Affected by the traditional off-season and product transition cycles, XPeng Inc. (NYSE: XPEV) saw a decline in both revenue and deliveries for the first quarter, with a widening net loss. However, its second-quarter performance guidance significantly surpassed market expectations.
On May 28, XPeng Inc. released its financial results for the first quarter of 2026. The data shows total deliveries for the period were 62,682 vehicles, a decrease of 33.3% year-over-year. Total revenue was 13.03 billion yuan, down 17.6% year-over-year, slightly below the market consensus estimate of 13.16 billion yuan. The operating loss was 1.87 billion yuan, and the net loss widened to 1.78 billion yuan, a significant increase compared to the 660 million yuan loss in the same period last year.
Despite the declines in deliveries and revenue, key profitability metrics showed an improving trend. The comprehensive gross margin for the first quarter was 20.6%, higher than the market expectation of 20% and an increase of 5 percentage points compared to the first quarter of 2025. The automotive gross margin was 12.1%, up 1.6 percentage points year-over-year.
The improvement in gross margin is primarily attributed to continuously deepening cost controls, optimization of the vehicle model mix, and structural improvements brought by in-house technology development and internationalization revenue. This validates management's previous assertion of "maintaining a robust gross margin even during the industry's off-season." During the same period, R&D expenses reached 2.91 billion yuan, exceeding the market estimate of 2.53 billion yuan, demonstrating the company's ongoing investment in product and technology development.
Looking ahead to the second quarter, XPeng expects deliveries to be in the range of 100,000 to 106,000 vehicles, representing sequential growth of approximately 60% to 69%, which is higher than the Bloomberg consensus estimate of 96,923 vehicles. Total revenue is expected to be between 19.6 billion and 20.8 billion yuan, representing year-over-year growth of about 7% to 14%. The technology flagship SUV, the XPeng GX, launched on May 20, along with three other new models within the year, will form a strong product offensive. CEO He Xiaopeng stated, "We are about to welcome a strong sales growth curve."
As of the end of the first quarter, the company's cash and cash equivalents stood at 42.09 billion yuan (approximately $6.1 billion), a decrease from 47.66 billion yuan at the end of 2025 but still at a relatively high level, providing ample strategic buffer for new product launches and technology R&D.
Following the earnings release, XPeng's U.S.-listed shares rose over 4% in pre-market trading.
Deliveries: Dual Pressure from Off-Season and Model Transition, with Signs of Recovery in April In the first quarter of 2026, XPeng's total deliveries were only 62,682 vehicles, a year-over-year decline of 33.3% and nearly halved compared to the 116,249 vehicles delivered in the fourth quarter of 2025. This performance was not unexpected for the market—the first quarter is traditionally a slow season for the auto market, compounded by the company being in a product cycle transition window, where order backlog effects from the shift between old and new models were delayed.
Looking at monthly trends, April deliveries rebounded to 31,011 vehicles. Cumulative deliveries from the beginning of the year to the end of April reached 93,693 vehicles, indicating a gradual recovery in demand driven by new models. The technology flagship SUV, the XPeng GX, officially launched on May 20, with three other new models scheduled for delivery within the year, making the product portfolio more complete. If the second-quarter delivery guidance is achieved, it would mean quarterly deliveries have more than doubled, which is crucial for meeting the full-year sales target.
Revenue Structure: Automotive Sales Under Pressure, Service Revenue Becomes a Bright Spot First-quarter automotive sales revenue was 11.0 billion yuan, a year-over-year decrease of 23.5%. This decline was less severe than the drop in deliveries, indicating some support for the average selling price per vehicle. In contrast, service and other revenue performed markedly differently, recording 2.03 billion yuan, a significant year-over-year increase of 41.2%. Its proportion of total revenue increased from 9.1% in the first quarter of 2025 to approximately 15.6%.
The growth in service revenue primarily stems from two aspects: first, increased revenue from technology R&D services, reflecting the commercialization progress of XPeng's AI and intelligent driving technology output to external partners; second, growth in parts and accessories sales, closely related to the continuously expanding vehicle ownership base.
It should be noted that service revenue in the previous quarter (Q4 2025) was as high as 3.18 billion yuan, mainly influenced by concentrated recognition from achieving significant milestones. This quarter's figure has returned to a normal level. The gross margin for the service business is as high as 66.5%, more than five times that of the automotive hardware business. The increase in its revenue share significantly contributes to pulling up the comprehensive gross margin.
Gross Margin: Significant Structural Improvement, with Partial Cost-Side Pressures Worth Monitoring The comprehensive gross margin reached 20.6%, one of the most prominent highlights of this quarter's report. This metric improved by 5 percentage points year-over-year, approaching the high of 21.3% seen in the fourth quarter of 2025, reflecting the ongoing solidification of the company's profitability quality.
Breaking it down, the automotive gross margin was 12.1%, improving by 1.6 percentage points year-over-year. This is mainly attributed to three factors: continuously deepening supply chain cost controls, component cost reductions brought by in-house developed electronic and electrical architectures and powertrains, and product mix optimization due to an increased proportion of higher-end models.
However, compared to the fourth quarter of 2025, the automotive gross margin declined sequentially by 0.9 percentage points, primarily due to rising costs for memory chips and battery-related components, pushing up the cost per vehicle sequentially. This trend warrants continued monitoring—if chip and battery cost pressures persist into the second quarter, their negative impact on gross margin may become more pronounced.
Expense Side: R&D Investment Surges, Initial Results Seen in SG&A Cost Control R&D expenses were the fastest-growing cost item this quarter, reaching 2.91 billion yuan in Q1, a substantial year-over-year increase of 46.8%. This growth primarily stems from two areas: first, development costs for new models (including the GX and other models within the year); second, continued high-intensity investment in AI-related technologies (intelligent driving, Robotaxi, humanoid robots).
Management has explicitly listed "mass production of Robotaxi and humanoid robots" as a key goal for 2026. The expansion in R&D investment is strategically necessary but also a significant contributing factor to the widened loss in the first quarter.
In contrast, selling, general and administrative (SG&A) expenses demonstrated relatively good cost control. This expenditure was 1.88 billion yuan in the first quarter, down 3.2% year-over-year, mainly due to reduced commissions paid to franchisees. From a cost-effectiveness perspective, achieving a year-over-year contraction in SG&A expenses against a backdrop of a significant drop in deliveries indicates a certain degree of improvement in channel operational efficiency.