XPeng Faces Sales Pressure in China — Freedom Global Assessment

Freedom Global analysts have lowered the target price for shares of Chinese EV maker XPeng (XPEV) from $28 to $25 per share. XPeng has been operating since 2014 and specialises in smart vehicles, autonomous driving systems, and AI solutions.

Experts note that the company has faced declining car demand in China and issued Q2 forecast below market expectations. Nevertheless, its focus on technology and AI remains a key factor for long‑term business growth.

XPeng reported mixed Q1 2026 results. Revenue fell 18% YoY to CNY 13 billion ($1.9 billion), slightly exceeding the analyst consensus forecast. Net loss reached CNY 1.78 billion ($260 million), nearly double market expectations.

Vehicle deliveries dropped 33% for the quarter to 62.7 thousand units. The company attributes the trend to weak demand in China’s auto market. Despite this, automotive gross margin rose to 12.1% from 10.5% a year earlier, thanks to a higher share of premium models in the sales mix.

Analysts believe XPeng’s management remains focused on AI development. The company plans to launch four new vehicle models by year‑end and accelerate commercialisation of robotaxi and humanoid robot initiatives. XPeng believes physical AI solutions could eventually become additional revenue and profit streams.

R&D spending rose nearly 47% to CNY 2.9 billion ($420 million). Funds are allocated to new vehicle development and AI technologies. High innovation investment pressured profitability: operating margin was −14.4% versus −6.6% a year earlier.

Q2 forecast was mixed. XPeng expects deliveries of 100–106 thousand vehicles, roughly in line with market expectations. However, the revenue forecast of CNY 19.6–20.8 billion fell short of the consensus forecast of CNY 22.2 billion.

Freedom Global analysts believe XPeng’s proprietary software, autonomous driving systems, and AI projects will help the company maintain competitiveness amid an intensifying price war among Chinese EV makers.

Key growth drivers include model range expansion, a possible recovery in mass‑market EV demand, and further AI development. Key risks remain high competition in China, margin pressure, and a growing number of budget‑segment manufacturers.

Not an individual investment recommendation.