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XPeng Motors (XPEV) stock is down nearly 22% so far this year and is trading near its 52-week lows. In my previous article, I had noted that XPeng Motors stock, which had a good run in 2025, should continue its rally in 2026 as well. However, XPEV stock is down sharply from those levels. Let's explore whether XPEV is a buy near current levels or if investors should brace for more downside in this Chinese electric vehicle (EV) stock. Let’s begin by analyzing XPEV's recent price action.
Why Is XPeng Motors Stock Going Down?
There are several reasons XPeng Motors' stock has fallen this year. Firstly, its deliveries have fallen on an annual basis in the first four months of the year. Rival Chinese EV company Nio (NIO) has fared much better, with deliveries rising year-over-year (YoY) over the period. The YoY comparisons might be a bit distorted, though, as Nio’s deliveries were weak in Q1 2025 while XPeng’s deliveries rose more than fourfold. Incidentally, XPeng Motors had a strong 2025, and its deliveries more than doubled last year amid the success of its new models. Markets rewarded the company for its stellar performance, and the stock significantly outperformed China-based rivals as well as U.S. market leader Tesla (TSLA) last year. Life has, however, come full circle for XPeng, and it is now getting punished for the decline in deliveries.
While XPeng Motors created a lot of euphoria with its physical artificial intelligence (AI) initiatives last year, these are long-term drivers. In the short term, markets are more focused on the core automotive business, which has disappointed this year.
Moreover, the pricing war in the Chinese EV market might only get worse this year amid slowing sales. XPeng Motors posted its first-ever net profit in Q4 2025 in part due to strong delivery growth in the quarter. However, the slowdown in sales, coupled with expected margin pressure from pricing, might take a toll on the company’s profitability.
XPEV Stock Forecast
Analysts are reasonably bullish on XPEV stock, and it has a consensus rating of “Moderate Buy” from the 19 analysts polled by Barchart, and its mean target price of $24.11 is 52% higher than current levels. Looking at recent analyst action, late last month, BNP Paribas downgraded the stock from “Neutral” to “Underperform.”
Should You Buy XPeng Motors Stock?
I remain invested in XPEV stock and see the recent decline as a good opportunity to add more shares. Like fellow Chinese EV companies, XPeng Motors has been expanding into global markets, and its global deliveries nearly doubled last year—a feat it expects to repeat this year as well. The company is also looking at localizing production and has initiated local production in Austria in collaboration with Magna (MGA). International expansion would be a key driver for XPeng’s deliveries in the coming years, particularly as more countries take a lenient view of imports from China, just as the E.U. and Canada do. Notably, XPeng has said that it is in discussion with global automakers for potential collaborations. The company already has a partnership with Volkswagen (VWAGY), and the German auto giant took a stake in XPEV as part of the 2023 agreement.
XPeng has also developed Turing AI chips and expects to ship 1 million of these in 2026. The company’s IRON humanoid is expected to enter mass production by the end of this year. The product would help increase XPeng’s target market considerably. XPeng is also gearing up to begin robotaxi trials later this year.
While the startup EV industry is infamous for the cash burn, XPeng Motors generated positive free cash flows last year and held cash and cash equivalents of $6.81 billion at the end of 2025. Its balance sheet strength gives it the legroom to invest in physical AI initiatives without needing to raise capital.
From a valuation perspective, XPEV trades at a forward price-to-sales multiple of 1.1x, which looks reasonable. However, the company’s management has a lot on its plate, and it needs to deliver on both the short-term and long-term plans. In the short term, it has to improve its vehicle deliveries while continuing to expand its margins. The company also must execute on the physical AI strategy and meet the robotaxi and humanoid production timeline that it has provided. I, however, believe that the risk-reward is quite attractive at these levels, even though the company is yet to prove itself in physical AI.
On the date of publication, Mohit Oberoi had a position in: XPEV, TSLA, NIO. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
