XPeng - Earnings Call - Q2 2025

Transcript

Speaker 2

Hello, ladies and gentlemen. Thank you for standing by for the second quarter 2025 earnings conference call for XPeng Inc. At this time, all participants are in a listen-only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Alex Xie, Head of Investor Relations and Capital Markets of the company. Please go ahead, Alex.

Speaker 5

Thank you. Hello everyone, and welcome to XPeng's second quarter 2025 earnings conference call. Our financial and operating results were issued by our news wire services earlier today and are available online. You can also view the earnings press release by visiting the IR section of our website at ir.xiaopeng.com. Participants on today's call from our management team will include our Co-founder, Chairman and CEO, Mr. He Xiaopeng, Vice Chairman and President, Dr. Brian Gu, Vice President of Corporate Finance and VW Projects, Mr. Charles Zhang, Vice President of Finance Accounting, Mr. James Wu, and myself. Management will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S.

Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the public filings of the company as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update forward-looking statements except as required under applicable law. Please also note that XPeng's earnings press release and this conference call include the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. XPeng's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. I will now turn the call over to our Co-founder, Chairman and CEO, Mr. He Xiaopeng. Please go ahead.

大家好, 2025年二季度小鹏汽车的各项可信的业务跟财务指标, 包括了销量、收入、毛利, 再者现金都达到了历史的最佳的水平。那么在二季度我们的交付量为103,181台, 同比增长242%。其中包括Mona M03 Max版本上市即热销, 那么在全系的订单中间占比持续超过了80%。那么独领高阶辅助驾驶在大众市场的普及。不仅如此, 在面对行业激烈的价格竞争跟卷的情况下, 小鹏坚持行稳致远的长线思维。我们在规模优先的同时不断的提升各项基础体系的能力, 包括了我们对经营的能力。所以我们的汽车毛利率在过去的连续8个季度有改善, 其中在二季度环比增加了3.8个百分点, 达到了14.3%。这创造了历史新高, 使公司的毛利率上升到17.3%, 净亏损进一步收窄。那么二季度我们的自由现金流超过了¥2.0 billion, 季度末的在座总现金超过了¥47.5 billion.

Hello everyone. In Q2 2025, we achieved a record high performance across our core business and financial metrics, including deliveries, revenue, gross profit margin, and cash on hand. During this quarter, our deliveries reached 103,181 units, a 242% increase year over year. The Mona M03 Max immediately became a bestseller upon launch, accounting for over 80% of total Mona M03 sales and leading the way in bringing high-level ADAS technology to the mass market. Despite intense price competition, we stayed focused on steady, long-term sustainable growth, prioritizing scaling up whilst continuously strengthening the foundational systems. Our vehicle gross margin increased 3.8 percentage points quarter over quarter to 14.3%, marking the eighth consecutive quarter of improvement and raising the company's overall gross margin to 17.3%. Net losses narrowing further. Free cash flow imputed exceeded RMB 2 billion, and total cash on hand at the end of quarter surpassed RMB 47.5 billion.

the end, this will accelerate the overall scale growth.

In July, we launched the G7, our first model featuring in-house developed Turing AI SoC. Over the past four weeks, it has become the top among its competitors, with the Ultra trim making up over 50% of sales. The Max Plus Ultra experience marks a new phase in high-level ADAS in the industry. Our Quinton Super Electric models will begin mass production in Q4, taking us to fully upgrade to a generation energy platform with intelligence and the new vehicle dual energy system by 2025. This platform will include vision-based ADAS, advanced AI models, the Turing AI SoC, 5G ultra-fast charging battery cells, and the Quinton Super Electric system. These innovations will give us a generational lead, allowing for greater modularity, better supply chain management, and scalability during our product cycle over the next two years, boosting our sales growth.

quality. This is our long-term strategy. We will continue to invest and lay out our presence overseas with patience.

The race for AI-powered vehicles will continue indefinitely. To succeed, I aim to strengthen the company's core capabilities in four key areas. First, focusing on technology leadership by developing AI capabilities in the physical world across all domains. This includes full stack self-development within specific vertical areas and cross-domain integration. In vertical areas, we are dedicated to enhancing design, AI, and quality. Second, building organizational strength by attracting and retaining top talent suited to each role, implementing world-class management practices along with automated tools. Starting with the CEO, we will leverage AI to optimize the management, R&D, and collaboration, maximizing organizational compounding effects. The third focus is excelling in commercialization, shifting from creating user-centric products to developing commercially successful products and establishing a strong brand while reducing cost and increasing profitability. Lastly, our globalization approach is unique.

Having integrated the global market needs into our product planning years ago, we attract international users with superior technology and quality through long-term growth with patience.

is that starting from September, XPeng's monthly deliveries will steadily exceed 40,000 units per month.

Next week, the all-new XPeng P7 sports sedan, a premium intelligent sports sedan in the RMB 300,000 price range, will be officially launched. The P7 reflects our innovative spirit and core values, showcasing the exceptional design and advanced technology that can set market trends rather than following them. With its distinctive style, thrilling performance, and generation-ahead leading AI technology, the P7 is the ideal vehicle for younger consumers. It highlights XPeng's future design approach for all models following P7, combining top-tier technology with superior aesthetics. We are investing more strategically in our styling team to ensure future models deliver innovative, emotionally impactful designs. Since its debut, user interest has vastly exceeded expectations, with pre-sales orders surpassing all previous XPeng models during the same period. I anticipate the new P7 will rank among the top three best-selling pure electric sedans in the sub-RMB 300,000 segment.

