Core Viewpoint - Xiaopeng Motors reported strong Q2 performance with significant year-on-year growth in vehicle deliveries and revenue, indicating a positive trend in operational efficiency and product profitability [1][2]. Financial Performance Summary - In Q2 2025, Xiaopeng Motors delivered 103,181 vehicles, representing a year-on-year increase of 241.6% and a quarter-on-quarter increase of 9.8%. Revenue reached 18.27 billion yuan, up 125.3% year-on-year and 15.6% quarter-on-quarter [1]. - The automotive business generated revenue of 16.88 billion yuan, with a year-on-year growth of 147.5% and a quarter-on-quarter growth of 17.5%. Service revenue was 1.39 billion yuan, showing a year-on-year increase of 7.8% but a quarter-on-quarter decline of 3.5% [1]. - The average selling price (ASP) per vehicle in Q2 was 164,000 yuan, reflecting a quarter-on-quarter decrease of 27.5% but an increase of 7% year-on-year [1]. - R&D and SG&A expenses for Q2 were 2.21 billion yuan and 2.17 billion yuan, respectively, with expense ratios of 12.1% and 11.9%, showing slight decreases from the previous quarter [1]. - The gross margin for Q2 was 17.3%, with a year-on-year increase of 3.3 percentage points and a quarter-on-quarter decrease of 1.7 percentage points. The automotive gross margin was 14.3%, up 7.8 percentage points year-on-year and 3.8 percentage points quarter-on-quarter [1]. Operational Analysis and Outlook - Q2 profitability exceeded expectations, driven by the successful launch of the revamped G6 and G9 models, as well as the introduction of the updated X9. The company's low-cost strategy has led to significant improvements in product gross margins [2]. - The sales proportion of the low-margin model MO3 decreased to 38% due to the impact of model upgrades and increased sales of other products, indicating a positive shift in product and profitability structure [2]. - For Q3 2025, the company anticipates continued improvement in vehicle model structure and operational performance, with new models G7 and the next-generation P7 expected to contribute to sales growth. The delivery guidance for Q3 is between 113,000 and 118,000 vehicles [2]. Profit Forecast and Valuation - Xiaopeng Motors is positioned as a leading player in the domestic smart driving sector, with significant improvements in fundamentals and a strong technological edge. Revenue forecasts for 2025, 2026, and 2027 are projected at 94.62 billion yuan, 153.27 billion yuan, and 175.7 billion yuan, respectively [3].

Investment Logic - The company has shown a continuous upward trend in operations after a bottom reversal, with April 2025 sales of passenger cars reaching 234,100 units, a year-on-year increase of 49.1% [1][13] - Electric vehicle sales reached 126,000 units in April 2025, with a year-on-year increase of 137.7% [1][13] - The company has maintained strong sales performance despite price wars affecting electric vehicles, with fuel vehicles also showing resilience [1][13] Reasons for Recovery - The core reasons for the company's recovery include the implementation of a low-cost strategy, a strong product cycle with multiple new models, and internal integration that has improved profitability [2][3] - The launch of the GEA platform and EM-i hybrid technology has significantly enhanced the company's product appeal [2] - The company is entering a new car cycle with ten new models expected to launch in 2025, including several market hits [2][3] Sales Performance - The company has achieved strong sales performance, with April 2025 sales of 234,100 units, a 52.7% increase year-on-year [13][14] - Electric vehicle sales in the first four months of 2025 reached 465,000 units, a 137.7% increase year-on-year [13][14] - The company has faced challenges in the export market, particularly in Russia, but has seen strong growth in other regions, including Latin America and Asia-Pacific [15][19] Brand Performance - The company's four main brands have shown varied performance, with the Galaxy brand achieving significant growth, while the Zeekr brand has faced challenges [25][19] - The Galaxy brand sold 97,000 units in April 2025, a 285.2% increase year-on-year, indicating strong market acceptance [19][25] - Fuel vehicles have also performed well, with sales increasing by 3% year-on-year in April 2025 [25][26] Profitability Trends - The company has experienced a significant recovery in profitability, with net profit in Q1 2025 reaching 5.67 billion yuan, a 262.9% increase year-on-year [39][40] - The gross profit margin for the company has improved, reaching 15.8% in Q1 2025, up 2.1 percentage points from the previous quarter [39][40] - The company has successfully turned around its profitability after a challenging period, with the Galaxy brand contributing significantly to this recovery [48][49] Cost Reduction Strategies - The implementation of the GEA platform has led to a significant reduction in vehicle costs, enhancing the company's competitive position [51][52] - The GEA platform allows for modular design and increased parts reuse, which lowers production costs [52][53] - The company's self-research and supply capabilities have improved, reducing reliance on external suppliers and further lowering costs [53]