We recently published 10 Stocks on a Hot Streak. XPeng Inc. (NYSE:XPEV) is one of the best-performing stocks on Tuesday. XPeng rallied to a new record high on Tuesday, as investors gobbled up shares amid significant progress in its artificial intelligence (AI) efforts following a viral video that showed its humanoid robot walking so convincingly like a human. The video, showcased by XPeng Inc. (NYSE:XPEV) CEO Xiao Peng in a conference in Guangzhou, China last week, showed its humanoid robot called Iron w ...

Core Insights - The Zacks Automotive – Foreign industry presents a mixed landscape of opportunities and challenges, with varying growth trajectories across regions [1] Industry Overview - The foreign automotive industry is heavily influenced by economic conditions and business cycles, with key manufacturing countries including China, Japan, Germany, and India [2] - Technological advancements are reshaping the market, with a focus on stricter emission targets and the ramp-up of charging infrastructure, boosting green vehicle sales [2] Key Investing Themes - **China's Auto Market**: China's auto market is expanding, with domestic car sales increasing by 6.6% year-over-year to 2.27 million units in September 2025. Electric and hybrid vehicles accounted for 57.2% of total sales, up 15.5% from the previous year [3] - **Europe's Auto Industry**: Europe's auto industry faces challenges from trade tensions and competition, but new car registrations rose 0.9% year-to-date through September 2025, with a 10% increase in September alone [4] - **Japan's Car Industry**: Japan's auto market shows moderate growth, with a 5.1% increase in car sales year-to-date through September 2025, but the EV segment lags behind, with sales down 11.9% [5] - **India's Auto Sector**: India's auto retail sector grew by 3.4% year-over-year in the first half of FY26, supported by structural reforms and a shift towards electric mobility [6][7] Industry Performance - The Zacks Automotive – Foreign industry ranks 204, placing it in the bottom 16% of around 245 Zacks industries, indicating dull near-term prospects [8][9] - The industry has underperformed compared to the Auto, Tires, and Truck sector and the S&P 500, with an 11% increase over the past year compared to 20% and 41% for the sector and S&P 500, respectively [11] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 7.58X, significantly lower than the S&P 500's 19.13X and the sector's 24.23X [14] - Over the past five years, the industry has traded between 6.5X and 12.6X, with a median of 9X [15] Investment Opportunities - **Geely Automobile Holdings Limited**: Geely reported a 28% year-over-year increase in sales, surpassing 1 million vehicles for the first time in Q3 2025. Electrified vehicle sales surged 59% to 588,110 units, making up 58% of total sales [18][19] - **XPeng Inc.**: XPeng delivered over 190,000 vehicles in 2024, a 34% increase year-over-year, with Q3 2025 deliveries surging 149% to 116,007 units. The company is investing in future technologies, including flying cars and humanoid robots [23][24]

Core Insights - The IAA Mobility Show in Munich indicates a significant transformation in the European auto industry, with contract manufacturing being redefined as Chinese brands aim to establish a local presence [1] Group 1: Industry Trends - Traditional contract manufacturers like Magna Steyr, Valmet Automotive, and VDL Nedcar are experiencing reduced demand as European OEMs consolidate and phase out Internal Combustion Engine (ICE) vehicle lines, leading to low utilization rates [2] - Volkswagen Group plans to reduce its manufacturing capacity in Germany by 30% over the next 4-5 years, while BMW Group intends to bring all European production in-house by 2028, marking a shift from previous outsourcing practices [2] Group 2: Impact on Contract Manufacturers - The decline in external manufacturing demand has particularly impacted Magna Steyr, with contracts for models like Jaguar's E-Pace and I-Pace ending in 2024, and production of BMW's 5-Series ceasing in 2023 [3] - Magna Steyr's plant in Graz, which has a capacity of up to 235,000 units per year, now faces significant spare capacity, creating opportunities for smaller Chinese brands to enter the European market [3] Group 3: Chinese Automakers' Localization Efforts - Chinese automakers such as Guangzhou Automobile Group (GAC) and Xpeng are localizing production in Europe to avoid EU tariffs on Chinese Electric Vehicles (EVs) and to better cater to European consumer preferences [4] - GAC announced that its Aion V Midsize SUV and Aion UT Hatchback will be manufactured at Magna Steyr, while Xpeng confirmed that assembly of its G6 and G9 SUVs is already in progress at the same facility [4] Group 4: Broader Chinese Market Entry - GAC and Xpeng represent a second wave of Chinese models entering Europe, focusing on localization and variety, with BYD planning to produce the Dolphin Surf at its new Hungarian plant by the end of 2025 [5] - Leapmotor, in collaboration with Stellantis, introduced the B05 Hatchback, which is set to be localized from 2027, while Chery has commenced production in Spain through a joint venture [5]

Xpeng, part owned by Volkswagen Group, has begun production in Europe in partnership with a contract manufacturer in Austria, as mainland Chinese electric vehicle (EV) makers make inroads into the continent and circumvent punitive tariffs. The Guangzhou-based carmaker said on Monday that it had started assembling the G6 and G9 SUVs at Magna Steyr's plant in Graz. Xpeng did not elaborate on its planned output, but added that cooperation with its partner would deepen over time. "[The roll-out] marked a mile ...