With deliveries of the new P7, we aim for monthly sales to steadily surpass 40,000 units starting in September.

among similar new energy products.

In Q4, we will introduce the X9 Quinton Super Electric Edition, our inaugural Quinton Super Electric vehicle, marking the beginning of our one-vehicle dual energy era. With over 450 kilometers of pure electric range and a combined range surpassing 1,500 kilometers, this model will lead in range within its category. Moving forward, we plan to launch several more super electric models, each offering top-tier pure electric range and 5C ultra-fast charging capabilities that exceed those of comparable NEVs on the market.

那么我相信小鹏汽车跟其他车企的一个非常大的不同来自于我们过去11年对于软件和硬件在核心技术全栈资源的坚定投入。那么这十年的坚持使得我们现在能够以AI驱动, 将大算力的AI芯片跟物理世界大模型进行联合研发, 跨域进行融合, 通过海量的数据和自动化的英法体系进行快速的迭代。长期来说, 一定会构建成物理世界的超级智能体。那么从三季度上市的小鹏G7和即将上市的P7开始, 我们会率先开启L3级别算力的时代。那么小鹏各车型的Ultra版本都将会搭载三颗自研的图灵AI芯片, 有效算力会达到2,250 TOPS。那么这在全球的量产车型中间处于绝对领先的水准, 是同行最新一代旗舰算力的3到10倍这个级别。那么小鹏的G7、P7跟后续的车型的欧洲版本将会部署端侧的VOA和VOA VOM大模型。那么基于图灵AI芯片, 我们部署的车端的模型的规模将会提升一个数量级多, 是起码数十亿的参数量。那么VIA的模型的运行的帧率将会是同行的两倍或以上。那么我们相信一定会做到大佬更聪明, 小佬也更敏捷, 从根本上提升自驾的安全性和体验。

What distinguishes us from automakers and software companies is our decade-long dedication to full stack in-house development of core hardware and software technologies. This commitment has enabled us to co-develop high-performance AI chips and foundational models for the physical world, achieving true cross-domain integration and speeding up iterations through extensive datasets and computing infrastructure, ultimately leading to AI super agents operating in the physical world. Beginning with the XPeng G7 and P7 launches in Q3, we are leading the way in L3 level computing power. All Ultra trims across our entire model lineup will feature the three in-house developed Turing AI SoCs, providing a total computing power of 2,250 TOPS. This positions us as the global leader among mass-produced vehicles, with over three times the computing power of our latest flagship competitors. These Ultra trims also include in-vehicle VLA plus VLM models.

Driven by Turing AI SoCs, the scale of our in-vehicle models will increase by an order of magnitude, reaching billions of parameters, with VLA models running at twice the frame rate of competitors, truly exemplifying smarter brain, agile control, and elevating the safety and user experience of ADAS.

2026 年量产，并且会在部分区域开始试点 Noble Tacit 的运营和服务。我们已经看到在市场上，实际上通过后装支持的 L4 的车已经有不少，但是真正在前装量产上就具备 L4 的算力、软件、硬件跟云端能力的车还没有。小鹏汽车将会是中国的第一家。此外，我们的新一代人形机器人也取得了非常可喜的突破。我相信基于小鹏的图灵芯片 VIA 跟 VLM，我们正在向拥有机器人领域的初阶 L4 能力的可量产版本技快速向前。我们正在为 2026 年下半年量产我们的能源继承做相关的过项准备工作。在之后小鹏的科技日，我还会跟大家介绍我们全新一代能源继承的相关情况。

I expect XPeng's VLA plus VLM to become the safest driver and the most attentive smart assistant for users, simplifying and enhancing travel. We plan to roll out the initial VLA model to G7 Ultra owners soon, with rapid OTA updates over the coming months. Over 18 months, our Turing AI SoC powered VLA is expected to outperform industry mainstream urban ADAS solutions by over 10 times. We aim to meet supervised L3 safety, coverage, and user experience, marking a generational lead. Our L4 capable vehicles are scheduled for mass production in 2026, with pilot robotaxi services launching in selected regions. Although aftermarket retrofits enable L4 in some vehicles, no mass-produced models currently have OEM integrated L4 hardware and software, a gap XPeng aims to fill in China. In addition, our latest humanoid robots also have made promising advancements.

With our Turing AI SoC, VLA, and VLM, we are quickly moving toward a mass-produced version featuring initial L4 capabilities in robotics, and we are actively preparing for mass production in the second half of 2026. During XPeng AI Tech Day, I will unveil the new generation of robots to everyone.

那么关于VLM, 我们这次在行业内首次部署了一颗专门用于智能座舱的大模型的AI芯片。那么它使智能座舱的AI算力比行业其他旗舰座舱芯片提高了12倍以上。那么基于图灵AI芯片的小鹏VM大模型, 我们的目标是成为AI汽车上的智慧管家。那么VLM不光会跟我们的VLA配合带来更聪明的辅助驾驶, 它还会是一个强大的汽车智能agent。我们希望它未来不仅通晓多国语言, 还可以有情感的交流和主动的服务, 给未来的AI汽车的用户体验带来进一步巨大的提升跟变更差异。那么我相信小鹏的独立大模型芯片加上VLM的软件将会引领全新一代智能座舱技术的范式的更新。在之后的时间里面, 会被行业更多的进行学习跟借鉴。另外, 小鹏的汽车的AI技术不仅在中国, 而且在全球都具备很好的落地跟泛化能力。我们也非常欢迎全球的友商, 如果对我们的图灵芯片跟AI技术感兴趣的话, 可以跟我们一起探讨相关的合作。

We have introduced the industry's first AI chip dedicated to foundation models for smart cabins, providing over 12 times the effective computing power of the living cabin processors. Powered by the Turing AI SoC, our VLM model is designed to act as a smart assistant in AI-enabled vehicles. It not only collaborates with VLA to enhance assisted driving, but also functions as a robust in-vehicle intelligent agent. Looking ahead, it is expected to master multiple languages, communicate empathetically, and offer proactive services, greatly improving the user experience of future AI-driven vehicles. I believe our combined independent large model chips plus VLM solution will lead a paradigm shift in the next generation intelligent cockpit technology, encouraging more OEMs to adopt and reference it. Our AI technology demonstrates strong generalization abilities worldwide, not just in China.

