The fifth profitable new energy vehicle company is about to emerge

Author | Wang Xiaojun

Editor | Huang Yu

After the humanoid robot went viral online, XPeng has delivered a record-breaking third-quarter financial report.

"XPeng's gross margin in the third quarter has surpassed 20% for the first time, and our net loss has further narrowed. Our goal is to achieve breakeven in the fourth quarter." At the XPeng Motors Q3 2025 earnings call, Chairman and CEO He Xiaopeng conveyed this important message to the market.

This also means that XPeng will become the fifth new energy vehicle company to achieve profitability, following BYD, Li Auto, Seres, and Leapmotor.

Specifically, in the third quarter of this year, XPeng's total revenue reached 20.38 billion yuan, a year-on-year increase of 101.8%, with an overall gross margin of 20.1%, up 4.8 percentage points year-on-year.

In the context of high competition and rapid iteration in the new energy vehicle industry, He Xiaopeng prefers to emphasize "physical artificial intelligence": "My goal for the next decade is to make XPeng Motors a global leader in the field of embodied intelligence."

The importance of this financial report lies not only in the positive data but also in its clear presentation of XPeng's development path for the next two years—pursuing short-term profitability while firmly investing in the next-generation technology architecture.

From the R&D deployment of VLA 2.0 to the route planning of Robotaxi, from the engineering progress of IRON robots to the cycle arrangement of extended-range products, XPeng is building a technological framework that transcends traditional automakers.

Gross Margin Surges to 20%

From the financial data, XPeng delivered a historically high performance in the third quarter.

Specifically, total revenue reached 20.38 billion yuan, a year-on-year increase of 101.8%, with quarterly revenue surpassing the 20 billion yuan mark for the first time; net loss significantly narrowed to 380 million yuan, a decrease of 78.9% compared to the same period last year, just one step away from breakeven.

For overall revenue, the market had already anticipated this, as it is closely related to how many cars were sold.

In the third quarter, XPeng's total vehicle deliveries reached 116,000 units, a year-on-year increase of 149.3%, setting a new historical high for a single quarter. As of the end of October, XPeng's cumulative deliveries for the year had reached 355,000 units, exceeding last year's total delivery of 190,000 units.

The increase in gross margin has become one of the highlights of this financial report. In this quarter, XPeng's overall gross margin surpassed 20% for the first time, reaching 20.1%, up 4.8 percentage points year-on-year and up 2.8 percentage points quarter-on-quarter. This figure significantly exceeded market expectations and further reflects the company's enhanced cost control capabilities.

In terms of cash reserves, this quarter also set a historical high. By the end of the third quarter, XPeng's cash and cash equivalents, restricted cash, short-term investments, and time deposits reached 48.33 billion yuan, an increase of approximately 760 million yuan compared to the end of the second quarter.

In terms of R&D investment, XPeng continues to increase its investment as multiple businesses make new progress. In the third quarter, XPeng's R&D expenditure was 2.43 billion yuan, a year-on-year increase of 48.7% and a quarter-on-quarter increase of 10.1% This also indicates that XPeng, while pursuing profitability, has not relaxed its investment in cutting-edge technology.

On the surface, the improvement in XPeng's gross margin is attributed to economies of scale and cost control, but a deeper analysis of the business structure reveals that revenue from technology research and development services has also become a key driver of the company's gross margin increase.

In the third quarter, XPeng's service and other revenue reached 2.33 billion yuan, a year-on-year increase of 78.1% and a quarter-on-quarter increase of 67.3%. More importantly, its "service and other profit margin" reached 74.6%, which not only offset the impact of the decline in automotive gross margin but also pushed the company's overall gross margin to a historical peak of 20.1%.

Specifically, the gross margin for the automotive business itself is 13.1%, an increase of 4.5 percentage points year-on-year, but a decrease of 1.2 percentage points quarter-on-quarter. This is understandable, as competition in the industry intensifies, and XPeng also needs to offer more competitive prices on more models.

In this context, the technology licensing business with a gross margin exceeding 70% is becoming XPeng's second growth curve.

