XPeng's Ambitious Global Push and AI Prowess: Is XPEV the Next Big Buy?

Stocks Apr 15, 2025

A Calculated Step into the European Market

Chinese electric vehicle maker XPeng is making waves in the auto industry with its recent move to enter the Polish market, even amidst rising geopolitical tensions. Just days before introducing its high-tech EVs in Warsaw, including the G9 SUV, G6 coupe SUV, and P7 sedan, the U.S.-China trade war reached new heights, with tariffs on Chinese imports surging dramatically. Undeterred, XPeng forges ahead with its ambitious global strategy, aiming to establish a presence in 60 countries by 2025.

Record-Breaking Deliveries Indicate Robust Demand

XPeng’s delivery performance is catching the industry’s attention. Q4 2024 saw a 52% year-over-year increase in vehicle deliveries, and Q1 2025 continued this upward trend with a record setting 331% increase from the previous year. The affordable Mona M03 electric coupe is driving this growth, capturing cost-conscious buyers while maintaining quality and technology. With an expected 92% revenue growth in 2025, XPeng’s expanding delivery base suggests a promising future, enhancing investor confidence.

Enhancing Margins Amidst Fierce Competition

XPeng’s focus is not just on volume; there’s significant progress on profit margins too. Vehicle margins improved to 10% by Q4 2024, a leap from 4.1% the prior year. Although this lags behind competitors like Li Auto, the cost-cutting measures and manufacturing scaling are clearly working wonders. The gross profit story from RMB 451 million to RMB 5.8 billion in 2024 underlines this effort, drawing the company nearer to profitability expectations by Q4 2025.

XPeng’s Unique Edge: Cutting-Edge AI Technology

What truly sets XPeng apart is its commitment to AI and futuristic technologies. From AI-integrated P7+ sedans with advanced navigation to audacious projects like autonomous flying cars and humanoid robots, XPeng is pushing boundaries. By also developing in-house AI chips, the brand aligns with aspirations of leading the next mobility frontier, distinguishing itself in the crowded automotive field.

Navigating Through Competitive Waters

In the face of stiff competition, XPeng holds its ground against industry giants like Li Auto and NIO. XPeng’s growth velocity notably surpasses its peers, highlighting its rapid ascent in the market. Despite NIO and Li Auto also boasting promising records, XPeng’s technological innovation and swift scaling make it a serious contender, validated by the impressive leap in its stock performance.

Valuation Catch: A Price for Growth?

While XPeng’s stock might appear pricey, trading at a forward sales multiple of 1.54, versus its competitors, its extraordinary growth and refining profit margins can justify this valuation. Analysts remain bullish, reflected in its average brokerage recommendation and Zacks Rank #2 (Buy)—a promising signal for potential investors.

The Long View: XPeng’s Roadmap to Success

At this pivotal stage, XPeng emerges as a lucrative investment choice. Despite the inevitable risks like valuation concerns and current losses, its strong core business, supported by an innovative tech-driven approach and aggressive global scaling, promises exciting returns. For investors with a long-term vision, the growth trajectory of XPeng’s XPEV stock indeed offers substantial potential for gains.