fourth quarter was 125,000 - 132,000 vehicles, lower than the market expectation of 136,000 vehicles. Even with the peak season in the fourth quarter and the rush to purchase before the expiration of the purchase tax subsidy, it still failed to meet expectations. Dolphin Research expects that this is mainly because the order volumes of the new P7 and G7 were lower than expected, and only the high - priced X9 MPV extended - range version will be launched in the fourth quarter, which will not contribute much to the fourth - quarter sales volume.
The revenue guidance for the fourth quarter was 21.5 - 23 billion yuan, also lower than the market expectation of 25 billion yuan. Since the service revenue is difficult to predict under the contribution of the cooperation with Volkswagen, assuming that the service revenue in the fourth quarter is the same as that in the third quarter, the implied average selling price of cars in the fourth - quarter revenue guidance is 155,000 yuan, still showing a quarter - on - quarter decline compared with 156,000 yuan in the third quarter. The car - selling business still faces relatively great pressure.
Dolphin Research's view:
Since XPeng updated a lot of progress in AI during last week's Technology Day, the stock price has risen to a relatively high historical level of $25 under the influence of AI sentiment. Therefore, the market also has high expectations for XPeng's this financial report.
Judging from the actual performance, the car - selling business in the third quarter fell short of expectations, and the sales volume and revenue guidance for the fourth quarter were also relatively weak, both lower than expected. It can be seen that XPeng still faces relatively great pressure in car - selling in the second half of this year. In particular, the order volumes of the two new models, G7 and the new P7, were relatively mediocre and did not meet expectations.
The management previously guided that the overall gross profit margin in the fourth quarter would reach a high double - digit level and that the net profit would turn positive in the fourth quarter. Dolphin Research expects that with the sales volume and revenue guidance for the fourth quarter falling short of expectations, the goal of turning the net profit margin positive may still face relatively great pressure and still needs the support of high - margin technical licensing revenue.
However, looking forward to XPeng in 2026, Dolphin Research believes that XPeng is still a target with a good car - selling fundamental and a scarce AI attribute:
① In the car - selling business: The major new - product cycle is expected to continue in 2026, and the overseas expansion process is expected to accelerate:
a. All existing models will be comprehensively upgraded to extended - range versions: The extended - range version of the X9 MPV was launched first in the fourth quarter of 2025 (with a pure - electric range of 450 km and a comprehensive range of 1,602 km), which solves the range anxiety for urban commuting. In 2026, extended - range versions will be launched for all main - selling models, officially starting the "one - car, two - energy" mode to meet the needs of users with different energy sources.
b. Five new models will be launched intensively: Based on the popular Mona series, two new A - class compact SUVs will be added, continuing the differentiated route of "strong intelligence + high cost - performance + excellent exterior design", targeting the Yuan/Song series. With the market reputation of the Mona series, the probability of becoming popular is relatively high. The other three new models will further improve the product matrix and cover more niche markets.
c. Overseas expansion will continue to accelerate: The company's overseas sales target in 2025 was 45,000 - 50,000 vehicles, accounting for 10% - 11% of the total sales volume in 2025. XPeng expects to fully launch a complete Kunpeng super - electric product line overseas in the second half of 2026. Currently, it has established relatively complete overseas channels in Europe, Southeast Asia and other regions, and the overseas expansion progress is expected to continue to accelerate.
② In terms of AI progress: Technology implementation + commercialization to create a second growth curve
a.In intelligent driving:
Hardware level: The self - developed high - order "Turing Chip" has been mass - produced, with a single - chip computing power of 750 TOPS. The new P7 is equipped with 3 chips (total computing power of 2,250 TOPS), which have been applied to models such as the G7 and the new P7, and the computing power reserve is still leading.
Algorithm level: The second - generation VLA algorithm uses a "vision + language directly connected to action" architecture, eliminating the intermediate conversion link and realizing the direct output from visual signals to action instructions. The pioneer version will be launched in December, and it will be fully pushed to Ultra models in Q1 2026.
