Morgan Stanley named XPeng among its preferred China mobility stocks for 2026 as the brand prepares to release several new fully electric and extended-range models.
The firm reiterated its Overweight rating and $34 price target in a research note Monday, days before the automaker reports December delivery figures.
Considering XPeng‘s closing price of $20.78 on Friday, the target implies an upside potential of 63.6%.
Morgan Stanley’s price target on its shares was increased from $30 on November 11 — about a week after the company’s ‘AI Day’ event.
The stock reached a new three-year high of $28.24 on the event’s day.
Since then, however, it has declined sharply to a four-month low of $17.92 in mid-December.
Despite the recent losses, the stock has jumped 75.8% from the beginning of 2025.
Preferred Calls
In a new research note, obtained by PriceTarget, analyst Tim Hsiao said Morgan Stanley’s “preferred” Chinese stocks for the first half of 2026 are XPeng, Geely and SAIC.
Hsiao cites “their resilient domestic and growing overseas sales,” alongside “re-rating opportunities from a non-auto ‘second act.'”
According to the analyst, this includes the “likely need [for] progressive development of non-auto initiatives,” noting that the “capital market proves willing to finance” initiatives such as physical, embodied AI and humanoids.
Morgan Stanley also recommends investors remain attentive to Li Auto, Nio, and BYD, as upcoming launches in the second quarter might act against “meaningfully reduced expectations.”
Deliveries
In a recent note published in September, Hsiao anticipated a “significant surge” in XPeng‘s monthly sales in 2025, driven by the successful rollout of several new models and its strong model lineup.
The analyst stated that the growth is expected to continue into 2026, as the company launched its first hybrid models, which include the recently launched extended-range version of the X9 multi-purpose van.
By then, Morgan Stanley included XPeng in its Global Emerging Markets (GEM) and Asia Pacific Market (excluding Japan) focus lists, replacing Shenzhen-based BYD.
As of November 30, the company reached its annual delivery guidance of 380,000 vehicles.
With only one month left of 2025, XPeng doubled deliveries year-over-year, a considerable jump from the 34% annual increase from 2023 to 2024.
However, monthly deliveries fell in November for the first time in six months. The company expects deliveries to slow down in the final quarter of the year.
At the same time, XPeng expanded into 25 new markets in 2025, nearly doubling its presence from the 30 markets it served at the end of 2024, with Colombia becoming its 55th global market late last month.
As the company moves toward producing hybrid models, and as exclusively reported by EV earlier this month, it will hold a global launch event for the new P7+ on January 8.
The model will be available as both a fully electric and an extended-range vehicle.
The brand announced on Monday that the launch will happen simultaneously across 36 markets.
China’s Auto Industry Forecast
Analyst Tim Hsiao further shared Morgan Stanley’s forecast for the Chinese auto market in 2026.
“We forecast that 2026 PV [passenger vehicle] wholesale volume will fall 3% YoY,” the analyst wrote, adding that, for domestic sales, the decline will reach 7%.
Exports, on the other hand, “should remain a bright spot in 2026,” Hsiao noted.
Morgan Stanley predicts a 16% year-over-year growth, with Europe, ASEAN countries (Philippines, Singapore, Thailand, Indonesia, Malaysia, Vietnam, among others) and Latin America representing 20 to 25% growth.
Additionally, the firm estimates that new energy vehicle (NEV) sales will “decelerate” to 11% growth in 2026, while still representing 59% of the market.
Plug-in hybrids (PHEV) will see sales increase by 14% while battery electric vehicles (BEV) are only expected to grow by 9%.