We welcome partnerships with top global players to explore opportunities for collaboration on our Turing AI SoC.

我们的海外业务在2025年上半年也继续保持高速增长，并且成功打造了领先的品牌跟口碑。上半年，XPeng在海外的交付量超过了18,000台，同比增长超过200%。我们在挪威、法国、新加坡、以色列等10个国家都是中国新势力品牌的销冠，也是目前欧洲市场中高端纯电市场销量最高的中国汽车品牌。在2024年7月份，第一台在印尼当地生产的XPeng X9交付给了印尼车主，这标志着XPeng正式开启了全球本地化生产的战略。到2026年下半年，XPeng还会全面完成X9 Quinton Super Electric Edition以及Ultra版本在全球海外市场的上市。我相信这会大幅度扩展我们的车型在全球的可达市场规模。

In the first half of 2025, our overseas business continued to show strong growth and built a top brand reputation. In the first half of the year, overseas deliveries exceeded 18,000 units, increasing over 200% year over year. XPeng now ranks as the best-selling Chinese NEV startup brand in 10 markets, including Norway, France, Singapore, and Israel, with lead in sales of mid to high-end Chinese BEVs across Europe. In July, we delivered the first locally produced XPeng X9 in Indonesia, marking a key milestone in our move toward global local manufacturing. By the second half of 2026, we aim to fully launch the entire Quinton Super Electric Edition lineup in international markets, including Ultra trim, expanding our global total addressable market significantly.

随着G7和全新P7的交付跟放量，我预期今年三季度的总交付量约为113,000至118,000辆，同比上升142.8%至153.6%。收入预计约为人民币19.6亿元至21.0亿元，同比上升94%至107.9%。在四季度开始，我们将进入一车双能的大产品周期，同时图灵AI自驾能力会逐步跟对手拉开明显的代差。我们有信心不仅实现规模领先，而且公司的经营也将进入盈利和自我造血的全新阶段。在未来的三年，小鹏会在保持势能稳定向上的基础上，加速扩大在中国和海外市场的规模跟市场份额。我们希望用颠覆性的AI技术创新，为全球的出行用户创造更大的价值。

As deliveries of G7 and the new P7 ramp up, we forecast Q3 deliveries to be 113,000 to 118,000 units, reflecting a year-over-year growth of 142.8% to 153.6%. Revenue is projected to reach between RMB 19.6 billion and 21 billion, representing an increase of 94% to 107.9% year over year. Starting in Q4, we will introduce the one-vehicle dual energy strong product cycle, complemented by Turing AI-driven smart driving solutions, which will significantly strengthen our generational lead. We are confident in leading the market at scale, whilst advancing operational efficiency toward sustainable profitability. Over the next three years, our focus will be on expanding market share both domestically and internationally, maintaining steady growth, and harnessing disruptive AI innovation to enhance value for users worldwide.

quarter of 2025.

Thank you, everyone. With that, I will now turn the call to our VP of Finance, Mr. James Wu, who will discuss our financial performance for the second quarter of 2025.

Speaker 0

Thank you, Xiaopeng. Now, let me provide a brief overview of our financial results for the second quarter of 2025. I'll reference RMB only in my discussion today, unless otherwise stated. Our total revenues were RMB 18.27 billion for the second quarter of 2025, an increase of 125.3% year over year, and an increase of 15.6% quarter over quarter. Revenues from vehicle sales were RMB 16.88 billion for the second quarter of 2025, an increase of 147.6% year over year, and an increase of 17.5% quarter over quarter. The year over year and quarter over quarter increases were mainly attributable to higher vehicle deliveries. Revenues from services and others were RMB 1.39 billion for the second quarter of 2025, representing an increase of 7.6% year over year and a decrease of 3.5% quarter over quarter.

The year over year increase was mainly attributable to the increased revenues from parts and accessory sales, in line with higher accumulated vehicle sales. The quarter over quarter decrease was mainly attributable to fluctuations in revenues from technical R&D services. Gross margin was 17.3% for the second quarter of 2025, compared with 14% for the same period of 2024 and 15.6% for the first quarter of 2025. Vehicle margin was 14.3% for the second quarter of 2025, compared with 6.4% for the same period of 2024 and 10.5% for the first quarter of 2025. The year over year and quarter over quarter increases were primarily attributable to the ongoing cost reduction and improvement in product mix of models. R&D expenses were RMB 2.21 billion for the second quarter of 2025, representing an increase of 50.4% year over year and an increase of 11.4% quarter over quarter.

