XPENG Recovered QoQ in 2Q26, but Capacity Bottlenecks Weigh on 3Q and the 4Q Recovery Still Needs to Materialize

Overview

This report reviews XPENG's 2Q26 results and earnings call commentary and assesses its 3Q26 guidance, 4Q26 capacity and new-model ramp-up, overseas expansion, and progress in the robotics business. Nomura believes 2Q26 showed a QoQ recovery, but patience is still needed in 3Q26, while further improvement in 4Q26 depends on whether capacity bottlenecks are resolved on schedule.

Core views

XPENG's operating performance recovered as expected in 2Q26. Revenue was RMB 19.7 billion, up 8% YoY and 51% QoQ, but only at the low end of the company's guidance range; quarterly deliveries totaled 103,300 units, broadly flat YoY and up 65% QoQ, likewise only reaching the low end of guidance. Due to a higher sales contribution from Mona models, the average selling price was approximately RMB 165,000, down 6% QoQ. Overall gross margin was 20.7%, up 3.4 percentage points YoY and 0.1 percentage points QoQ; automotive gross margin was 12.1%, down 2.3 percentage points YoY and broadly flat QoQ, while the gross margin for services and other businesses reached 75.1%, up 21.5 percentage points YoY and 8.6 percentage points QoQ. Operating margin was -6.7%, down 0.1 percentage points YoY but improving 9.4 percentage points QoQ, indicating that the company had recovered from its 1Q26 trough. Net loss was RMB 1.3 billion, widening 180% YoY but narrowing 25% QoQ. 3Q26 guidance remains the key source of near-term pressure. The company expects deliveries of 115,000 to 121,000 units, representing a YoY change of -1% to +4%; given that 38,000 units were sold in July, this guidance implies average monthly sales of approximately 38,500 to 41,500 units in August and September 2026. Considering the order performance following the launch of the Mona L03, Nomura views the guidance as somewhat weak. Management primarily attributed it to capacity constraints for new models and plans to resolve the bottleneck in September 2026. The company also expects 3Q26 revenue of RMB 21.7 billion to RMB 23.4 billion, up 6% to 15% YoY; based on this guidance, Nomura estimates that the 3Q26 average selling price may remain at approximately RMB 165,000, with the overall product mix remaining stable. The robotics business is another growth avenue highlighted in the report. On the same day that it announced its 2Q26 results, the company announced that its robotics business had raised more than USD 900 million, including USD 600 million from external investors, USD 200 million from XPENG, and USD 100 million from company executives, implying a valuation of USD 6.3 billion for the robotics business. The report highlights its full-stack in-house R&D capabilities, including key components such as the AI Turing chip and dexterous hands, as well as its physical-AI world model, and believes the financing will help the company further accelerate the development of its robotics business. A more pronounced recovery in the automotive business has been deferred to 4Q26, contingent on resolving capacity issues. Following the GX and Mona L03, the company plans to officially launch the G9L in September 2026 and the Mona L05 in 4Q26. The company hopes to optimize its product mix through these four new SUVs and aims to achieve 60,000 deliveries in one month during 4Q26. Management expects monthly deliveries of the Mona L03 in the Chinese market to reach 15,000 units in 4Q26, with overseas markets potentially contributing several thousand additional units per month. Nomura also notes that weak domestic demand will remain a near-term headwind for the broader automotive industry, meaning patience is still required in 2H26. The overseas business has become an important source of support. XPENG's overseas deliveries reached 20,000 units in 2Q26, up 81% YoY, with overseas sales contributing more than 25% of total quarterly revenue. With overseas deliveries of the Mona L03 scheduled to begin in 4Q26, the company targets overseas sales of 40,000 units in 4Q26 and plans to introduce more extended-range electric vehicle models to global markets beginning next year. Intelligent driving and Robotaxi remain at the stage of feature rollout and commercialization preparation. The company plans to release the latest version of VLA 2.0 by the end of August 2026 and, subject to conditions, introduce the relevant features into the EU market in 2027. For Robotaxi, the company aims to provide driverless Robotaxi services in 2027. These businesses expand the long-term growth runway, but actual product deployment and commercialization progress still need to be demonstrated. Margins may fall back to the high teens in 3Q26 and 4Q26. Management explained that while the revenue contribution from the automotive business will increase, revenue related to the Volkswagen partnership is expected to decline to approximately RMB 500 million to RMB 1.0 billion per quarter in 3Q26 and 4Q26, compared with more than RMB 1.0 billion in 2Q26. Due to the decline in high-margin partnership revenue, overall gross margin may not sustain the 2Q26 level; the company expects a more meaningful improvement in financial performance only when deliveries increase in 4Q26. Operating milestones for the humanoid robot business are concentrated from the end of 2026 onward. The company continues to target mass production by the end of 2026, expects to begin generating external product revenue from 2Q27, and forecasts that monthly production capacity for the Iron humanoid robot could reach several thousand units in 2027. Nomura believes innovative businesses such as robotics, beyond the automotive business, could open a path toward sustainable long-term growth, but their pace of development is also an important variable in achieving the target price. Based on the anticipated 4Q26 recovery in the automotive business, new models and overseas expansion, and the long-term potential of innovative businesses, Nomura reiterates its Buy rating and USD 23 target price. The target price is based on a DCF valuation, assuming a weighted average cost of capital of 9.9%, a market risk premium of 10.9%, and a perpetual growth rate of 1.5%, with cash flows discounted to 2026 to derive a 12-month forward valuation. The target price corresponds to 1.6x 2026F P/S, while the stock currently trades at 0.8x. Downside risks explicitly identified in the report include weaker-than-expected growth of new models in 2026, further intensification of competition in China's automotive market, and slower-than-expected development of Robotaxi and humanoid robots.

