XPeng Inc. (XPEV) Earnings

Management highlights

- Xpeng Robotics Business Updates * Closed an industry-record first private financing round for Chinese humanoid robotics, led by IDG Capital with participation from Gaorong Ventures and strategic backing from Tencent and Alibaba. The financing validates capital market confidence in Xpeng's physical AI leadership and long-term commercial value, and will fund R&D and mass production preparation for the Xpeng IRON general-purpose humanoid robot. * 8 years of in-house R&D completed, with full-stack in-house development of the entire technology stack covering robot body, core AI, motion control, data infrastructure and core components. Xpeng IRON features industry-leading 76 total degrees of freedom, 21 DOF per dexterous hand, a proprietary fully enclosed flexible lattice structure, and three in-house Turing AI chips delivering 2250 TOPS of effective on-edge computing power. * Xpeng IRON will enter scaled mass production by end of 2026, with initial commercial deployment in Xpeng retail stores and corporate campuses. Large-scale customer deliveries in China and overseas will begin in 2027, targeting retail and service sector customers, with monthly production capacity ramping to several thousand units by the second half of 2027. - Automotive Business Operational Highlights * Q2 2026 deliveries hit 103,295 units (up 65% QoQ, +YoY outpacing industry recovery), with overall gross margin holding above 20% at 20.7% despite industry-wide cost pressure. * The flagship premium GX large 6-seat SUV reached over 7,000 domestic deliveries in July 2026, ranking top 3 among NEV SUVs priced above RMB 300,000. The all-new Mona L03 SUV set a new Xpeng record for opening orders, with Q3 2026 new net orders up 50% QoQ to an all-time high. Production ramping for L03 is underway with two-shift production to address delivery delays caused by extreme weather and supply chain disruptions. * New model pipeline: The 5-seat flagship G9L SUV will launch and begin deliveries in September 2026, and the Mona L05 SUV will launch in China in Q4 2026. Four new SUV launches will complete Xpeng's coverage of all major SUV segments. * International business (second growth engine): Q2 2026 overseas deliveries exceeded 20,000 units for the first time, up 81% YoY, with average selling price exceeding €40,000, placing Xpeng at the forefront of Chinese global automakers in per-vehicle revenue and gross profit. The Mona L03 launched globally in Munich in July 2026, will begin overseas deliveries in Q4 2026, and is expected to drive Q4 2026 overseas deliveries above 40,000 units. - ADAS and Robotaxi Business Updates * A major upgrade to VLA 2.0 (Xpeng's second-generation ADAS large model) will roll out starting end of August 2026. The new 6.3.0 version expands model parameters by 3.5x, improves perception sensitivity by 300%, adds ultra-long horizon reasoning, and integrates VLA and VLM to bring L4 Robotaxi capabilities to mass-produced passenger vehicles. Testing confirms VLA 2.0 matches leading global ADAS on major highways, and delivers a superior user experience on narrow roads, campuses and parking lots. * VLA 2.0 on-road testing in Germany showed high performance with almost no additional local training data. Xpeng targets regulatory approval for VLA 2.0 in Europe in H1 2027, with rollout to global users planned. VLA 2.0 will become Xpeng's core global competitive advantage, and Xpeng will explore new software-based business models for ADAS. * VLA 2.0-powered mass-produced Robotaxi has completed over 2,000 internal test orders in Guangzhou, with full end-to-end trial operations validated. Xpeng targets driverless Robotaxi operations (no in-vehicle safety operator) in 2027, with plans to expand commercial scale via partnerships with leading global mobility platforms, generating value via vehicle sales, technology services and operational revenue sharing.

Guidance

- Q3 2026 vehicle deliveries are guided to 115,000 to 121,000 units, representing 11.3% to 17.1% quarter-over-quarter growth. - Q3 2026 total revenue is guided to RMB 21.7 billion to RMB 23.4 billion, representing 9.9% to 18.5% quarter-over-quarter growth. - Xpeng expects total vehicle deliveries to increase significantly in Q4 2026, with monthly deliveries targeting over 60,000 units by the end of 2026. - VLA 2.0 ADAS is expected to obtain regulatory approval and launch in Europe in H1 2027. - Xpeng Robotics expects to reach scaled mass production of the Xpeng IRON humanoid robot by end of 2026, begin large-scale external customer deliveries in 2027, and ramp monthly production capacity to several thousand units by the second half of 2027. Xpeng expects the humanoid robot business to achieve higher gross margins than the automotive business once scaled, and reach profitability faster than the auto business due to lower capital expenditure requirements.

