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Xpeng Motors stock (NYSE: XPEV) is up sharply in early US price action today as the Chinese electric vehicle (EV) maker continues its good run after reporting a stellar rise in its January deliveries. Notably, despite the escalating trade tensions between the US and China, Chinese shares closed almost today but thanks to the recent rally XPEV has extended its YTD rally to nearly 50%.
Xpeng Motors delivered 30,350 vehicles in January which was up 268% compared to the corresponding period last year. While the steep rise was also due to a lower base as the company had delivered fewer than 10,000 vehicles in January 2024, the performance nonetheless looks encouraging.
Xpeng Motors Share Rose Following the Delivery Report
Xpeng Motors shares rose following the delivery report yesterday and are up sharply today also. Notably, the company’s low-cost Mona MO3 model has been doing quite well and its deliveries have topped 15,000 for two consecutive months.
In 2023, Chinese ride-hailing app Didi took a 3.25% stake in Xpeng Motors in exchange for its electric vehicle and autonomous driving assets. As part of that agreement, Xpeng Motors was supposed to produce budget cars under the “MONA” brand. The model’s sales have been quite brisk since the launch last year and helped drive a 34% rise in Xpeng Motors’ 2024 deliveries.
Volkswagen Also Took a Stake in XPEV
In 2023, Volkswagen also partnered with Xpeng Motors to build two EVs on its platform and also bought a stake in the company for a total consideration of $700 million. The deal was a pathbreaker for not only XPEV but also the Chinese EV ecosystem as it reflected the confidence of the German auto giant in a startup EV company. It was also a testimony to Xpeng Motor’s self-driving capabilities. The two companies have since expanded their partnership and last year announced a joint sourcing program in order to cut down on costs.
Last month, the two companies signed a Memorandum of Understanding (MOU) to jointly build a super-fast charging network in China with mutual access to the networks.
“Through this strategic collaboration, more than 20,000 charging piles operated by both companies, spanning 420 cities in China, will be made available to customers of both XPENG and Volkswagen Group China,” said Xpeng Motors in its release.
EV charging network is key to EV adoption. Notably, a well-entrenched EV charging network helps address range anxiety which is among the key reasons many people refrain from buying an electric car. Tesla, which is the largest EV seller in the US has build a wide network of charging station named Superchargers which are its competitive advantage.
Xpeng Motors Offers Advanced Self-Driving Features
Xpeng Motors offers one of the most advanced self-driving features in China. While releasing its January deliveries, the company said, “XNGP’s monthly active user penetration rate in urban driving reached 87% in January 2025. At the same time, XPENG rolled out its latest XOS version, AI Tianji 5.5.0, introducing “door-to-door” ADAS and other advanced smart driving features, such as the world’s first coach vehicle recognition with bypassing capability, to eligible customers across China.”
The company added, “The update brings a seamless smart driving experience to owners across diverse scenarios, including parking, highways and urban roads.”
Tesla incidentally does not offer its full-self driving (FSD) features in China. While Tesla expected regulatory approvals in China by the end of 2024 and was looking to offer FSD in the country from Q1 2025, it hasn’t been able to secure the approvals so far.
Notably, the name FSD is misleading as while the software is quite advanced, it is not L4 fully autonomous as the name might suggest. The nomenclature has been a point of contention with US regulators who accuse the company of deceptive marketing.
Xpeng Motors Is Looking to Launch New Models
Meanwhile, Xpeng Motors is looking to launch new models over the next two years, especially in the budget range. It is also looking to launch what’s popularly known as extended-range electric vehicle (EREV) in China. These cars come with a fuel tank which can extend the vehicle’s range. These vehicles have been quite popular in China. Li Auto, which gets the bulk of its revenues by selling EREVs hit a new milestone as it delivered over 500,000 vehicles last year and its cumulative deliveries topped 1 million. It became the first emerging Chinese NEV company to hit the milestone.
China is by far the biggest market for new energy vehicles (NEVs), a category that includes hybrids as well as battery electric vehicles (BEVs). China is home to BYD which is the world’s largest seller of NEVs. While EV adoption rates in the US have sagged, they have surged past 50% in China and every second car sold in the country is a NEV now.
Trump’s China Tariffs Could Put Pressure on Chinese Economy
While Xpeng Motors and other Chinese EV stocks are higher today, analysts are cautious on the Chinese economy amid Trump’s tariffs. China achieved its 2024 GDP growth forecast of 5% and is yet to set a target for this year. UBS however believes that the world’s second biggest economy would expand by only about 4% this year.
“Clearly the 10% tariff hike came in quickly and lower, but there remains a lot of uncertainty on the timing and scale of additional tariffs on China,” said, Wang Tao, chief China economist at UBS Investment Bank.
She added, “We are not revising our 2025 baseline forecast of 4.0% GDP growth for China.” Her forecast assumes additional tariffs of 60% on a quarter of exports to the US and more stimulus from the Chinese government.
Notably, China provided a flurry of stimulus measures last year to spur its sagging economy. The country has hinted that it is open to more fiscal measures. According to Goldman Sachs analysts, “We continue to expect policymakers to announce more expansionary fiscal policies … with the augmented fiscal deficit widening by 2.6 percentage point of GDP in 2025.”
Meanwhile, as part of the stimulus measures last year, China provided a trade-in subsidy for electric cars last year which helped spur sales of companies like Xpeng Motors. It has renewed the subsidy this year which is positive for the country’s automotive industry.
