Does XPeng's Global Push & AI Edge Make This EV Stock a Buy?

Chinese EV maker XPeng’s XPEV latest foray into Poland signals that the company has no intention of slowing down, even as geopolitical tensions escalate. Just days before the launch of three of its high-tech EVs in Warsaw—the G9 SUV, the G6 coupe SUV, and the P7 sedan—markets were rocked by a sharp escalation in the U.S.-China trade war, with tariffs on Chinese imports surging to 125%. Despite the noise, XPeng pushed forward. This move, part of its ambitious strategy to go global, points to its long-term vision. XPeng plans to be in 60 countries by the end of 2025.

The vehicles launched in Poland all boast 5-star Euro NCAP safety ratings and cutting-edge technology like 800V fast-charging and NVIDIA-powered smart systems. While the tariffs caused the stock to dip 19% in the past month, this is more of a short-term reaction than a lasting headwind. Investors should stay calm and focus on the fundamentals.

Delivery Surge Points to Strong Demand

XPeng’s vehicle delivery numbers paint a compelling picture. In Q4 2024, it delivered 91,507 units—a 52% year-over-year jump. That momentum carried into 2025, with a record-breaking 94,008 vehicles delivered in Q1, representing a stunning 331% increase from the same quarter last year. Leading the charge is the Mona M03, a low-cost electric coupe starting around $16,000. This vehicle alone accounts for nearly half of total monthly sales.

This way, XPeng is connecting with cost-conscious buyers by offering affordable options without compromising on quality or technology. This expanding delivery base is key to driving revenue growth and operational scale. In fact, the Zacks Consensus Estimate for XPeng’s 2025 revenues points to a 92% increase, while earnings are projected to rise 58%, offering a strong setup for investor confidence.
 

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Margins Improving, But XPeng Still Has Some Work to Do

The story doesn’t end with volume. XPeng has also made significant progress on the margin front. In Q4 2024, vehicle margins improved to 10%, up from just 4.1% a year ago. While that’s still behind Li Auto’s LI 19.8%, it signals that XPeng is moving in the right direction. Cost-cutting measures and manufacturing scale are beginning to pay off. The gross profit shot up to RMB 5.8 billion in 2024 from just RMB 451 million the year prior. XPeng’s adjusted net loss margin has narrowed from -15.3% to -9.4%, showing that the company is inching closer to profitability. Management believes XPeng will hit breakeven by Q4 2025, and if this trend continues, that timeline seems increasingly realistic.

AI Innovation Sets XPeng Apart

XPeng isn’t just scaling up—it’s also doubling down on tech. The company has become a front-runner in AI-driven vehicle development. Its P7+ sedan integrates a proprietary AI system that enables features such as advanced lane changes and superior detour handling. The AI Hawkeye Visual Solution and XOS 5.4 operating system reflect XPeng’s full-stack approach, distinguishing it from rivals.

The company also has bold aspirations outside conventional EVs—unveiling humanoid robots, autonomous flying cars, and even in-house AI chips. While some of these moonshot projects raise eyebrows, they also signal XPeng’s ambition to lead the next generation of mobility.

Competitive Landscape: NIO and Li Auto in Focus

In a market dominated by strong players, XPeng is holding its own. Li Auto delivered 92,864 vehicles in Q1 2025, a 15.5% year-over-year increase. Its vehicle margins are industry-leading, and it’s already profitable—with a net income of $1.5 billion last year. That sets a high bar, and XPeng hasn’t quite caught up yet. But here’s the twist: XPeng’s growth rate outpaces Li Auto’s by a wide margin, especially in Q1. Meanwhile, another Chinese player, NIO Inc.’s NIO Q1 deliveries slipped to 42,094 from 72,689 in the previous quarter, although year-over-year growth was still solid at 40%. NIO has set a 20% vehicle margin target for 2025, but it remains in the red financially.

Each competitor has its edge—NIO stands out with its futuristic brand appeal, and Li Auto impresses with strong profits—but XPeng’s rapid growth and advanced technology foundation position it as a serious contender. Each has carved a niche, but XPeng is arguably gaining ground faster than anyone expected. Shares of NIO and Li Auto have plunged 9.5% and 18.8%, respectively, over the past year, while shares of XPEV have skyrocketed 178%. This kind of performance speaks volumes about investor confidence.

XPEV, NIO, LI 1-Year Stock Performance

Does the Stretched Valuation Reduce XPeng’s Appeal?

It’s true—XPeng isn’t cheap right now. Currently trading at a forward sales multiple of 1.54, the stock is well above its 1-year average and pricier than competitors like NIO (0.5) and Li Auto (0.92). However, valuations are subject to change — especially with fast-growing companies. Considering XPeng’s triple-digit growth and improving profit margins, investors might just be willing to pay a higher price.

XPEV, NIO, LI Price/Sales F12M

Plus, the stock currently carries an average brokerage recommendation (ABR) of 1.97 on a scale from 1 (Strong Buy) to 5 (Strong Sell), indicating bullishness from the analyst community.

Final Word: XPeng is a Compelling Investment

XPeng is at an inflection point. Despite recent market volatility driven by trade war headlines, the company’s core business remains strong and solid. It’s scaling up fast, refining its margins, introducing new models, and doubling down on AI-driven tech. While risks like valuation and current losses remain, the long-term outlook is compelling. Strong forecasts, rising deliveries, and an ambitious roadmap all point to continued momentum. For investors willing to look ahead, XPEV offers real potential.

The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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