To The Moon

XPeng Earnings Review: Gross Margin Tops 20%, ASP Slides & Soft Q4 Guidance

$XPeng Inc.(XPEV)$   released its Q3 2025 quarterly report today.

Core Financial Indicators

~Total revenues were RMB 20.38 billion (US$2.86 billion) in Q3 2025, up 101.8% year over year and 11.5% quarter over quarter. The revenue was expected to be CNY 20.4B.

~Net loss was RMB 0.38 billion (US$0.05 billion) for the third quarter of 2025, compared with RMB 1.81 billion for the same period of 2024 and RMB0.48 billion for the second quarter of 2025.

~Basic and diluted net loss per ADS were RMB 0.40 (US$0.06) in Q3 2025, while non-GAAP basic and diluted net loss per ADS were RMB 0.16 (US$0.02). Basic and diluted net loss per ADS were estimated to be CNY -0.7.

Business Segment Overview

- Revenues from vehicle sales were RMB 18.05 billion (US$2.54 billion), up 105.3% YoY and 6.9% QoQ.

- Revenues from services and others were RMB 2.33 billion (US$0.33 billion), up 78.1% YoY (from RMB1.31 billion) and 67.3% QoQ (from RMB1.39 billion), primarily driven by higher after-sales and technical R&D service revenue recognized upon achieving key milestones for a car manufacturer during the quarter. In our earnings preview XPeng Earnings Preview: The "Catwalk" Robot Maker May Report Double Revenue as Q3 Vehicle Sales Surge 149%, we noted that the manufacturer is Volkswagen.

Key Highlights and Concerns

Positive signals in the financial report

XPeng's overall gross margin exceeded expectations this quarter, though its vehicle margin declined from the prior quarter.

- Gross margin was 20.1% in Q3 2025, compared with 15.3% in Q3 2024 and 17.3% in Q2 2025.

- Vehicle margin (gross profit from vehicle sales as a percentage of vehicle sales revenue) was 13.1% in Q3 2025, compared with 8.6% in Q3 2024 and 14.3% in Q2 2025.

"With effective cost control and technology-related revenue streams unlocking greater potential, our gross margin exceeded 20% for the first time in the third quarter," added Dr. Hongdi Brian Gu, Vice Chairman and Co-President of XPeng.

Notably, the rise in overall gross margin alongside the decline in automotive gross margin implies a substantial increase in the gross margin of services revenue.

Areas below expectations

The company's revenue came in below expectations. In our preview, we noted that, given XPeng's Q3 vehicle sales volume rose 149% and the higher overseas mix should lift average selling prices (ASP), vehicle sales revenue ought to grow at a similarly rapid pace. However, revenue from vehicle sales increased by only 105.3%, indicating a significant ASP decline. We believe the increased contribution of the MONA 03 model in Q3 is the main reason for the lower ASP.

Earnings Guidance

XPeng issued relatively lackluster earnings guidance. For the fourth quarter of 2025, the company expects vehicle deliveries of 125,000–132,000 (up approximately 36.6%–44.3% year over year) and total revenue of RMB21.5–23.0 billion (up approximately 33.5%–42.8% year over year). This means the company's fourth-quarter revenue growth is significantly lower than in the third quarter.

Summary

Overall, the earnings report was mixed. Although its net loss narrowed significantly, the stable per‑vehicle selling price that investors had hoped for did not materialize. The automotive gross margin was below expectations.

The stock price fell by more than 3.5% after the earnings release.

~Valuation:

XPEV's PE ratio is 2.81 times, which is at the 42th percentile of its historical range over the past five years.

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