XPeng, Inc. Q1 FY2025 earnings call

• Q1 2025 deliveries totaled 94,008 units, a 331% year-over-year increase, establishing a new quarterly delivery record and securing top sales position among emerging EV brands domestically and internationally.
• Vehicle gross margin improved for seven consecutive quarters, with overall gross margin reaching a record high of 15.6% in Q1 2025, net loss narrowing, and free cash flow exceeding RMB3 billion.
• Products like the Mona M03 surpassed 100,000 deliveries, the P7+ reached 50,000 units in production five months after launch, and 2025 G6 and G9 models delivered over 7,500 units in April.
• Overseas business saw rapid growth, with Q1 2025 overseas deliveries up over 31,700 year-over-year, and over 40 new stores opened abroad.
• Focus on AI development, including the Hawkeye Pure Vision ADAS solution, self-developed Turing chips, large-scale cloud-based foundation models, and progress in autonomous driving from L2+ to L3/L4.
• Humanoid robot development, with the fifth-generation robot powered by Turing chips and plans to launch industry-leading robots for industrial and commercial applications in 2026.

Total revenues for the first quarter of 2025 were RMB15.81 billion, an increase of 141.5% year-over-year and a decrease of 1.8% quarter-over-quarter. Revenues from vehicle sales were RMB14.37 billion, up 159.2% year-over-year and down 2.1% quarter-over-quarter. Revenues from services and others were RMB1.44 billion, up 43.6% year-over-year and up 0.5% quarter-over-quarter. Gross margin was 15.6% for the first quarter, compared to 12.9% in the same period of 2024 and 14.4% in the fourth quarter of 2024. Vehicle margin was 10.5% for Q1 2025, compared to 5.5% in the same period of 2024 and 10% in the fourth quarter of 2024. R&D expenses were RMB1.98 billion, up 46.7% year-over-year and down 1.3% quarter-over-quarter. SG&A expenses were RMB1.95 billion, up 40.2% year-over-year and down 14.5% quarter-over-quarter.

• For Q2, total vehicle deliveries are estimated to range from 102,000 to 108,000 units, representing a year-over-year increase of 237.7% to 257.5%.
• Revenue is expected to be between RMB17.5 billion to RMB18.7 billion, a year-over-year growth of 115.7% to 130.5%.
• Aim to more than double sales growth this year and achieve profitability in Q4, generating substantial free cash flow for the entire year.

• Tariffs in the EU impacting profitability, with efforts underway to reduce impact through partnerships, product mix changes, and local investments.
• FX exposure due to European business, with monitoring and control measures in place to manage potential impacts.

Q: So, my first question is about the volume sales, given the strong model pipelines, should we expect more significant sales jump in the following quarters?

A: Thank you so much for your question. First of all, I think it is -- our performance in the past quarter definitely aligns with our overall strategy of long-term and steady development... For Q2, we expect to actually have five upgraded versions or improvement face-lift versions... Also, Brian Gu added that the steady performance reflects improved operation quality and new launches like Mona Max, G7, and P7 will be catalysts for further growth.

Q: For your export business, could you give us the latest guidance for your growth in 2025? And among all the different regions, which area do you see a higher growth? And for European -- EU zone, because they increased the tariff for the EV made in China since last year, so, right now, what is your current strategy in this market?

A: Hey, Ming, it's Brian. Let me address your question. Yes, indeed, we have seen a very strong international growth... This year, our continued focus will be on the European, Middle East and Southeast Asia... The issue on the tariff, I think, is something that we are very, very focused on. Clearly, it's having an impact on the profitability of our business, for example, in Europe...

Q: Will G7 be the first model to use the Turing chip in your product portfolio? And going forward, will all of your XPeng branded EV models use Turing chips? And by using these chips, I believe you can reduce your costs. Will you share the cost reduction benefit with your customers?

A: Thank you. This is Xiaopeng. Thank you for the question. Now, when it comes to our Turing chip, the development of it has been going really, really well... Currently, everything is going really well. We have already going into -- we have already begun our production in second quarter this year, and we expect to actually have some more models supported or with the Turing chip in the third quarter of the year... We believe that in a very, very near future, we will be able to really showcase our generational lead in this regard... By that time, we're not going to be talking about the human interference within the current, how many miles, we're going to enter the next stage of autonomous driving... We will bring benefits to all of the people and hope to -- hope that everyone can get access to this fancy technology one day and as soon as possible. And we believe that this dual Turing chip can help us to do that.