Tokyo-based Daiwa Securities has upgraded XPeng‘s rating to Buy, days after the company reported its third quarter earnings results earlier this week, disclosing improved margins and the smallest loss in five years.
The investment bank also increased its price target on the Chinese automaker by 20%, from $24 to $29, citing “competitiveness in robotaxis and humanoid robots.”
The updated target implies an upside potential of 28% based on Tuesday’s close at $22.62.
In a new research note published on Wednesday, the securities group said it raised its outlook based on recent “good progress” in robotaxi and humanoid-robot development, as well as the company’s software partnership with VW, “which should drive its margins in 2026.”
These same factors also helped drive last week’s jump in the stock, following the the company’s ‘AI Day’ event held on November 5, along the company approaching its 2025 delivery and market-expansion targets.
The company’s share price climbed to a new three-year high of $28.24 on November 11.
Despite the positive results, the stock has declined over 10% on Monday’s trading session, closing at $22.43, and traded nearly flat on Tuesday.
According to Bernstein’s analyst Eunice Lee, XPeng’s fourth-quarter delivery guidance is “softer” than prior expectations.
However, both Bernstein and Daiwa have reiterated that the company is still set for achieving profitability in the fourth quarter.
Goldman Sachs’ analyst Tina Hou also wrote on Wednesday that the firm expects “sustainable revenue contribution from VW to drive 40% revenue growth” in 2026.
Revenue and Margins Outlook
In the third quarter of 2025, XPeng‘s gross margin reached 20.1%, up by 4.8 percentual points year over year and 2.8 percentual points from the second quarter.
Daiwa expects gross margin to reach 23% in 2026, “due to the higher mix of technical services.”
The Japanese firm has raised its revenue assumption for these — which include Volkswagen’s investment — to 7.7 billion yuan, equivalent to $1 billion (up from 6.6 billion yuan).
Last week, the first model jointly developed by the German legacy automaker and XPeng was first revealed on a catalogue by China’s Ministry of Industry and Information Technology (MIIT).
The brands first partnered in 2023 to develop electric vehicles, a collaboration that was extended earlier this year to include other powertrains.
On XPeng‘s ‘AI Day’ event, founder and CEO He Xiaopeng also revealed that VW will be the first external company to use its in-house developed autonomous driving solution.
According to Daiwa, “XPeng will book revenue in 2026 once multiple milestones in technical services are achieved, while licence fees related to its Turing chip will likely be another revenue source.”
The Turing AI Chip was first included in XPeng‘s G7 SUV and new P7 sedan, which were launched over the summer.
As Chinese automakers dive deeper into chip development, a local report on Wednesday said Shanghai-based EV maker Nio has also secured the first customer for its Shenji NX9031 autonomous driving chip.
New Products Outlook
Daiwa also noted that XPeng plans to launch four new models next year with both battery electric (BEV) and extended-range (EREV) versions, while additionally launching hybrid versions for three existing models (the G7, G6 and P7).
The company has recently launched the extended-range X9 multi-purpose van, its first hybrid model after only producing BEVs since its inception 11 years ago.
Production will rely not only on its domestic facilities, but also “in Indonesia and Austria (by partnering with Magna)” for overseas markets.
However, and despite having raised the sales outlook for 2026, Daiwa sees a downside risk of “lower-than-expected new-car sales.”
“We now expect XPeng to sell 554,000 new cars in 2026,” the analysts wrote, comparing it to a “previous estimate of 493,000.”
The 554,000 units include 1,000 robotaxis.
Skepticism on Autonomous Products
XPeng has announced that it will “roll out its robotaxi road testing from 2026, building the robotaxi operation ecosystem as the priority,” Daiwa noted.
The firm expect Robotaxi production “to be within a few thousand units per year” in 2026 and 2027.
Additionally, the company plans to kick off production of the humanoid robot ‘IRON’ by the end of 2026, with an initial use for its own stores, factories and campuses.
Despite the progress, Daiwa is not confident on the ambitious targets set by XPeng regarding the robot’s sales.
“Management mentioned an ambitious plan to sell 1 million units of humanoid robots in 2030,” they wrote, “however, there is ambiguity around short-term production volume over 2027-28E.”