The year over year and quarter over quarter increases were mainly due to higher expenses related to the development of new vehicle models and technologies as the company expanded its product portfolio to support future growth. SG&A expenses were RMB 2.17 billion for the second quarter of 2025, representing an increase of 37.7% year over year and an increase of 11.4% quarter over quarter. The year over year and quarter over quarter increases were primarily attributable to the higher commissions paid to the franchise stores driven by higher sales volume. Moreover, the quarter over quarter increase was also due to the higher marketing and advertising expenses. As a result of the foregoing, loss from operations was ¥0.93 billion for the second quarter of 2025, compared with ¥1.61 billion year over year and ¥1.04 billion quarter over quarter.

Net loss was ¥0.48 billion for the second quarter of 2025, compared with ¥1.28 billion year over year and ¥0.66 billion quarter over quarter. As of June 30, 2025, our company had cash and cash equivalents, restricted cash, short-term investments, and time deposits in total of ¥47.57 billion. To be mindful of the length of our earnings call, I would encourage listeners to refer to our earnings press release for more details on our second quarter 2025 financial results. This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.

Speaker 6

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond, and then feel free to follow up with your next question. Your first question comes from Tim Hsiao with Morgan Stanley. Please go ahead.

Speaker 5

你好, 我是摩根士丹利的 Tim, 感谢接受我的提问。那也首先恭喜小鹏汽车的这个季度销量和汽车毛利率再创新高。我有两个问题, 第一个有关于这个产品定位啊, 就是我们也看到公司过去两年达成这个非常显著的项目增效, 但同时间销售的这个平均单价啊还在持续下滑。所以想请问管理层接下来如何提升这个品牌定定位, 打造更多 20 万以上价格带的一个热门车型。那我们何时能够明显提升这个产品平均单价来加速改善公司的盈利啊? So my first question is about the grand position and the product pricing because experience average selling price has declined over the past two years given the product mix. How are you going to reverse the trend and effectively upgrade the brand positioning and the sales mix of high-end models? Where are we going to see more meaningful ASP upgrade and it can accelerate that can help to accelerate expense that profit improvement? That's my first question. 对, 谢谢啊, 这个实际上我们小鹏汽车一直都销售的价格区间在 10 到 50 万之间。实际上您的这个问题对我们在内部来说, 这样分解成几个方向问题。第一个是产品怎么布局啊, 第二个是如何利用科技能够有更好的溢价, 另外就是呢还有一个是如何利用情绪有更好的溢价, 还有一个是利用品牌有更好的溢价。实际上在这几条线我们都正在去全面的布局啊, 比如说举例我们马上要发布的 P7 是 30 万级, 那么今年四季度的 X9 的超电是 40 万级, 都是相比我们现在小鹏的平均设计都高。那么在 2026 年, 2027 年是小鹏的全新大产品的两个大年, 那么价值上的全新车型会出现, 我相信就是第一科技上面, 实际上刚刚所介绍的我们在欧甲车型上, 甚至在明年在罗伯泰迪上的科技的差异, 我们会在多项科技上继续增加投入以及提高溢价。那么在小鹏在最近我们期望把原来的科技长板, 特别是在自动辅助驾驶的这个方面, 我们也增加一个全新的长板目标, 也就是颜值。所以换个角度, 颜值做好了之后, 整个的溢价转化营销都有很大的变化。最后一个是品牌, 小鹏在 2025、2027 年, 我们会在品牌的全球化建设上都会看到比今年要有加速, 所以我相信在这四个方向上的变化, 在未来的时间, 您会看到我们的平均特价越来越高, 我也期待毛利和净利都会越来越高。谢谢。

Thank you very much for your question, Timothy, and the answer is as follows. As you can see, for our sales, it has always been in the range of ¥100,000 to ¥500,000. Internally, we are also looking at this, and we are approaching this from a few different directions. Number one is with respect to the different layout of our products. Number two is to leverage technology to increase premium. Number three, using emotions to increase premium. Number four, using the brand to increase premium. If you look at the P7 that is soon to be launched, and this is in the price range of above ¥300,000, and the soon to be unveiled X9 will be in the range of ¥400,000.

In 2026 to 2027, these will be our two major product sales cycles, and there will be multiple different cars to be launched in the market, and their sales price will be above the ¥300,000 range at the moment. Number two, using technology, and technology has always been our strength, including Ultra trim versions as well as robotaxis. Starting from next year, you will see our investment being increased, and we believe that this will further drive up our premium. Number three, using technology. We know that ADAS has always been our strength, apart from the strength of technology. We have another strength, which is aesthetics. Becoming or making aesthetically more beautiful cars will also be able to drive the sales volume. Finally, leveraging our brand.

I believe that in 2026 and 2027, these will be the two years of establishing more of a global brand of XPeng, and the speeding up or acceleration of our brand will pick up. As a result, I do believe that you will see the ASP of our products will increase. So will the gross profit as well as the net profit. Thank you.

谢谢小鹏总的分享。那么第二个问题是有关于刚才所提到的这个科技长板, 好, 有关于支架, 因为我们看到今年开联行业有许多这个车企啊也宣布端到端支架上车, 那也有一些车企呢宣布搭载这个这个NVIDIA的索尔芯片, 还有VOA的大模型啊。想请问管理层我们怎么看待小鹏汽车这个自动驾驶技术和相比于这个行业的一些领先优势。那我们刚才其实小鹏总可能也稍稍有提到, 想再确认一下我们预计图灵芯片啊在这个Ultra版本上面什么时候可以开始拉开软件体验的一个差距啊。 My second question is about smart driving. The carriers we noticed that since the beginning of this year, several car makers have launched MTN smart driving solutions and new vehicles powered by Thor tips and VOA models. How should we think about XPeng's technology advantage in smart driving against such a backdrop of competition? Specifically, when could XPeng's Turing chip on Ultra trim effectively differentiate with a much better software experience versus our competitors? That's my second question. Thank you.

at that time, everyone will see that the combination of XPeng's Ultra and Turing chips will significantly make the N4 intelligent assisted driving capabilities in the market dozens of times or more stronger. This is our goal.