Analysis framework

The report first reviews 2Q26 revenue, deliveries, average selling price, segment gross margins, operating margin, and net loss on both YoY and QoQ bases to determine whether operations recovered from 1Q26. It then combines 3Q26 delivery and revenue guidance with July sales, capacity constraints, and product mix to estimate subsequent monthly sales and average selling prices. The report subsequently assesses the 4Q26 and long-term growth trajectory based on the new-model launch schedule, overseas delivery targets, and milestones in intelligent driving and robotics, before deriving its target price through a DCF valuation and cross-presenting it using 2026F P/S.

Methodology notes

• Valuation MethodDCF

  Discounted Cash Flow Valuation

  The report discounts future cash flows to 2026 and calculates a 12-month forward target price of USD 23 using a 9.9% weighted average cost of capital, a 10.9% market risk premium, and a 1.5% perpetual growth rate.

• Valuation MethodPS valuation

  Forward P/S Comparison

  The report translates the USD 23 target price into 1.6x 2026F P/S and presents it alongside the stock's current valuation of 0.8x 2026F P/S.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Volume-price decomposition of deliveries, average selling price, and revenue

  The report explains revenue changes by combining quarterly deliveries with the average selling price and uses 3Q26 delivery and revenue guidance to conclude that the average selling price may remain at approximately RMB 165,000.

• Corporate Fundamentals and Financial Framework

  YoY, QoQ, and Segment Margin Analysis

  The report assesses the extent of the 2Q26 recovery and subsequent earnings pressure by analyzing YoY and QoQ changes in revenue, deliveries, overall gross margin, automotive gross margin, gross margin for services and other businesses, operating margin, and net loss.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• XPENG Inc. (XPEV.US)

  The company covered by the report; Nomura believes its automotive business is recovering QoQ, with new models and capacity ramp-up potentially driving a more pronounced improvement in 4Q26, while robotics and intelligent driving provide long-term growth avenues.

  Strengths

  2Q26 revenue, deliveries, and operating margin improved QoQ; overseas deliveries grew 81%; the company possesses full-stack in-house R&D capabilities, including the AI Turing chip, dexterous hands, and a physical-AI world model.

  Weaknesses

  3Q26 delivery guidance is somewhat weak, and new models face capacity bottlenecks; automotive gross margin declined YoY, net loss widened YoY, and domestic automotive demand remains sluggish.

