Chinese EV maker XPeng forecasts weak fourth quarter revenue amid fierce competition
![Item 1 of 2 People look at an Xpeng X9 minivan at the Chinese electric vehicle (EV) maker's booth during a media day for the Auto Shanghai show in Shanghai, China April 23, 2025. REUTERS/Go Nakamura/File Photo [1/2]People look at an Xpeng X9 minivan at the Chinese electric vehicle (EV) maker's booth during a media day for the Auto Shanghai show in Shanghai, China April 23, 2025. REUTERS/Go Nakamura/File Photo Purchase Licensing Rights, opens new tab](/_next/image?url=https%3A%2F%2Fwww.reuters.com%2Fresizer%2Fv2%2FRWERY3CQ7ZMHVIZWA45S7DGJKA.jpg%3Fauth%3Da8a406cd1f83a1c61ef4d7ba707511b6f297805f8ea1ed890a83dc6e717ef9ce%26width%3D1200%26quality%3D80&w=1920&q=75)
News Summary
Chinese electric vehicle (EV) maker XPeng has forecast fourth-quarter revenue below market estimates, attributing the cautious outlook to a prolonged price war and intensifying competition in the world's largest auto market. This subdued forecast comes despite XPeng and rival NIO posting record deliveries in October, a period when Tesla's China sales slumped to a three-year low. This contrasting performance highlights the uneven impact of a bruising price war that has eroded profitability across China's crowded EV sector. XPeng expects fourth-quarter revenue to range between 21.5 billion yuan ($3.03 billion) and 23 billion yuan, falling short of analysts' average estimate of 26 billion yuan. For the third quarter, XPeng reported revenue of 20.38 billion yuan, in line with expectations, driven by a 149.3% year-on-year jump in vehicle deliveries. The company's net loss narrowed to 380.9 million yuan.
Background
The Chinese electric vehicle (EV) market is the world's largest and most competitive, featuring numerous domestic brands and international giants. In recent years, an intense price war has erupted among automakers vying for market share, putting significant pressure on overall industry profit margins. XPeng has historically been known for its investment in intelligent driving technology. However, with growing demand for mid-to-low-end EVs, the company has also launched "MONA," a mass-market brand in collaboration with ride-hailing giant DiDi, introducing models like the M03 to penetrate more affordable EV segments. Concurrently, XPeng is exploring futuristic technologies such as "flying car" concepts and humanoid robots. These long-term projects necessitate substantial R&D investments, which could place further pressure on the company's near-term earnings.
In-Depth AI Insights
Is XPeng's dual strategy of high-end R&D and mass-market penetration sustainable amidst intense competition? - XPeng's simultaneous pursuit of advanced intelligent driving R&D and its entry into the mass market via the MONA brand risks creating a 'split' brand identity, potentially diminishing its appeal in the premium segment (above 200,000 yuan) as analysts suggest. In a capital market highly focused on profitability, this dual investment could lead to resource dilution and prolong the timeline to achieve scaled profitability. - In the long run, if high-end technologies fail to commercialize rapidly or if mass-market share doesn't significantly increase, the company will face sustained financial pressure. Investors need to assess whether its technological advantages can translate into market barriers and profitability, especially as the price war continues to erode margins. What are the deeper reasons behind the diverging performance of domestic Chinese EV makers and Tesla in the China market? - The contrast of XPeng and NIO's record deliveries against Tesla's sales slump suggests that domestic Chinese brands might hold an advantage in product adaptability, localized services, and pricing strategies. Local players can respond more swiftly to market changes, introduce models better suited to Chinese consumer preferences, and employ more flexible tactics in the price war. - Tesla's challenges likely stem from its slower product refresh cycle, the rapid catch-up by local competitors in smart cockpit and autonomous driving features, and its brand's limitations in pricing flexibility. This indicates that the competitive landscape in China's EV market will continue to shift in favor of leading domestic players, with Tesla's market dominance facing long-term erosion. Given the fierce domestic competition, how will the export strategies of Chinese EV manufacturers evolve? - As domestic competition intensifies and profit margins narrow, Chinese EV makers, including XPeng, will more aggressively pursue international market opportunities. This serves not only to absorb excess capacity but also to diversify single-market risks and enhance global brand influence. - However, export expansion faces new challenges, including potential trade barriers and tariffs from the Trump administration (e.g., EV tariffs), and increasingly stringent local production requirements in various countries. Success in international markets will depend on their comprehensive capabilities in technology, cost control, brand adaptability, and navigating geopolitical risks, which may necessitate establishing more overseas manufacturing facilities or seeking local partnerships.