Thank you for your second question. Actually, if you look at the current players in the market when it comes to software and basically all the tier one players, I would say that everyone is roughly the same. For those either with computing power or the ones without the sufficient computing power, they would have computing power plus LiDAR to make up or bridge the gap. In a way, we know that with computing power plus model and plus data, these three factors will be able to provide better results. We know that this was an idea or a principle that people have in mind. However, at XPeng, we have been able to validate this idea. As you can see, our total computing power has already achieved 2,250 TOPS. In the meantime, if you look at our peers, they are still at 100 to 700 TOPS.

Once we talk about this when it comes to data and as well as model scaling and in terms of our frame rate, which is running at two times of our competitors, this again shows our smarter brain as well as better control for motion. In the meantime, for your next question about for Ultra trim and when we would be able to ensure that there is a gap between us as in we leading the race ahead of our peers and for the Ultra trim versions, we will start with our initial VLA launch. Hopefully, we will bring this to the same level as Max for now. By the end of this year, we would be able to see a significant improvement or difference between us and our peers.

If we're talking about huge differences between us and our peers, I would say that that time will come in next year, not long after this year. Roughly around when you will see the pilot runnings of our robotaxis and with L4 as well as Ultra trim, they come from the same source of the same model. Basically, the only difference is that there is no cloud and control. There is no hardware redundancy. With the Ultra trim plus our Turing AI SoCs, I do believe next year you will be able to see that our product will be leading ahead of our peers by 10 times or even more.

Thank you very much for sharing all the great details and exciting progress. Thank you.

Speaker 6

Your next question comes from Meng San Lei with Bank of America. Please go ahead.

各位领导, 你们好。我是民政局的 Ming, 我这边也是两个问题都是跟这个合作伙伴有关系。大众的这个合作有扩大这个范围, 想了解一下, 就是说可不可以给一个更新的, 就是把这个扩大范围考虑进来之后呢, 对我们未来的跟大众整个这个项目合作的收入啊等等, 可以给一个最新的指引。我翻译一下, so my first question is related to your cooperation with Volkswagen because recently you just announced to broaden your cooperation with Volkswagen's EVA and expand into more vehicle models including ICEV. Could you give us more color and guidance regarding the future revenue from the cooperation with Volkswagen?

Speaker 3

Thank you, Ming. This is Charles here. Last week we announced our fourth cooperation with Volkswagen. Basically, we're expanding our electrical and electronic architecture collaboration from the battery electrical EV in China into the ICE and the PHEV of Volkswagen brand in China. We believe that's a major expansion of our scope of the collaboration with our partner. I think that through this collaboration, we are really creating a very significant strategic value for our partner. I believe that Volkswagen is probably the only global auto company that possesses the technology that has one EE architecture platform across all the powertrain, so through which you can see the value creation that we created by both parties. Obviously, I think from XPeng's side, we're also benefiting from such collaboration.

In terms of the second part of your question regarding the value of the potential creation from our partnership with Volkswagen, as you may be aware of, right now, since Q1 2024, we have started to recognize the IP licensing revenue from the G9 platform collaboration and later on the ERFS collaboration. We believe that in the past couple of quarters, the revenue from such collaboration has been relatively stable within a certain range. For the second half this year, we see some potential growth potential in such revenue from the past two collaborations. In terms of the newly entered expanded EEA collaboration, the revenue will start to be recognized once those Volkswagen's ICE and the PHEV vehicles start SOP. That's basically the third recurring revenue stream on top of the previous two revenue streams. I hope this clarifies your question, Ming.

Robotics 这个业务的一些规划。那第一个就是说, 因为我们之前 Mona 的话, 本来也有考虑 2C 或 2B 版, 那所以说是不是可以理解说未来那个有跟这个合作对象来合作的话, 可能是要设计跟目前这个我们 2C 的这些产品有一些这个差别。然后这个是, 然后另外我们是不是也已经找好了这个合作对象, 所以才可以提到就是说从 2026 年的话, 可能就有这样的一个服务。然后我们目前的这个车就从今年下半年的车, 因为都有搭载这个图灵芯片, 所以算力是非常强的。所以目前的这个下半年可以做的这个车款, 有可能明年透过 OTA 升级, 就能够也有这个 Level 4 的能力吗? 还是说可能还是要从这个明年会推出这个具备 Level 4 能力的这个 2C 版本的这个车? 那我也翻译一下问题。 My second question is related to a robot taxi business. I think the Chairman already mentioned this corporation detail business. In the future, we will launch the 2B version of vehicles to differentiate from your current product for the consumers. Also, for your current cars, is they able to provide Level 4 functions next year when you provide the OTA service? Thank you.

we pass that stage, we will seek more partners and welcome more partners to join us in exploring how to bring the robotaxi into the operational phase. Thank you.

Speaker 5

Thank you for your question. In the future, in my view, there will be two types of vehicles. The first type will be L4 enabled or L4 capable vehicles with people driving those. The second type will be L4 capable vehicles with no people driving it. Of course, this will take years to achieve. We also know that with L4, this will need to obtain the permission and approval by different policies and regulations. In 2026, for XPeng, we will try out the L4 in different pilots. The precondition is that we are running these pilot schemes after we have obtained the relevant approvals.

