Xpeng earnings reveal 'positives' - just not in the core EV business

Xpeng (XPEV) stock is slipping on Monday morning after the Chinese electric vehicle (EV) maker posted weaker-than-expected earnings for its fiscal second quarter (Q2).

Yet, there were significant positives in XPEV’s financial release – just not in its core EV business.

Xpeng shares have been a major disappointment for investors in 2026, currently down nearly 50% versus its year-to-date high.

What was positive for Xpeng stock in Q2 earnings?

The standout positive from Xpeng’s earnings day arguably had little to do with electric vehicles.

XPEV’s robotics business raised more than $900 million in its first funding round, giving the unit a post-money valuation of more than $6.3 billion.

The round was led by IDG Capital, with Gaorong Ventures participating and Alibaba and Tencent joining as strategic investors.

Xpeng’s management said the financing represents the “largest single-round” private funding deal recorded in China’s embodied-AI industry.

That matters because XPEV is increasingly positioning itself as a Physical AI company rather than simply an EV manufacturer.

The proceeds will support humanoid-robot hardware and software development, Physical AI model training, data generation, manufacturing infrastructure and international commercialization.

XPeng plans to produce 1,000 IRON humanoid robots per month by the end of 2026, with initial deployments targeted at retail and industrial locations before broader commercial sales in 2027.

Other non-core positives in XPEV’s quarterly release include an exciting 94% year-on-year growth in services and other businesses sales to about RMB2.70 billion ($400 million), driven by technical research and development services provided to an automaker and stronger parts and accessories revenue.

XPEV stock is worth buying on the dip because that actually helped the firm’s overall gross margin climb 340bps to 20.7% in Q2.

Why XPEV shares still tanked on Monday

Xpeng shares cratered on August 24 primarily because investors are still valuing the firm primarily on what its EV operation can deliver today.

And on that front, the Q2 numbers were less convincing. XPeng delivered 103,295 vehicles during the quarter, up a substantial 64.8% sequentially, but just 0.1% from the same period last year.

Vehicle-sales revenue rose only 1% year over year to RMB17.05 billion.

More importantly, vehicle margin tanked to 12.1% from 14.3% a year earlier, even though overall gross margin improved, which management attributed to a product-generation transition.

XPEV’s net loss also widened sharply to RMB1.34 billion from just RMB480 million a year earlier – while adjusted loss per ADS came in at RMB1.29 versus a FactSet estimate of RMB0.91.

Then came the bigger warning sign: Q3 guidance. XPeng expects revenue of RMB21.7 billion to RMB23.4 billion, well below the RMB26.69 billion FactSet consensus.

It expects about 118,000 deliveries, which would represent sequential growth but only between a 0.87% decline and a 4.3% increase from a year earlier.

In other words, XPeng is growing volume from the weak Q1 base, but investors aren’t yet seeing evidence of accelerating underlying demand or improving vehicle economics.

Should you buy the post-earnings dip in Xpeng?

Together, all of it leaves XPEV shares with an unusual investment story. The company is producing evidence that its technology platform can extend beyond cars, and the $900-million-plus robotics financing provides meaningful external validation.

But investors cannot ignore the fact that the EV business still generates the overwhelming majority of revenue and remains under pressure from intense competition in China's auto market.

The good news is that XPeng entered the second half with RMB40.48 billion in cash, equivalents, restricted cash, short-term investments and time deposits.

It also has a growing pipeline of new models, while executives expect recent launches to support future volume and product mix.

For shareholders, however, the next test is straightforward: can XPeng turn its tech advantage into better economics? The robotics business could ultimately become a valuable standalone asset – while services and Physical AI could diversify revenue.

But until vehicle margins recover and guidance starts pointing toward stronger year-over-year growth, the Street is likely to keep treating those opportunities as promising — rather than proven.

And that explains Monday's reaction. XPeng's release contained some impressive developments, particularly in robotics. But the stock market is demanding evidence that the company's ambitious future is beginning to improve its core EV business today.