XPeng's Billion-Dollar Robot Bet Collides With a Market That's Still Sceptical

XPeng's robotics unit secures record $900M funding, yet auto losses and disappointing Q3 guidance push shares to two-year low.

There are two very different stories playing out inside XPeng right now, and the stock market hasn't decided which one to believe. On one side sits a carmaker still burning through cash and disappointing on delivery forecasts. On the other stands a robotics arm that just pulled in the largest single funding round in China's embodied AI sector — and yet the shares keep sliding.

The disconnect was on full display this week. XPeng's stock clawed back 2.9 percent to €10.24 on Wednesday, a modest bounce after days of pressure that had pushed the shares to a two-year low. Over the past twelve months, the equity has lost 51 percent of its value; since the start of the year, it's down 43 percent. The market capitalisation now hovers around €10 billion, a far cry from the November peak when the stock marked its 52-week high.

A Record Cash Haul for the Robot Arm

The robotics division, operating under the name Xpeng Robotics and known internally as Dogotix, has closed a funding round exceeding $900 million. Led by IDG Capital and Gaorong Ventures, with strategic participation from Tencent and Alibaba, the round values the unit at more than $6.3 billion — a figure Reuters describes as the largest single financing in China's embodied artificial intelligence industry.

The centrepiece of the operation is the humanoid robot "Iron", equipped with 76 degrees of freedom and three Turing AI chips, delivering what the company claims is 2,250 TOPS of computing power. Mass production is slated to begin at the end of 2026, with larger delivery volumes promised for 2027. XPeng's co-president Brian Gu has gone further, arguing that the robotics division's margins will eventually surpass those of the auto business — a bold assertion for a company that posted a net loss of roughly $200 million in the second quarter, more than double the year-ago figure.

The competitive field is filling up fast. Leapmotor, via its chief financial officer Li Tengfei, has confirmed it is entering humanoid robotics, with a subsidiary registered at the end of July.

The Auto Core Tells a Different Story

The numbers from the vehicle business paint a picture of growth without profitability. Second-quarter revenue reached 19.74 billion yuan, up 8 percent year on year, while vehicle deliveries jumped 65 percent quarter on quarter to 103,295 units. The gross margin of 20.7 percent marked a record for the company, and the vehicle margin came in at 12.1 percent. Yet the bottom line still showed a net loss of 1.34 billion yuan.

The market's reaction to the third-quarter guidance was telling. XPeng forecast deliveries of 115,000 to 121,000 vehicles and revenue between 21.7 billion and 23.4 billion yuan — numbers that disappointed investors, sending the Hong Kong-listed shares down 9 percent, according to CNBC, despite the billion-dollar robotics valuation sitting in the background.

Analysts responded with a flurry of target price cuts, though the revisions were hardly a vote of no confidence. JPMorgan trimmed its target to $24, BofA to $18, and Citi to $21.40 — all still far above the current trading level. Barclays, meanwhile, lowered its target from $15 to $14 and maintained an "Underweight" rating, even as it acknowledged the robotics market could grow to $200 billion by 2035.

Sector-Wide Valuation Jitters

The caution isn't confined to XPeng. Unitree Robotics, which only recently listed on the Shanghai exchange, has shed roughly $30 billion in market value within a few trading days — a drop of nearly 50 percent from its peak. The valuation concerns gripping robotics stocks are clearly a sector-wide phenomenon, not a company-specific problem.

That broader context sharpens the central question for investors: is the market pricing XPeng as an automaker with a side project, or as a robotics pioneer with vehicle production attached? The answer determines whether the current weakness is a correction or a warning sign.

The valuation metrics offer conflicting signals. The price-to-sales ratio of 1.09 sits well below the historical median of 2.61, which some read as undervaluation — GuruFocus calculates a fair value of $26.24 per share, implying the stock is 55.8 percent undervalued against its current $11.60 level. But the financial health indicators urge caution: an Altman Z-score of just 0.73 signals elevated financial stress.

Two Speeds, One Stock

The share price itself maps out the uncertainty. Trading between a 52-week low of €9.42 and a distant high of €24.40, the stock has become a barometer for a company operating at two very different velocities. The core vehicle business grows but continues to consume capital; the robotics division carries the fantasy of an entire industry but has yet to prove it can translate that promise into real production volumes and real margins.

The private market valuation of over $6.3 billion for the robotics unit stands in stark contrast to the muted reception of the parent company's shares. Whether that value eventually shows up in the group's consolidated results depends on a production timeline that won't begin in earnest until late next year. For now, XPeng remains a company whose two narratives are pulling in opposite directions — and the market hasn't decided which one to trust.