In terms of the questions that you have asked, there are areas that I'm not really in a position to answer today, but what I can try to answer is that, number one, for XPeng's vehicle, we are the front market or the mass-produced vehicles with the no map, non-HD map model. That is to say we do not need LiDAR to scan the whole map, the whole city. In the meantime, as I have mentioned earlier, we do not have the software redundancy, nor do we need the cloud to take over to manage this. What we strive to achieve between our future products and Robotaxi is that they would be models of the same sources. However, there are differences, for instance, for our Robotaxis. There will be functions such as when the passengers on the street wave their hands, the Robotaxis will stop.

For our own vehicles to consumers, obviously, there are no such functions. When there is a passenger on the street waving their hands, our own vehicles will not be stopping. This is all about strengthened learning of the whole process. We ourselves, obviously, will carry out our own trials and our own operations. When all of these have passed, we will be seeking out and speaking to partners and looking at how to expand this further.

谢谢小鹏总, 谢谢 Charles, that's all my question.

Speaker 6

Your next question comes from Jiaming Wu with CitySea. Please go ahead.

各位管理层好, 感谢这个提问的机会。我是中信的地球分析师吴平月。那这边我也是有两个小问题, 第一个是关于我们的这个P7, 因为也是这个非常恭喜, 其实P7上市之后我也看到了很多这种这个社交媒体上的这个评价, 关注度和评价都非常高, 而且它的这种很创新性的这种设计也是获得了就是同样是这个很有这种时代引领感的这种消费者的认可。那之前管理层其实也提到我们的这个新的P7的扫定是很强劲的, 那是否可以再请管理层来多分享一下关于这个P7扫定的这个情况, 以及可能我们看这个这个强劲背后的一些原因啊。然后另外是在销量这个层面, 就是新的P7是不是有机会可能看到像比如说第一代的这个P7, 包括去年去发布的P7+一样, 成为一个比较走量的这个车型, 或者是我们怎么去判断这个销量。 Let me translate the questions. First, congratulations on the successful launch of the pre-sales of the new P7, and it's a very highly original design. It's also appreciated by customers who are also leading the area. Could you please share more about the reason behind the P7's strong order performance and how do we forecast itself? Is it going to be a high volume model just like the first generation of P7 or our latest P7 Plus? Thank you.

Speaker 3

about this, but we are not sure if we can improve further and do even better. This is the goal we are working hard towards. Thank you.

Speaker 5

Thank you very much for your question. For P7, yes, indeed, next week P7 will be officially launched into the market. Certain detailed data, I'm not going to be elaborating on those today. However, there are a few points that I can comment on. Number one is that the attention and interest that we have received in P7 has indeed far exceeded our expectation from end of last year to earlier this year. In terms of the pre-sales orders, as you have stated, it has exceeded all our historical data sales for different other series of cars such as Mona, etc. If you look at the purchasers and the users, consumers who have purchased P7, it is also quite interesting, there is a very high percentage of male consumers.

In addition, in terms of the age brackets of those who have placed an order for P7, so far it is the youngest age brackets that we have, and their professions are also quite interesting. This is what we have witnessed so far from the pre-sales orders. For P7, it is not only that it is an aesthetically beautiful car, it is also a very strong, sturdy car. Whether you are running on racetracks or running on highways, what we have received feedback from the users as well as from the media reviews is that the chassis that we have worked together with Volkswagen is rather strong. We are getting very good positive feedback from the users, from the media. Our aim is to become the top three in the pure battery vehicles, in the pure battery electric vehicles in the price range of ¥200,000 to ¥300,000.

Of course, we don't know whether we can achieve a better ranking for that, but we will strive to do so.

谢谢, 谢谢。然后这个第二个问题还是讲这个再追问请教一下关于Robotaxi, 因为其实这个何总刚才也这个去分享了一些关于Robotaxi的这个思考。那其实我还是想请教一下, 就是我们现在其实又去重新的公开了Robotaxi在明年的这个战略, 是不是我们在这种技术上或者是在甚至是在一些法规的许可下我们看到了一些这种机会啊。那明年比如说在这种无人Robotaxi可能能否是实现一个比如说无人啊以及可能我们能实现一些什么样的一种这个区域的这个运行啊。 My second question is about the Robotaxi, and as we renewed our announcements of our Robotaxi strategy, and what opportunities such as technology or regulatory success do we see currently? Thank you.

Speaker 3

好, 谢谢啊, 我觉得XPeng因为它是一个整车厂, 它跟纯粹Robotaxi的软件或者服务提供的公司它有很大的不同啊,

Speaker 2

OTA updates with code that shares the same origin as robotaxi to further enhance capabilities? I think these are all areas XPeng is exploring and hopes to bring new capabilities to everyone in the future. Thank you.

Speaker 5

Thank you for your question, and as you can see, for XPeng, we are an OEM company, which makes us essentially different from Robotaxi software providers or Robotaxi service providers. For L4, of course, in order to sell this to the customers and for the customers to be able to drive such cars, there are issues that we need to resolve or we need to go about, for instance, for regulation issues and technology iterations, etc. As you have stated, once we cross over those humps, and once people are able to purchase L4 vehicles, in terms of the upper limit of the growth, that has greatly improved. That is number one point. Number two, for Robotaxis to operate within a certain region, I do think that there will be such possibilities.

