XPeng is one step closer to profitability

Author | Wang Xiaojun

Editor | Chai Xuchen

Last year, XPeng, which struggled to climb out of the pit, has now shifted its keyword to profitability this year.

On May 21, XPeng released its financial report for the first quarter of 2025. The loss for the quarter narrowed to 660 million yuan, far below the market expectation of 1.386 billion yuan.

Other financial indicators also showed relatively good performance. Data shows that XPeng's revenue for this quarter was 15.8 billion yuan, a 141.5% increase compared to 6.55 billion yuan in the same period last year; cash reserves reached 45.28 billion yuan, an increase of 3.32 billion yuan quarter-on-quarter; in terms of gross margin, XPeng has improved for seven consecutive quarters, reaching 15.6% in the first quarter of this year, setting a historical high.

The impressive financial report, combined with optimistic expectations, quickly received positive feedback from the capital market.

After the market opened on May 21, Eastern Time, XPeng's stock price in the U.S. rose more than 16% at one point, closing up 13%, with a market value increase of over 17 billion yuan in one night, surpassing the revenue for the first quarter.

Investment institutions have also given positive expectations. Morgan Stanley believes that XPeng is showing signals of "structural repair" and "clear profitability path." The strong product delivery rhythm, recovery of gross margin, and ample cash flow have collectively enhanced its feasibility for continued investment in AI and intelligent driving, maintaining an optimistic judgment on the company's medium to long-term growth potential.

Clearly, the effects of XPeng's previously proposed technology cost reduction have begun to show this quarter, and the scale effect after the increase in delivery volume has also been released.

For car manufacturers, the amount of profit can actually be seen from previous delivery volumes. The increase in XPeng's scale is also attributed to last year's two new models—XPeng MONA M03 and XPeng P7+. He Xiaopeng introduced that the MONA M03 has delivered over 100,000 units in 8 months since its launch, becoming the sales champion of A-class pure electric sedans, while the P7+ has completed its 50,000th unit offline in just 5 months since its launch.

Thanks to the efforts of these two models, XPeng's delivery volume reached 94,000 units in the first quarter, far exceeding the previously provided upper limit of delivery guidance, with a year-on-year increase of 330%.

Moreover, financial report data shows that revenue from other business services in the first quarter was 1.44 billion yuan, with a gross margin of 66.4% for other businesses. This means that the revenue from the electronic and electrical architecture technology in cooperation with Volkswagen has become a recurring income, which also balances the overall gross margin well.

All data proves that XPeng is one step closer to profitability.

He Xiaopeng, Chairman and CEO of XPeng Motors, stated in the earnings call that he is very confident in achieving a growth target of more than doubling sales this year, and the company will also move towards profitability in the fourth quarter, achieving a positive free cash flow for the entire year.

Next, efforts must be made to fulfill He Xiaopeng's goal of achieving profitability in the fourth quarter. As profitability accelerates, it also means that XPeng is transitioning from a "financing-dependent company" to a "structural self-sustaining company." However, a key word that cannot be separated from XPeng's sales success is "price reduction." According to the first quarter financial report, XPeng's average price per vehicle was 153,000 yuan, a decrease of 7,000 yuan compared to the previous quarter. This can actually be inferred from the prices of the main models during the reporting period.

Although the current average price has declined, in the long term, the high-end market is a necessary course for XPeng. After achieving volume, XPeng will also aim for the high-end market.

During this financial report conference call, He Xiaopeng also revealed the progress of several upcoming models, which are all targeting relatively higher-priced markets compared to the current best-selling models.

He Xiaopeng disclosed that the all-new XPeng G7 will debut in June, and he is confident it will become a competitive new product in the 250,000 yuan SUV market; at the same time, XPeng's historically most important model, the XPeng P7, will launch a new version in the third quarter; and in the fourth quarter, XPeng's Kunpeng super electric vehicle model will gradually enter mass production, achieving "one vehicle with dual capabilities."

Especially for the new XPeng P7, He Xiaopeng previously stated on social media, "After thousands of design iterations, we have brought it from dream to reality. The all-new XPeng P7 may be the project we have invested the most emotion into in our history."

Currently, the XPeng MONA M03 MAX will be launched on May 28. Based on the stable performance of current sales and optimistic expectations for new models, XPeng expects second-quarter deliveries to be between 102,000 and 108,000 units, an increase of 237.7% to 257.5% year-on-year.

In addition to cars, XPeng also has some new plans in robotics.

He Xiaopeng stated that the next step is to deploy the Turing chip in our fifth-generation robots, significantly enhancing the edge computing power of the robots. Humanoid robots, as one form of embodied intelligence, will become XPeng Motors' third growth curve. The goal is to launch humanoid robots for industrial and commercial scenarios by 2026.

Summarizing past achievements, He Xiaopeng said, "I believe the core still lies in the continuous improvement of organizational, product, marketing, as well as technological and operational systematic capabilities."

The automotive industry remains ever-changing; it may only take a few months to go from the top of the mountain to the foot. The future will continue to test these capabilities. Only by continuously enhancing systematic comprehensive capabilities can XPeng maintain its current momentum, achieve profitability smoothly, and advance towards the endgame