XPeng’s Robotics Unit Raised Over $900 Million at a $6.3 Billion Valuation. What This Means for XPEV Stock.

China’s auto market is struggling. Vehicle sales have fallen for 10 straight months, while domestic passenger-car sales declined by more than 20% in the first seven months of 2026. New-energy vehicles (NEVs) accounted for a record nearly 65% of sales in July, but NEV sales have still declined every month this year. Too many vehicles, weak demand, and an ongoing price war are weighing on the industry.

At the same time, humanoid robotics could become a much bigger market. Barclays Research expects the global market to grow from roughly $2 billion to $3 billion today to $200 billion by 2035, describing physical AI as the next major industrial growth wave.

XPeng (XPEV) is caught between these two trends. Its shares fell sharply on Aug. 24 after second-quarter earnings missed estimates and the company forecast third-quarter revenue of RMB21.7 billion to RMB23.4 billion, below the RMB26.69 billion analysts expected. 

The stock is now down roughly 45% so far this year. Still, XPeng also announced that its robotics unit raised more than $900 million in its first funding round, at a post-money valuation above $6.3 billion.

So, can this robotics bet make XPeng worth buying despite the weak EV outlook? Let’s take a closer look.

The Numbers Behind XPeng

XPeng is a China-based smart EV maker whose business centers on selling electric vehicles, while it also develops autonomous-driving software, AI technologies, and now humanoid robotics. XPEV stock has had a rough run, falling 51% over the past year and 42% so far in 2026.

The second quarter showed some improvement, but there are still clear issues. Revenue rose 8% from a year earlier and 51.5% from the prior quarter to RMB19.74 billion ($2.91 billion). Vehicle sales brought in RMB17.05 billion ($2.51 billion), up 55% from the first quarter, mainly because XPeng delivered more vehicles. But sales from vehicles were only 1% higher than a year ago. Services and other revenue climbed 93.9% to RMB2.70 billion ($400 million), helped by technical R&D work for another carmaker and sales of parts and accessories.

Cost of sales rose 3.7% to RMB15.66 billion, while overall gross margin improved to 20.7% from 17.3% a year earlier. However, vehicle margin fell to 12.1% from 14.3% as XPeng moved between product generations. The services segment helped offset that weakness, with its margin reaching 75.1%.

XPeng is still losing money as it spends on new vehicle models and robotics. R&D expenses rose 32.1% to RMB2.91 billion, while selling, general, and administrative costs increased 15.2% to RMB2.50 billion. Its operating loss widened to RMB1.14 billion and net loss grew to RMB1.34 billion ($200 million), although both improved from the first quarter. XPeng ended June with RMB40.48 billion ($5.97 billion) in cash. For the third quarter, it expects 115,000 to 121,000 vehicle deliveries and revenue of RMB21.7 billion to RMB23.4 billion.

Building Beyond Electric Vehicles

XPeng has raised more than $900 million for its robotics division, giving the business a valuation above $6.3 billion. IDG Capital and Gaorong Ventures led the round, while Tencent Holdings (TCEHY) and Alibaba Group Holding (BABA) joined as strategic investors. The money will support the development and production of IRON, XPeng’s humanoid robot, which it introduced at its AI Day in November 2025. 

IRON has 76 points of movement, including 21 in each hand, and uses three in-house Turing chips with a combined computing power of 2,250 TOPS. XPeng aims to begin mass production by the end of 2026, and CEO He Xiaopeng has taken direct control of the robotics unit to speed up the work. The funding comes at a useful time, as China’s EV retail sales were down 17% year-over-year in early August after trade-in subsidies were reduced.

XPeng is also developing robotaxis and flying cars. It is mass-producing Level 4 robotaxis in Guangzhou using the same Turing-chip setup, with fully driverless operations planned for early 2027. Its flying-car unit has received more than 7,000 orders at around $280,000 each. At 10,000 sales, the business could generate roughly $700 million in gross profit.

Analysts See Promise and Risk in XPEV Stock

XPeng reported its June-quarter results on Aug. 24. Analysts expect XPeng to lose $0.39 per share in fiscal 2026, compared with earnings of $0.17 per share a year earlier. They expect the company to return to a small profit in fiscal 2027, with earnings of $0.04 per share. That would be a 110.26% improvement from the expected 2026 loss.

Barclays analyst Jiong Shao remains cautious. He kept an “Underweight” rating and cut his price target to $15 from $16 on July 16. Earlier in February, he lowered it to $17 from $20 because of weak margins and strong competition in China’s EV market. Barclays has since reduced its target again to $14, citing concerns about delivery growth. Those concerns are understandable, given that XPeng’s vehicle margin fell to 12.1% in the second quarter.

Macquarie has a less bearish view, although it is still not fully bullish. The firm upgraded XPEV from “Neutral” on May 29 and set a $19 price target. It now rates the stock “Hold” with the same $19 target as the EV price war continues.

Still, the 18 analysts covering XPEV stock rate it a consensus “Moderate Buy,” with an average target of $20.23. That suggests roughly 70% upside from current levels.

Conclusion

XPeng’s robotics financing gives XPEV a credible second growth engine at a moment when its EV business is fighting soft demand, price competition, and still-thin vehicle margins. The $6.3 billion valuation, outside backing, and plans to commercialize IRON make the physical-AI opportunity difficult to ignore, but it remains a long-term option rather than an immediate earnings fix. In the near term, shares are likely to stay volatile and tied to deliveries, guidance, and margin recovery. Still, with XPEV stock already deeply discounted, I think the risk-reward is gradually tilting upward for patient investors, provided XPeng can execute on both EV profitability and robotics commercialization.