However, to say that Robotaxis will be rolled out on a global scale, I think it is difficult at this stage, at least. I would also say that, globally speaking, for Robotaxis to be rolling out, it is also getting further expanded at the moment. We know that in the past, people would need to rely on navigation to use their cars and to drive the ADAS system. In the future, would people be able to rely on ADAS without navigation? Would people be able to update their OTAs by simply relying on the same source code? Those are questions and challenges that at XPeng we hope that we would be able to strive to resolve in the future.

感谢, 感谢管理层的回答。 Thank you so much.

Speaker 0

Your next question comes from Tanahou with Goldman Sachs. Please go ahead.

Speaker 5

感谢管理层接受我的提问。我这边的第一个问题是关于咱们整车的毛利率, 因为我们看到这次二季度比一季度环比上升有3.8个点, 这个幅度其实比历史上每个季度的幅度都大挺多的。那管理层能不能给我们拆解一下这3.8个点分别来自于哪几个方面? 比如说车型mix的改变, 这个规模的提升, 以及原材料成本的一个环比的下降。感谢。那我来翻译一下。 Thanks management for taking my question. The first question is regarding vehicle gross margin. We see that on a quarter-over-quarter basis, it's up by 3.8%, which is much bigger versus previous quarters. Could management help us break down the different factors contributing to this sequential improvement? Thanks!

Speaker 6

Hi Tina, this is James. Thanks for the question. You're right. I think you mentioned three aspects in terms of the product mix change, cost reduction, as well as scale. I think all three factors come into play. What I would say is the majority of the impact is still on the product mix side. If you remember, the Mona M03 accounts for a pretty significant delivery percentage in the first quarter, and that percentage has reduced through the second quarter as we transition Mona into the new version, whereas our new G6 and G9 have increased their product mix in the second quarter of 2025. What we've seen is the new G6 and G9 have a very healthy gross margin thanks to the improvement in technology, as well as the specs that we offer to our customers that they like.

In the meantime, we have achieved a higher level of platform communication through our engineering efforts. All of that has helped us to achieve a healthier gross margin for our new model year changes. As you mentioned earlier, scale also comes into play. We have delivered slightly higher volume in the second quarter as well. Last but not least, we have continued our effort through our supply chain optimization, which helped us to further optimize our material costs as well in the second quarter. Thank you.

Speaker 5

感谢。我下一个问题是关于咱们的这个费用端。那首先我们这个研发费用是不是还是维持在全年85亿的一个指引？然后另外看到销售费用这一端，其实二季度我们也有很多营销的活动，但是其实相对于一季度上涨了大概有2亿左右吧。如果从新车发布的节奏来看，三季度和四季度的这种力度应该跟二季度差不多，所以我们是不是可以认为就是刨去给渠道的这一块费用，那我们的 sales marketing 这边的费用可能跟二季度是基本上就是类似的一个水平。My second question is regarding the operating expenses. For R&D expense, is management still keeping the ¥8.5 billion R&D annual guidance? Also, in terms of the sales and marketing expense, because we're seeing just around ¥200 million in increase from Q2 to Q1 with the new model launch schedule. If we look at Q3 and Q4, it seems that the new model launch schedule is very similar, the intensity is very similar to the second quarter. Should we expect, excluding the channel fees, the sales and marketing expense should be quite similar to the second quarter? Thanks.

Speaker 6

Got it. This is James again. With regard to the expenses, I'll answer in two parts. From an R&D perspective, you're right. We have been expanding our investment in the R&D segment, particularly to try to basically bring the AI capabilities from the digital world to the physical world. As well as, as Xiaopeng mentioned earlier, we will start to launch one car with two dual energy platforms in the fourth quarter of this year. We have basically increased our engineering workforce and capabilities throughout this year, as well as into the second half. In the meantime, our AI technology investment will help us to enhance our leadership in this area, which includes autonomous driving, robotic investment, as well as our enhancement of the engineering workforce. Also, the cloud-based computational power is something that we have continued to invest as well. This is on the R&D side.

With regard to the sales expenses, you're right, the second quarter has a slight increase versus the first quarter, partially also because of our higher deliveries in the second quarter as we pay commissions to our franchise stores. It is part of that as well. We have product launches in Q2, as you mentioned, but remember, we have more significant product launches in the third quarter. For example, the G7, which is a brand new SUV, as well as the new P7. These two launches, I would say, would be more significant and probably would require higher marketing and advertising expenses in the third quarter. Going into the end of the third quarter and into the fourth quarter, we'll be launching the Quinton Super Electric Edition as well in our X9 product, which we will also provide and deploy sufficient resources to make the successful launch as well.

In that regard, we will continue to invest and make sure the marketing and advertising expenses are appropriate to support the product launches in the second half. Thank you.

Speaker 5

好的, 感谢。 Thank you very much, James.

Speaker 0

Your next question comes from Xiaoyi Lei with J.P. Morgan. Please go ahead.

Speaker 5

感谢管理层接受我的提问。我这边也是有两条问题。我的第一条问题是关于我们这个产品的这个思路这块。我们看到这个新款 Next G7 在颜值上有显著的提升。请问这是否意味着小鹏未来的产品思路将更加强调设计的优先级？我们是否可以理解成这不是一个短期的调整，而是公司中长期战略转型的核心组成部分？so my first question is about your product strategy. The Next P7 has made a significant leap in the ethical design. Does this signal a shift in XPeng's product strategy towards prioritizing design? Should we understand this not just as a short-term adjustment, but as a core component of the company's long-term strategic transformation?

Speaker 2

later, everyone will see that from the perspective of goals, processes, and management, we have made huge improvements compared to before. This is our core goal. Thank you.