Commercialization: The VLA 2.0 large - scale model and the Turing AI chip will be supplied to external customers such as Volkswagen (Volkswagen will adopt them in new models in the Chinese market starting from 2026), replicating the "hardware - software integration" model of Horizon and opening up a new revenue source from third - party intelligent driving services.
b. In Robotaxi:
In 2026, three L4 - level autonomous driving Robotaxis will be launched, using a front - loaded mass - production and full - stack self - developed solution. In the early stage, they will operate independently in pilot areas, and later they will be connected to the Gaode aggregated ride - hailing platform and jointly promoted and deployed with ecological partners. The long - term goal is to achieve large - scale operations of tens of thousands or even hundreds of thousands globally.
c. In the robot business:
The new - generation "Iron" humanoid robot is based on the Turing Chip (equipped with 3 chips, total computing power of 2,250 TOPS) and the self - developed VLA+VLM "brain + cerebellum" intelligent driving large - scale model. It will be commercially launched in April 2026. Initially, it will be applied in scenarios such as office, tour - guiding, reception, and security, and will also be stationed in XPeng stores. The high - order version will be mass - produced by the end of the year, entering a new track.
Currently, XPeng is more expensive than other car companies, mainly because XPeng has made relatively leading progress in the AI business: it was the first to start the external supply model for intelligent driving, and both the Robotaxi and robot businesses are in the early stage of commercialization, with still broad growth space in the future. A more detailed value analysis is published in the article with the same title in the "Dynamic - Investment Research" section of the Changqiao App.
Here is the main text
I. XPeng's car - selling business was a bit "chilly" this quarter
Since XPeng's sales volume in the third quarter has been announced, when this financial report was released, investors were still more concerned about the revenue and gross profit margin of the car business.
Previously, XPeng guided that the car - selling gross profit margin in the third quarter would further increase to a mid - double - digit level quarter - on - quarter. The market's expectation for XPeng's third - quarter gross profit margin was also around 14.4% - 14.5%.
However, XPeng's actual car - selling gross profit margin in the third quarter was 13.1%, continuing to decline by 1.2 percentage points compared with 14.3% in the previous quarter, and also lower than the market expectation. This was mainly due to the quarter - on - quarter decline in the average selling price of cars this quarter.
Looking specifically at the economics per vehicle:
a) Average selling price per vehicle: The quarter - on - quarter decline in the average selling price of cars was the "culprit" for the decline in the car - selling gross profit margin
The average selling price of cars this quarter was 156,000 yuan, a decline of 8,000 yuan compared with 164,000 yuan in the previous quarter, and also lower than the market expectation of 162,000 yuan. It is expected that this is mainly due to increased promotional subsidies, a decline in the overseas sales proportion, and a downward shift in the vehicle model structure:
① The vehicle model structure continued to shift downward:
In the third - quarter vehicle model structure of XPeng, the proportion of the highest - priced G9+X9 models declined by 8.1 percentage points quarter - on - quarter to only 9% this quarter, and the vehicle model structure continued to shift downward.
② XPeng expanded its subsidy and promotion policies:
XPeng expanded its subsidy policies in the third quarter, offering a choice of two subsidies: car insurance subsidy or car finance interest subsidy.
For financial subsidies, XPeng launched zero - interest and zero - down - payment plans for multiple models within a specific period: the X9 enjoys a 5 - year policy, the P7+ and G6 enjoy a 3 - year policy, and the G7, G9 and Mona M03 enjoy a 2 - year policy, while also overlaying the company's replacement subsidy (higher than the government's replacement subsidy).
In addition, customers who do not choose the interest subsidy can enjoy the insurance subsidy, among which the Mona M03 gets a 4,000 - yuan subsidy, the G9 gets a 5,000 - yuan subsidy, and the G6 gets an 8,000 - yuan subsidy.
③ The overseas sales proportion declined slightly quarter - on - quarter:
XPeng's overseas sales volume in the third quarter was 11,000 vehicles, accounting for 9.5% of the vehicle model structure, a decline of 1.2 percentage points quarter - on - quarter.
b) Cost per vehicle: Economies of scale led to a decline in the amortized cost per vehicle
In the third quarter, XPeng's cost per vehicle was 135,000 yuan, continuing to decline by 5,000 yuan compared with 140,000 yuan in the previous quarter. This was mainly because due to the delivery of the new models G7 and the new P7 this quarter, the sales volume increased by 12.4% quarter - on - quarter to 116,000 vehicles, the economies of scale were released, and the fixed amortized cost per vehicle declined.
c) Gross profit per vehicle: Declined by 3,000 yuan quarter - on - quarter to 20,000 yuan
In the third quarter, XPeng's gross profit per vehicle declined by 3,000 yuan quarter - on - quarter to 20,000 yuan. Although the car - selling cost declined due to the release of economies of scale this quarter, the decline in the average selling price of cars was greater. Finally, the actual car - selling gross profit margin this quarter declined by 1.2 percentage points quarter - on - quarter to 13.1%.
