Core Viewpoint - Xiaopeng Motors reported strong revenue growth in Q3 2025, with total revenue increasing by 101.8% year-on-year and 11.5% quarter-on-quarter to 20.38 billion yuan, indicating robust business performance despite challenges in automotive gross margins [4][5]. Group 1: Q3 2025 Performance - Total revenue for Q3 2025 reached 20.38 billion yuan, reflecting a year-on-year increase of 101.8% and a quarter-on-quarter increase of 11.5% [4]. - Gross margin improved by 4.8 percentage points year-on-year and 2.8 percentage points quarter-on-quarter to 20.1% [4]. - Non-GAAP net loss narrowed significantly by 90.1% year-on-year and 60.6% quarter-on-quarter to 150 million yuan [4]. Group 2: Automotive Business Insights - Automotive revenue for Q3 2025 was 18.05 billion yuan, up 105.3% year-on-year and 6.9% quarter-on-quarter, with a delivery volume of 116,000 units, representing a 149.3% year-on-year increase [5]. - The average selling price (ASP) decreased by 17.7% year-on-year and 4.9% quarter-on-quarter to 156,000 yuan [5]. - Automotive gross margin decreased by 1.2 percentage points quarter-on-quarter to 13.1%, attributed to a higher sales proportion of the Mona M03 model and inventory clearance of older models [5]. Group 3: Future Outlook and Strategic Initiatives - For 2026, the company plans to launch seven "dual-energy" models, including four new models, and ramp up production at overseas factories [6]. - Collaboration with Volkswagen on G9 platform models is expected to begin mass production in 2026, enhancing revenue potential [6]. - The company aims to introduce three Robotaxi models and a new generation of humanoid robots by the end of 2026, leveraging AI technology [6][7].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 115 / USD 29, indicating a potential upside of 20% from the current price [3][7]. Core Insights - The company reported a narrower loss in Q3, which was better than expected, driven by high-margin revenue from collaboration with Volkswagen [1][3]. - The "dual-energy" strategy and international expansion are expected to support sales growth in 2026, with accelerated deployment of Robotaxi and humanoid robots [1][2]. - The earnings forecast has been revised downward due to increased competition in the industry, with expected sales reductions of 3% to 11% for 2025-2027 [3][6]. Financial Performance - In Q3, the company recorded a net loss of RMB 380 million, a year-on-year and quarter-on-quarter reduction of 78.9% and 20.3%, respectively, outperforming the market expectation of RMB 564 million by approximately 32.5% [1]. - Revenue for Q3 reached RMB 20.4 billion, representing a year-on-year increase of 102% and a quarter-on-quarter increase of 11.5% [1]. - The gross margin improved to 20.1%, up 4.9 percentage points year-on-year, attributed to high-margin income from the partnership with Volkswagen [1][3]. Sales and Production Outlook - The company aims to deliver between 125,000 and 132,000 vehicles in Q4, reflecting a year-on-year growth of 37% to 44% [1]. - The upcoming launch of the X9 super-range extender model is expected to significantly drive profitability, with pre-order volumes three times that of the previous generation [2]. - The company plans to introduce three different price models for Robotaxi in 2026, utilizing cost-effective technologies to enhance adaptability [2]. Profitability Forecast - The revised profit forecasts for 2025, 2026, and 2027 are projected at RMB -1.4 billion, RMB 1.2 billion, and RMB 3.7 billion, respectively, reflecting adjustments due to increased R&D investments in AI [3][24]. - The average selling price of vehicles is expected to decrease slightly, with a forecasted average of RMB 161,679 in 2025 [23]. Market Positioning - The company is positioned favorably in the market due to its advancements in humanoid robots and Robotaxi, which are expected to provide a competitive edge over peers [3][6]. - The report highlights the company's valuation at 1.9x FY26 P/S, which is below the historical average of 4.2x, indicating potential for growth [3][27].