Speaker 5

Thank you very much for your question. The overall answer to your question is yes. Last year we were looking at this, and we were thinking that technology has always been our strength, and we have always focused on autonomous driving and invested a huge amount of money and resources in the area. However, we have lacked in the other areas. In the beginning of 2024, we started to think that we should shift more focus onto design as well. For the past 24 months, as well as the next whatever months to come, and in the near short-term future, I would say that the company's target is to ensure that our product does not have any shortcomings.

We try and improve the areas that we are doing okay, and further add on strengths to our existing areas that we already outperform others, which means that we are now currently giving more weightings and giving more attention to the styles and aesthetics of our products. In the past, when we look at styles or when we look at aesthetics and design of a car, it comes at last. We first start with the engineering, we first then look at the cost and the positioning of the car, and finally it comes to the design and style and aesthetics of a car. Now it is the reverse. Sometimes we look at the style and aesthetics of a car first. We then decide on the engineering, the cost, and the positioning of this vehicle.

In Shanghai currently, we have two buildings that are dedicated to work on the design and styles of our vehicle. In Guangzhou, we have one building, so that's three buildings in total. Globally, we are also building more different centers to help us with the designs. Overall, I would say that we are looking at providing our users with a better physical product, as well as a better overall user experience. For the P7, you can see that this is a process that we have been able to do so, and that is also the target that we strive to achieve.

Thank you, that's very helpful. 那我第二个问题是关于这个反内卷政策。那我们看到反内卷政策也是中国汽车行业近期重要的一个方向吧。那请问小鹏在经营层面做了哪些具体的调整来应对这一政策? 那对于我们自身的这个业务会有哪些具体的影响? My second question is regarding the policy response. As we noticed that China's anti-involution policy has become a key regulatory direction in the auto sector. How is XPeng adjusting the business operations in response to this policy, and what specific impact will this have on your operations and market positioning?

Speaker 6

Hi, this is Dr. Brian Gu. Let me address this question. First of all, I think we noticed the recent policy announcements around anti-involution measures. I think this is actually a culmination of a number of discussions that aim to improve the Chinese economy competitiveness as well as healthiness. I think that's good for the long run. I think as an industry, we need to have a healthy competition. At the same time, we need to have the ability to reinvest into new technology, reinvest into building better quality products. This is actually the right direction. From our perspective, we actually always focused on achieving the most innovative technology and products for our customers through relentless innovation, relentless development. I think this actually, I would say, coincides with this new policy direction.

We feel like by focusing on our target customers, by delivering the best quality, the best technology, and in a product that actually has broader appeal, it ultimately will be the right solution and will earn the right recognition both from customers as well as from our partners, as well as from our regulators. I think in that regard, we will continue to focus on full stack innovation, continue to focus on building innovative, also broadly appealing products to our customers. At the same time, also be able to maintain a disciplined, an orderly, I would say, operations. For example, you probably noticed that XPeng is actually one of the earliest OEMs to respond to the government's request of improving sort of payment terms. We have really been making sure that our partners, our suppliers are all benefiting from this new trend.

We believe that ultimately it will lead to a more healthier ecosystem and industry for our company.

Speaker 5

Thank you, that's very helpful.

Speaker 0

The next question comes from Bin Wang with Deutsche Bank. Please go ahead.

Speaker 2

谢谢。我的问题关于G7, 想问问看G7目前的这个座舱芯片的问题, 大概什么时候可以解决? 解决之后我们对G7的热销大概是怎么样一个水平的期望? My question is about the G7 SUV. The company seems to be facing some difficulty in the in-cabin and copy-related chips. When this issue can be resolved, and what's the normalized monthly volume assumption the company currently has? Thank you.

Speaker 6

Hey, Bin, just to clarify, there's no issue with G7. We announced that we will deploy the specific Turing AI SoC for infotainment in October, and when we roll out the VOA and the VOM models for the G7 customers.

Speaker 2

Okay, 那第二个问题是关于那个三季度的毛利率指引。那么之前公司说了在四季度才会实现双位数的车辆毛利率, 那么现在毛利率在二季度超预期了, 能不能说在三季度会提前实现高的双位数的车辆毛利率? My second question is about the vehicle gross margin guidance for the third quarter. Previously, the guidance was that only in the fourth quarter, vehicle gross margin can go to high teens because the second quarter vehicle gross margin has been higher than the market expectation. Do we expect in the third quarter we already can achieve the high teens vehicle gross margin? Thank you.

Speaker 6

Hi, Bin, this is James. With regard to the vehicle margin, yes, we have improved significantly in Q2. The reasons I have explained before. In the long term, we have always focused on taking into account the overall competitive landscape as well as improve our scale as our strategic priority. Overall, we'll take that as our overall guidance from a pricing as well as margin perspective. What I would emphasize is going into the second half as we launch the brand new P7 as well as the X9 Quinton Super Electric Edition, I would focus on Q4, which we have communicated earlier that we are aiming at profitability in the fourth quarter, and that target has not changed. We have, as you remember, mentioned that we hope to achieve high teens profitability, overall profitability in the fourth quarter as well, and that target has not changed as well.

Both of that will help us to solidify our target to achieve break even in the fourth quarter. Basically, that's my answer to your question. Thanks.

Speaker 2

Thank you.

Speaker 0

Thank you. That concludes our question and answer session. Now I'd like to turn the call back over to the company for closing remarks.

Speaker 6

Thank you once again for joining us today. If you have further questions, please feel free to contact XPeng's investor relations through the contact information provided on our website or the piece in financial communications.

Speaker 0

This concludes today's conference call. You may now disconnect your line. Thank you.