Morgan Stanley analyst Tim Hsiao reaffirmed on Wednesday the Overweight rating on the shares of the Chinese carmaker XPeng — a few hours after the company reported its first quarter earnings results.
The Chinese carmaker said its first quarter revenue jumped 141% year over year and 2% from the previous quarter to $2.19 billion while losses narrowed.
According to Hsiao, that is “thanks to first quarter deliveries of 94,000 (+3% quarter over quarter),” which topped the “90,000-93,000 guidance, implying 4% ASP [average selling price] decline.”
The delivery of 94,008 vehicles in the first three months of the 2025 represented a 330.8% surge from the 21,821 units delivered a year earlier. The figures were also above last quarter’s 91,507 vehicles.
Revenue from vehicle sales jumped 159.2% year over year to 14.37 billion yuan ($1.98 billion) and were just 2% under the 14.67 billion yuan from the fourth quarter.
In a new research note, the analyst reiterated the price target of $26 on the company. Based on Tuesday’s close of $19.69, the price target implies an upside potencial of 32%.
Hsiao noted that vehicle gross margin, which stood at 10.5%, surpassed “Morgan Stanley’s estimate of 10.3%.”
The analyst considered that “scale benefits and ongoing BOM [bill of materials] cost-saving efforts offset the deteriorating mix (higher mix of MONA M03).”
Morgan Stanley also estimates that second-quarter revenue growth and the implied “2% sequential ASP expansion” will likely be “due to higher sales mix of G6/G9/X9 facelifts.”
The three models got refreshed versions over the last few months.
In March, XPeng unveiled the refreshed versions of both its G6 and G9 SUVs, both launching with lower starting prices than their first generation — the most affordable G6’s prices start at 176,800 yuan and the G9 is priced from 248,800 yuan.
The brand also unveiled its 2025 X9 MPV last month, starting from 359,800 yuan in China. Although the models are aimed at global markets, no timeline has been set yet for their launch overseas.
The Mona M03 Max was unveiled on Tuesday, with deliveries starting later this month. While the standard version, XPeng‘s best-selling model in China, is priced from 119,800 yuan ($16,620), the Max version will start at about 155,800 yuan ($21,610).
The company stated that it expects second quarter deliveries to range between 102,000 and 108,000 vehicles. The volume guidance, which is 9-15% higher form the previous quarter, “looks prudent” to Morgan Stanley.
It is “largely in line with market expectations, implying an average of 33,500-36,500 units in May-June,” considering that the brand announced that it delivered 35,045 vehicles in April.
Total revenue is expected to jump between 115% and 130% to 17.5-18.7 billion yuan ($2.4-2.6 billion).
The analyst considered that the net loss of 664 million yuan — nearly 50% less than in the previous quarter and 53% from a year earlier — was “better than expectations thanks to higher other income of 544 million yuan from government subsidies.”
“This, alongside a higher non-vehicle gross profit margin of 66.4%, kept group GPM at 15.6%,” the analyst stated, adding that “operating expenses declined in the first quarter.”
Hsiao noted that R&D expenses fell 1% quarter over quarter and selling, general, and administrative expenses were down 14%, which was “likely due to no new model launches coming in the first quarter.”
XPeng‘s U.S.-listed shares are trading over 10% higher at $21.86. The stock more than doubled in the past twelve months and surged 67% year to date.