Currently, XPeng's technical cooperation with Volkswagen has entered a deeper stage. He Xiaopeng revealed that Volkswagen will become the first customer for XPeng's second-generation VLA model, and XPeng's Turing AI chip has also been designated by Volkswagen. The models developed collaboratively by both parties are expected to go into mass production early next year.

Regarding expectations for the next quarter, XPeng is also very optimistic.

He Xiaopeng stated in a conference call: "As we launch the dual-energy product cycle, we expect total deliveries in the fourth quarter to reach 125,000 to 132,000 units, with fourth-quarter revenue estimated at 21.5 billion to 23 billion yuan."

Moreover, He Xiaopeng reiterated that XPeng will achieve profitability in the fourth quarter. This optimistic expectation also means that XPeng is likely to achieve the historic goal of breakeven in the fourth quarter.

Imagining and Challenging Physical AI

At the recent 2025 XPeng Technology Day, XPeng connected all its businesses starting from multiple physical AI terminals.

In terms of automotive products, XPeng has currently initiated a new product cycle of "dual-energy" (pure electric + super range extender). In terms of the technology onboard, the second-generation VLA large model allows XPeng's intelligent features to maintain competitiveness.

Progress in several cutting-edge fields such as Robotaxi, humanoid robots, and flying cars has made XPeng's physical AI attributes more apparent, adding new narratives to its relatively bland new energy sector, allowing it to break out of its original framework and be re-evaluated by the outside world.

It is understood that XPeng's second-generation VLA will open up pioneer user co-creation experiences by the end of December 2025, with a full rollout to all Ultra models of XPeng in the first quarter of 2026.

In the Robotaxi field, He Xiaopeng revealed that XPeng will launch three Robotaxi models in 2026, and XPeng plans to start trial operations of Robotaxi in China in 2026, with Gaode becoming the first global ecological partner for XPeng's Robotaxi. The newly popular humanoid robot IRON aims to achieve large-scale production of advanced humanoid robots by the end of 2026 The progress in these areas indicates that XPeng has a clear technological roadmap, and its products and cycles are relatively controllable. For instance, the layout of future products such as humanoid robots and flying cars demonstrates the capability from showcasing to engineering.

This has also led to a shift in how the capital market evaluates XPeng, moving beyond the traditional automotive evaluation system. JP Morgan pointed out that the next wave of major growth for XPeng from 2026 to 2027 will come from the company's recent AI initiatives, including Robotaxi, humanoid robots, and flying cars, all driven by the company's self-developed AI.

This means that XPeng is undergoing a new transformation. However, as in the past few years, the automotive market still faces many uncertainties, and the story of "each leading the way for a year or two" continues.

In terms of automobiles, on one hand, the industry's price war has never truly ceased, and the overall sales in the extended-range segment that XPeng has newly entered have begun to decline. Whether XPeng's high-priced models, especially the flagship extended-range model, can gain market acceptance remains to be seen.

Additionally, while humanoid robots can shock domestic and international netizens and prompt the capital market to reassess XPeng, their commercialization prospects are still unclear. A previous survey report from Goldman Sachs indicated that despite many companies ramping up production capacity, orders are still not abundant.

He Xiaopeng has stated that a groundbreaking product in the humanoid robot field has yet to emerge, and the investment scale needs to reach 50 billion to even 100 billion yuan. XPeng's R&D expenses are expected to be around 6.5 billion yuan in 2024, with an anticipated increase to 10 billion yuan this year. Taking on more challenging businesses also means higher R&D investments, which could pose challenges to its future profits.

In this quarter, XPeng indeed achieved its best financial report in history, but this is not a short-term result; it is the outcome of adjustments made to the organizational structure, clearer product definitions, and a more defined technological roadmap.

Looking ahead to the next two years, the flags set by XPeng still need to be validated one by one. For example, whether the extended-range models can gain market acceptance, the commercial deployment capability of the second-generation VLA, the rollout pace of the native Robotaxi model, and the engineering progress of the advanced humanoid robot IRON.

And these do not seem to be an easier journey than in the past