  Risks

  Weaker-than-expected growth of new models, further intensification of competition in China's automotive market, and slower-than-expected development of Robotaxi and humanoid robots.

Key data

• 2Q26 RevenueRMB 19.7 billionUp 8% YoY and 51% QoQ, at the low end of guidance
• 2Q26 Deliveries103,300 unitsBroadly flat YoY and up 65% QoQ, reaching the low end of guidance
• 2Q26 Average Selling PriceApproximately RMB 165,000Down 6% QoQ, mainly due to a higher sales contribution from Mona models
• 2Q26 Overall Gross Margin20.7%Up 3.4 percentage points YoY and 0.1 percentage points QoQ
• 2Q26 Automotive Gross Margin12.1%Down 2.3 percentage points YoY and broadly flat QoQ
• 2Q26 Gross Margin for Services and Other Businesses75.1%Up 21.5 percentage points YoY and 8.6 percentage points QoQ
• 2Q26 Operating Margin-6.7%Down 0.1 percentage points YoY and improving 9.4 percentage points QoQ
• 2Q26 Net LossRMB 1.3 billionWidened 180% YoY and narrowed 25% QoQ
• 3Q26 Delivery Guidance115,000 to 121,000 unitsRepresenting a YoY change of -1% to +4%
• 3Q26 Revenue GuidanceRMB 21.7 billion to RMB 23.4 billionUp 6% to 15% YoY
• Implied Monthly Sales from August to September 202638,500 to 41,500 unitsEstimated based on 3Q26 guidance and July sales of 38,000 units
• 3Q26 Forecast Average Selling PriceApproximately RMB 165,000Nomura's estimate based on delivery and revenue guidance
• 2Q26 Overseas Deliveries20,000 unitsUp 81% YoY, with overseas sales contributing more than 25% of quarterly revenue
• 4Q26 Overseas Sales Target40,000 unitsOverseas deliveries of the Mona L03 are scheduled to begin in 4Q26
• 4Q26 Single-Month Delivery Target60,000 unitsThe company aims to reach this level in one month during 4Q26
• Robotics Business FinancingMore than USD 900 millionUSD 600 million from external investors, USD 200 million from XPENG, and USD 100 million from company executives
• Robotics Business ValuationUSD 6.3 billionEstablished in this financing round
• Target PriceUSD 23.00Reiterated; DCF valuation corresponds to 1.6x 2026F P/S
• Current Valuation0.8x 2026F P/SThe stock's current trading level as stated in the report

Impact & implications

The report believes the QoQ improvement in 2Q26 demonstrates that operations are recovering, but capacity constraints in 3Q26, weak domestic demand, and lower high-margin revenue from the Volkswagen partnership will delay a more pronounced financial inflection point. If the company can resolve its capacity bottlenecks in September 2026, new models, overseas deliveries, and an improved product mix could drive a further recovery in deliveries and financial performance in 4Q26. Robotics, intelligent driving, and Robotaxi represent longer-term growth paths whose realization remains to be validated.

Risks

• Growth of new models launched in 2026 may be weaker than expected, affecting the recovery in deliveries and revenue.
• Competition in China's automotive market may intensify further.
• The development of the Robotaxi and humanoid robot businesses may be slower than expected.

What to watch

• Whether the company can resolve capacity bottlenecks for new models such as the Mona L03 in September 2026 as planned.
• Whether the G9L can be launched in September 2026, whether the Mona L05 can be launched in 4Q26, and whether the four new SUVs can drive single-month deliveries to 60,000 units during 4Q26.
• Whether the Mona L03 can achieve monthly deliveries of 15,000 units in the Chinese market in 4Q26 and whether the company's overseas sales can reach 40,000 units in 4Q26.
• Whether overall gross margin can remain in the high teens in 3Q26 and 4Q26, and the impact of lower revenue from the Volkswagen partnership.
• Whether humanoid robots can enter mass production by the end of 2026, begin generating external revenue from 2Q27, and establish monthly production capacity of several thousand units in 2027.
• Whether VLA 2.0 can be released by the end of August 2026, whether the relevant features can enter the EU in 2027, and whether driverless Robotaxi services can be launched in 2027.