Segment performance

1. Automotive Segment: Total vehicle sales revenue was RMB 17.05 billion in Q2 2026, an increase of 1% year-over-year and 55% quarter-over-quarter. Vehicle gross margin was 12.1%, flat quarter-over-quarter and down from 14.3% year-over-year due to production generation transition. Vehicle deliveries reached 103,295 units, up 65% quarter-over-year-over-year. In H1 2026, the automotive segment contributed 75% of total company revenue, with international automotive revenue accounting for over 25% of total company revenue in H1 2026. 2. Services and Other Segment: Revenue was RMB 2.69 billion in Q2 2026, an increase of 93.9% year-over-year and 32.6% quarter-over-quarter. This growth was driven by increased technical R&D service revenue from Volkswagen Group (after meeting key milestones) and higher parts and accessory sales. This segment contributed 13.6% of total Q2 2026 revenue. 3. Humanoid Robotics (Xpeng Robotics): The business recently closed its first round of private financing, raising over US$900 million at a US$6.2 billion post-money valuation. The business is still in pre-revenue development stage as of Q2 2026, with no commercial revenue reported this quarter.

Risks & headwinds

- Extreme weather and supply chain disruptions have impacted production ramping and delivery timelines for the new Mona L03 SUV, creating delays that require customer patience. Ramping up production capacity depends on close coordination with supply chain partners. - Mass production scaling and commercial adoption of advanced general-purpose humanoid robots faces very high technological barriers, and supply of core components is currently scarce, which may impact early production ramp. - Global ADAS deployment requires regulatory approval in multiple overseas markets, and local market adaptation creates execution risk that could delay launch timelines. - Commercialization of new business lines (humanoid robots, Robotaxi, paid ADAS software) is still in early stages, and market acceptance and revenue projections are uncertain.

Analyst Q&A

• Q: What is Xpeng IRON's projected production capacity at the end of 2026 and 2027 delivery target, and what are the expected unit cost, pricing strategy and gross margin trajectory? /

  A: Xpeng IRON will enter scaled mass production at the end of 2026, with initial commercial deployment in Xpeng's own retail stores. External commercial deliveries will accelerate starting in the first half of 2027, with monthly production capacity ramping to several thousand units by mid-to-second half of 2027, depending on market demand. Over 85% of core components are in-house developed, giving Xpeng strong cost leadership that will lead to higher hardware gross margins than the automotive business. In addition to hardware sales, the business will also generate recurring revenue from software model updates and subscription services. Xpeng IRON is targeted at retail and service sectors in both China and overseas, with delivery counting matching the transparent reporting standard of Xpeng's automotive business.

• Q: Where do Xpeng's humanoid robot and ADAS businesses share synergies, and what is Xpeng's differentiated advantage in robot data iteration? /

  A: Both businesses rely on similar layered large model architectures: Xpeng's ADAS VLA medium-speed model shares core logic with humanoid robot navigation and movement, while robot-specific safety and thinking models can also be adapted for automotive use. Beyond models, AI infrastructure, data architecture and organizational capabilities are shared across both businesses. Xpeng leverages 10+ years of autonomous driving data development experience to build a unified high-quality data management system for robotics. Once mass-produced, IRON will collect high-quality real-world and human demonstration data, creating a closed-loop flywheel for continuous improvement that outperforms competitors relying on low-quality simulated or synthetic data.

• Q: Why did Xpeng choose retail/service scenarios as the first deployment for IRON, what are the target customers, and are there plans to expand to industrial and home use later? What is the status of Xpeng's in-house dexterous hand development? /

  A: Most competitors enter via industrial or home 2B markets, but Xpeng is targeting large consumer and small-to-medium B customers starting with retail and service scenarios, with expansion to industrial and home use at a later stage. This path best leverages IRON's four core strengths: hardware capability, environmental adaptability, service functionality and emotional value, and will help open new sales channels. Xpeng will also open an SDK for third-party app development to expand ecosystem use cases. Xpeng's in-house dexterous hand is ready for mass production by end of 2026, with 21 degrees of freedom matching the size of an adult human hand, and industry-leading load and grasping capability. Xpeng prioritized a balance of safety, reliability, maintainability and cost, resulting in a leading design versus alternative approaches pursued by peers.

• Q: When will VLA 2.0 launch overseas, which models will carry it, and what is the business model for overseas ADAS? /

  A: The newly launched Mona L03, which is already available overseas, comes standard with Turing AI chips and will offer a VLA 2.0 ultra trim. All future Xpeng models launched overseas will include VLA 2.0 capable hardware. Local compliance and testing are underway, targeting regulatory approval in Europe in H1 2027. Xpeng is exploring a software subscription business model for VLA 2.0, has established a dedicated business development team to discuss partnerships, and will announce formal plans later this year.

• Q: When will the humanoid robot business become profitable, and will Xpeng split the robot and automotive businesses for financial reporting? /

  A: It is too early to give a specific profitability timeline, but the robot business is expected to achieve higher gross margins than automotive even at the hardware level, and will reach profitability much faster than the auto business after scaling, due to significantly lower capital expenditure requirements. The financing structure includes an 18-month window for gradual business separation, but near-term the business will remain consolidated to maximize synergies in AI, manufacturing, supply chain and other capabilities. The robot business will remain 100% consolidated in Xpeng's financial statements even after operational separation, so there will be no impact on Xpeng's overall financial results.