While NIO and Li Auto have witnessed a slowdown in their growth rates, Zero-Run has emerged as a dark horse with its cost-effective strategy. XPeng, with impressive results of 94,008 deliveries and revenue of 15.81 billion yuan, has topped the list of new forces and become the market's focal point.

This financial report not only signifies XPeng's turnaround from critical condition to a safe zone but also reflects a shift in China's smart electric vehicle industry's logic, transitioning from scale expansion to efficiency competition. During the earnings call, XPeng CEO He Xiaopeng set a target of achieving profitability in the fourth quarter, backed by the combined efforts of its blockbuster strategy, "technology for all," and globalization layout.

From navigating through challenging waters to achieving monthly sales of 30,000, what is XPeng's blockbuster logic?

The financial report reveals that XPeng's total revenue in the first quarter of this year amounted to 15.81 billion yuan, marking a significant 141.5% increase compared to 6.55 billion yuan in the same period last year. This revenue performance surpassed the previous guidance ceiling, demonstrating robust growth momentum.

In terms of deliveries, XPeng set a new record. The total vehicle deliveries in the first quarter reached 94,008 units, a surge of 330.8% compared to 21,821 units in the same period last year and a sequential increase of 2.7%. This achievement positions XPeng at the top in both domestic and overseas sales of new forces, with its market recognition continually improving.

This success is primarily attributed to two strategies. The first is the technology decentralization strategy, where XPeng equips high-level intelligent driving functions (such as the XNGP system) on MONA series models starting at 119,800 yuan, covering a broader price range and driving the single-vehicle gross margin to further increase from 8.3% in 2024.

The second is the blockbuster model effect. The MONA 03 and P7+ models launched in the fourth quarter of 2024 have continued to sell well. Notably, MONA M03 received over 10,000 large orders within just 52 minutes of its launch and soared to 30,000 after 48 hours, setting a new record for the speed of large orders for a new car launch.

In addition to record-high deliveries, profitability indicators are also improving simultaneously. XPeng's net loss in the first quarter was 660 million yuan, significantly narrower than the 1.37 billion yuan in the same period last year and the 1.33 billion yuan in the previous quarter.

Moreover, the company's gross margin reached 15.6%, an all-time high, surging 19.5 percentage points over the past seven quarters. The automotive gross margin has also achieved seven consecutive quarters of growth, reaching 10.5%, demonstrating the company's improvement in cost control and product profitability.

Behind this trend lie the dual effects of supply chain optimization and technology cost reduction. Through large-scale procurement and self-research of core components (such as battery management systems), XPeng's amortization cost per vehicle has continued to decline, and its supply chain bargaining power has continued to improve.

Furthermore, technology licensing is contributing to profits. In the first quarter, XPeng's technology cooperation with the Volkswagen Group generated 462 million yuan in service revenue, an increase of 100 million yuan compared to 366 million yuan in the same period last year, thereby becoming an important profit growth point.

Overall, XPeng delivered an "anti-cyclical growth" performance in the first quarter with a year-on-year revenue increase of 141.5%, explosive growth in deliveries exceeding 94,000 units, and a record-high gross margin of 15.6%.

The "technology for all" strategy activating the broader market, the blockbuster models reshaping the product matrix, and supply chain optimization and technology licensing feeding back into profits are the three engines driving its transformation from "scale expansion" to "efficiency competition".

As the "elimination round" for new forces intensifies, is XPeng still under immense pressure?

However, amidst the accelerated reshuffling in the new energy industry, sustaining this high growth faces multiple challenges.

As the price war extends from the 200,000 yuan segment to the 100,000 yuan market, when the speed of technological iteration far outpaces the R&D cycle of automakers, and "profitability" becomes the sole criterion for measuring survival rights in the capital market, can XPeng's proud "intelligent driving for all" moat withstand the fierce competition in the industry's elimination round?

Currently, despite a year-on-year revenue increase of 141.5% in Q1 and the gradual emergence of scale effects, XPeng's profitability pressure remains unresolved. The core contradiction lies in XPeng's high R&D investment at this stage. In 2024, XPeng's R&D expenses amounted to 6.46 billion yuan, accounting for about 22.4% of its revenue.

Furthermore, the price war is intensifying. Tesla's Model 3 offers a "5-year 0% interest + insurance subsidy," Wuling's Bingguo SUV has ventured into the 80,000 yuan segment, and Guangqi Toyota has reduced prices across its two SUV models, the Fenglanda and Weilanda, further squeezing profit margins.

This also means that XPeng needs to find a new balance between scale expansion and cost control.

In overseas markets, XPeng expanded its presence in the European market in the first quarter of 2025, successfully entering the UK, Poland, Switzerland, Czech Republic, Slovakia, and Indonesia. Recently, XPeng officially entered the Italian and Polish markets, becoming one of the first new Chinese forces to land at the Milan Design Week.

To date, XPeng has achieved coverage in more than ten European countries. Although XPeng has leveraged its charging speed and endurance advantages to promote the G6 in the European market, making it into the D-segment SUV rankings, and is attempting to use the European region as a fulcrum to accelerate its global market layout, competitors such as BYD and Zero-Run have seized the initiative in the European market.

Zero-Run's technology licensing model (such as its cooperation with Stellantis) also helps reduce R&D costs and accelerate overseas channel construction. Moreover, local brands such as Volkswagen and BMW still occupy a significant market share. For XPeng to make further progress in overseas markets, it needs to overcome tariff barriers and shortcomings in after-sales networks.

Additionally, in Q1 2025, Li Auto and NIO's revenue growth rates slowed to 15.5% and 24.8%, respectively, while Zero-Run approached break-even with a gross margin of 14.9%. The industry logic is shifting from "multi-brand horse racing" to resource intensification.

The technology race is also intensifying. Xiaomi's SU7 relies on its smart home ecosystem to cover the 200,000-300,000 yuan market, while Huawei and Thalys' new goal for intelligent car selection is to achieve annual production and sales of over 1 million units. The continuous efforts of cross-border giants are also squeezing XPeng's living space.

For XPeng at this stage, only by continuously strengthening technological barriers such as AI intelligent driving and 800V ultra-fast charging can it maintain its advantages in the "most competitive three years".

Conclusion

As the industry transitions from "stacking materials and internal competition" to "technology for all" and from "capital infusion" to "self-sustaining growth," XPeng has validated three underlying logics with a counterattack: technology democratization determines the right to survive, the blockbuster logic crushes the long-tail trap, and global competition forces system revolution.

However, this counterattack is merely a ticket to the elimination round. As Xiaomi uses its ecosystem to compete in the 200,000-300,000 yuan market, Zero-Run approaches the break-even line with a gross margin of 14.9%, and the EU is poised to impose tariffs on Chinese electric vehicles, XPeng's "intelligent driving for all" moat is facing new challenges.

He Xiaopeng's goal of "achieving profitability in the fourth quarter" is essentially a life-or-death gamble against time. Before the patience of the capital market runs out, it is imperative to solidify the current technological advantages into systematic efficiency hegemony. The outcome of this battle may define whether China's smart car army can transition from the "red ocean of internal competition" to the "global blue ocean".

Source: HK Stock Research Society