XPeng, Inc. (XPEV, HOLD) - 2Q26: Soft 3Q Delivery Guide Offsets Encouraging 4Q Ramp and Robotics Progress; Maintain HOLD and Lower PT to $15

XPeng, Inc. (XPEV, HOLD) - 2Q26: Soft 3Q Delivery Guide Offsets Encouraging 4Q Ramp and Robotics Progress; Maintain HOLD and Lower PT to $15 We maintain our HOLD rating but lower our price target to $15 from $20 on XPeng following a mixed 2Q26. Consolidated gross margin improved, but vehicle margin remained soft and high-margin services contributed disproportionately. More importantly, 3Q guidance implies roughly flat YoY deliveries, below our expectations. This is partly offset by a stronger anticipated 4Q ramp, supported by MONA L03 capacity expansion, the G9L and MONA L05 launches, and overseas growth. XPeng's humanoid robotics business is also nearing commercialization, although execution, demand sustainability, and profitability remain uncertain. We lower our price target to reflect weaker near-term momentum, continued losses, and limited visibility into robotics and Physical AI monetization. 2Q consolidated margin remained healthy, but vehicle economics weakened. XPeng reported 2Q revenue of RMB19.74bn, up 8% YoY and 52% QoQ, approximately 3% below our estimate due mainly to lower vehicle revenue. Deliveries of 103.3k were in line, but ASP was weaker than expected. Vehicle margin was 12.1%, flat QoQ but down 2.2ppt YoY and 1.9ppt below our estimate, reflecting product-generation transition. This was offset by Services and Others, where revenue rose 94% YoY to RMB2.70bn and gross margin reached 75.1%, benefiting from Volkswagen technical R&D milestones and parts sales. Consolidated gross margin therefore reached 20.7%, about 90bps above our estimate. Operating expenses were higher than expected. R&D was RMB2.91bn, while SG&A rose 33% QoQ to RMB2.50bn due to higher franchise-store commissions and marketing expenses. Non-GAAP net loss was RMB1.24bn, versus our estimate of approximately RMB0.55bn. Continued investment in VLA, Robotaxi, humanoid robotics, and new vehicle programs should limit near-term earnings conversion. The 3Q delivery guide is the clearest near-term negative. Management guided to 115k–121k deliveries, implying -1% to +4% YoY growth and 11%-17% sequential growth. Revenue guidance of RMB21.7bn–23.4bn implies 6%-15% YoY growth. We lower our 3Q delivery estimate by 14% to 117k, revenue by 12% to RMB22.8bn, and vehicle margin to 13.5%. We now expect a non-GAAP net loss of approximately RMB0.59bn. Management nevertheless expects a meaningful 4Q26 acceleration. MONA L03 orders have set a company record, while production has been constrained by weather and supply-chain disruptions. XPeng has moved to two-shift production, the G9L is scheduled to begin deliveries in September, and MONA L05 will launch in 4Q. Management is targeting monthly deliveries above 60k. We raise our 4Q delivery estimate by 21% to 166k and revenue by 12% to RMB30.5bn, assuming vehicle margin recovers to 15% and modest profitability returns. Overseas deliveries exceeded 20k in 2Q, up 81% YoY, and international operations contributed more than 25% of 1H26 revenue. Export ASP exceeded €40k, and management expects MONA L03 overseas deliveries to begin in 4Q, targeting more than 40k overseas deliveries during the quarter. Additional models, including EREVs, are planned for 2027. International expansion could support volume and mix, although localization, distribution, and demand sustainability remain unproven. Humanoid robotics was the most important longer-term development. XPeng announced more than $900mn of external financing for its robotics subsidiary at a post-money valuation above $6.2bn, led by IDG Capital with participation from Gaorong, Tencent, and Alibaba. XPeng plans to begin scaled production of IRON by year-end, initially for internal deployment, followed by external commercialization in China and overseas in 2027. Monthly capacity could eventually reach several thousand units. Management expects hardware gross margin to exceed that of the automotive business, with software services and subscriptions providing recurring revenue. More than 85% of IRON's suppliers overlap with XPeng's automotive supply chain, potentially supporting cost and production efficiency. However, XPeng has not disclosed 2027 deliveries, pricing, breakeven volume, or a firm profitability timeline, while the general-purpose humanoid market remains unproven. We therefore view the financing valuation as strategic optionality rather than near-term earnings support. Overall, XPeng's near-term fundamentals and longer-term optionality are diverging. The 3Q guide indicates that the recovery remains uneven, while reliance on high-margin technical services to support a 20%+ consolidated gross margin warrants caution. The 4Q ramp, overseas expansion, VLA development, and robotics roadmap could materially expand future earnings potential, but we remain neutral until stronger volume momentum proves sustainable and Physical AI investments translate into scalable, profitable businesses.