Bernstein Keeps XPeng’s ‘Market Perform’ Rating and $21 PT

“XPeng: Q2 margin beat, Building a stronger case towards Q4 break-even profit

Q2 record gross margin. XPeng reported Q2 revenue of RMB 18.3bn, +125.3% yoy and +15.6% qoq.

Sales volume came in at 103.2k units in Q2 25, +241.6% yoy and +9.8% qoq.

ASP reached RMB 164k, -27.5% yoy and +7.1% qoq, primarily due to product mix improvement (i.e. fewer MONA, higher G6, G9, and X9 contribution).

Gross margin rose to 17.3% (vs. 14.0% in Q2 24 and 15.6% in Q1 25) and vehicle margin was 14.3% (vs.

6.4% in Q2 24 and 10.5% in Q1 25) on cost reduction and improvement in product mix and scale.

R&D expenses were RMB 2.2bn for Q2 25, or 12% of revenue in Q2 25, vs.

18% in Q2 24 and 13% in Q1 25. SG&A expenses came in at RMB 2.2bn, or 12% of revenue in Q2 25, vs.

19% in Q2 24 and 12% in Q1 25, with a store count of 677 vs. 690 a quarter ago.

EBIT loss margin narrowed to -5.1% in the quarter, vs. -19.8% in Q2 24 and -6.6% in Q1 25.

Net loss recorded RMB -478mn, vs. RMB -664mn in Q1 25.

XPeng’s net cash position further improved to RMB 36.3bn, implying positive cash generation of RMB 3.0bn in the quarter.

Investment Implications: We value XPeng based on 1x 2026E EV/sales multiple and arrive at a price target for XPEV at US$21.00 (unchanged) and for 9868.HK at HK$82.00 (unchanged) on 1-yr forward 1x EV/sales (unchanged).

Valuation Methodology

We value XPeng primarily using forward EV/sales multiples, given losses which we expect will endure for a number of years.

We reference the valuations of EV peers like Tesla.

We also refer to estimates of the company’s longer term (e.g. 2025-2030) profit potential, which we multiply by PE multiples, then discount back to the present.

We value XPeng based on 1x 2026E EV/sales multiple and arrive at a price targets for XPEV at US$21.00 and for 98.68HK at HK$82.00, on stronger sales volume momentum and 1-yr forward 1x EV/sales.

Risks

The main downside risks around XPeng relate to sales of current and future vehicles, product quality and potential recalls, execution around the company’s retail footprint expansion, and future product and technology development.

We see upside risks related to better than expected sales performance and rate cuts.”

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