XPeng's Billion-Dollar Robot Windfall Masks a Deepening Auto-Sector Bleed

XPeng's Q2 net loss nearly triples to 1.34B yuan, while robotics unit raises $900M at $6.3B valuation, highlighting split investor sentiment.

The Chinese electric vehicle maker finds itself telling two very different stories to investors these days — and the market is increasingly voting on which one it believes.

On Monday, XPeng's robotics subsidiary Pengxing (Dogotix) pulled in over $900 million in a Series A funding round, valuing the unit at more than $6.3 billion. Shares responded with a 5.3% pop. But that enthusiasm barely registered against the weight of the company's second-quarter earnings, released the same day, which laid bare the struggles of its core automotive business.

The Numbers That Gave Investors Pause

Revenue for the April-to-June period came in at 19.74 billion yuan, up 8.0% year over year — modest growth for a company that markets itself as being in an aggressive expansion phase. Vehicle revenue specifically rose just 1% from a year earlier, though it did climb 55% sequentially. Deliveries reached 103,295 units, a 64.8% jump from the first quarter but essentially flat against the prior-year period at a 0.1% gain.

The bottom line told a harsher story. The net loss ballooned to 1.34 billion yuan, nearly tripling from the 0.48 billion yuan recorded in the same quarter last year, as spending on research and development plus sales and administrative costs surged.

Management's third-quarter guidance — 115,000 to 121,000 deliveries and revenue between 21.7 billion and 23.4 billion yuan — failed to reassure. The stock tumbled 8.5% to $11.15 on the day of the release, touching a 20-month low. The shares now sit roughly 59% below their 52-week high of €24.40, set back in November, and just 6.8% above the 52-week trough of €9.42.

A Split Verdict From the Street

Seven brokerages moved on the numbers Tuesday, and their conclusions diverged sharply. Barclays trimmed its price target to $14 from $15 while keeping an Underweight rating, citing weak vehicle margins as the core concern. Bernstein SocGen cut its target to $18 from $20 with a Market Perform rating, and Tiger Securities lowered its goal to $15 from $20, pointing to the mixed results and softer near-term delivery outlook.

Others struck a more constructive tone. Macquarie held its Outperform rating but shaved its target 5% to $18, explicitly noting the reduction stemmed from lower peer-group valuations rather than the results themselves. Bank of America left both its Buy rating and $19 target untouched. Goldman Sachs trimmed its Hong Kong-listed share target by 10.4% to HK$69 while maintaining a Buy. Freedom Broker reduced its target to $22 from $25, also keeping a Buy.

Institutional positioning reflects the same ambivalence. Morgan Stanley boosted its stake by 75.9% to over 9.5 million American depositary shares during the second quarter, while Goldman Sachs cut its holding by 71.0% to roughly 2.2 million ADSs over the same stretch — two heavyweight houses arriving at opposite conclusions.

Where the Growth Story Actually Lives

The bright spots are increasingly found outside the core vehicle business. Overseas deliveries surpassed 20,000 units for the first time in the second quarter, a year-over-year jump of 81%, with average selling prices above €40,000. XPeng claims that puts it at the top of Chinese automakers with international ambitions on both revenue and per-vehicle margin.

The company expects overseas shipments to exceed 40,000 units per quarter by the fourth quarter, helped by the L03 model, which management says generated record order volume at launch. Domestically, the flagship G9L SUV arrives in China in September, with European deliveries slated for 2027. A "Physical AI" briefing with test drives of the G9L is scheduled for Thursday.

The robotics and autonomy pipeline is equally busy. XPeng reports over 2,000 internal test orders for its robotaxi equipped with the VLA-2.0 system in Guangzhou, targeting driverless passenger service by 2027. The first major upgrade of the VLA-2.0 model, which merges cockpit and driving functions, is set to roll out at the end of August.

The Core Question Remains

The tension is hard to miss: a robotics and AI narrative flush with fresh capital and bold ambitions, running alongside an auto business that, despite revenue growth, continues to bleed red ink on thin margins. Barclays' critique cuts to the heart of it — until vehicle profitability improves, the robotics story remains a promise about the future rather than a foundation for the present.

The divergent moves by Morgan Stanley and Goldman Sachs suggest even the most sophisticated investors can't agree on how to weigh these competing narratives. For now, the chart speaks for itself — and it's not telling a story of market confidence.