XPeng Inc. Q2 FY2025 earnings call

• Q2 2025 saw record high performance with deliveries at 103,181 units, a 242% y-o-y increase. MONA M03 Max was a best-seller. - Launched G7 in July, with Ultra trim making up over 50% of sales. Kunpeng Super Electric Models to start mass-production in Q4 2025. - Focus areas include technology leadership, building organizational strength, commercialization, and globalization. - New P7 to be launched next week, with presales orders exceeding previous export models. X9 Kunpeng Super Electric Edition to be introduced in Q4, with over 450 km pure electric range and combined range over 1,500 km. - Turing AI SoCs in ultra-trims provide 2,250 TOPS computing power, over 3x that of competitors. VLA plus VLM to be rolled out, aiming for generational lead in ADAS. - Overseas business grew with over 18,000 deliveries in H1 2025, ranking as a top Chinese NEV start-up brand in 10 markets.

In Q2 2025, total revenues were RMB 18.27 billion, an increase of 125.3% year-over-year. Revenues from vehicle sales were RMB 16.88 billion, up 147.6% year-over-year, and revenues from services and others were RMB 1.39 billion, up 7.6% year-over-year. Vehicle gross margin was 14.3% for the quarter, a 3.8 percentage point increase quarter-over-quarter. R&D expenses were RMB 2.21 billion, up 50.4% year-over-year, and SG&A expenses were RMB 2.17 billion, up 37.7% year-over-year. As of June 30, 2025, cash and cash equivalents totaled RMB 47.57 billion.

• Forecast Q3 deliveries to be 113,000 to 118,000 units, representing a y-o-y growth of 142.8% to 153.6%, and revenue to reach between RMB 19.6 billion and RMB 21 billion. - Aim for profitability in Q4 2025, with the introduction of the one vehicle dual energy strong product cycle and Turing AI-driven smart driving solutions.

Q: About brand obsession and product pricing, how to reverse the trend of declining average selling price?

A: Through different product layout, leveraging technology, emotions, and brand to increase premium, with models like P7 and X9 in higher price ranges.

Q: Regarding smart driving technology advantage against competition, when will XPeng's Turing chip on Ultra trim differentiate?

A: XPeng's total computing power is 2,250 TOPS, with frame rate 2x of competitors. Initial VLA launch for Ultra trim, expecting significant difference by end of 2025 and 10x lead next year.

Q: About cooperation with Volkswagen, future revenue guidance?

A: Expanded EEA collaboration with Volkswagen, revenue from collaboration to start recognizing once Volkswagen's ICE and PHEV vehicles start SOP.

Q: About robotaxi business, will launch 2D version of vehicles?

A: There will be L4 enabled/capable vehicles with and without people driving, but details on 2D version not specified yet.

Q: About vehicle gross margin sequential improvement factors?

A: Mainly product mix change, cost reduction, and scale, with new models like G6 and G9 increasing product mix and supply chain optimization helping material costs.

Q: About R&D and sales expenses guidance?

A: R&D investment increased for AI capabilities and new platform launches. Sales expenses had slight increase in Q2 due to higher deliveries and commissions, with more product launches in H2 requiring appropriate marketing and advertising expenses.

Q: About product strategy shift towards design?

A: Yes, shifting focus to design first, then engineering, cost, and positioning, with multiple buildings dedicated to design globally.

Q: About policy response to China's anti-involution policy?

A: Focus on full stack innovation, delivering quality products, and responding to payment term requests to maintain a healthier ecosystem.

Q: About G7 intelligent cockpit chips and vehicle gross margin guidance?

A: G7 will deploy specific Turing SoC for infotainment in October. Vehicle gross margin improved in Q2, aiming for high teens in Q4 and breakeven in Q4.