Xiaopeng He, CEO of Chinese electric vehicle manufacturer Xpeng, stated in a media interview that achieving profitability in the fourth quarter of 2025 is feasible. He expressed confidence that the company’s annual performance would exceed external expectations.

Founded in 2014, Xpeng Motors focuses on smart electric vehicles that feature technologies such as artificial intelligence and autonomous driving. The company operates in a competitive Chinese electric vehicle market, which includes established players like Tesla and growing number of domestic entrants.

Despite He’s optimism, the electric vehicle industry faces challenges, including rising raw material costs and ongoing supply chain disruptions. Analysts indicate these factors could affect profitability, even as Xpeng expands its product range and technological capabilities.

🔗 Source: Huxiu

🧠 Food for thought

1️⃣ Chinese EV profitability journey mirrors broader market evolution

Xpeng’s confidence about Q4 profitability represents a significant milestone in the Chinese EV startup journey, which has been characterized by years of losses in pursuit of market share.

The industry has transitioned from a growth-at-all-costs model to profitability focus, with Xpeng’s gross margin recently improving to 15.6% and net losses narrowing by 51.5% year-over-year to RMB 660 million ($91.4 million)1.

This shift comes after years of financial struggles throughout the sector. For example, in 2019, competitor NIO reported dramatic losses of RMB 3.3 billion ($478.6 million) in a single quarter2.

Chinese EV makers previously relied heavily on government subsidies, which were crucial for early growth but have been gradually reduced since 2019. This reduction has forced companies to develop sustainable business models3.

Xpeng’s apparent turnaround has been fueled by strong delivery numbers, with record deliveries of 94,000 vehicles in Q1 2025 representing a 330% year-over-year increase1.

The company’s focus on higher-margin products, including premium sedans and SUVs, has been key to improving financial performance while maintaining growth momentum.

2️⃣ Product mix and volume strategies increasingly critical for EV profitability

Xpeng’s profitability strategy highlights how successful EV makers are balancing product diversification with manufacturing scale to overcome industry-wide challenges.

The company’s G6 SUV has become a critical sales driver, delivering over 8,000 units in May 2024 alone, demonstrating how targeted product development can drive both volume and margins4.

This approach contrasts with earlier attempts by Chinese EV startups that prioritized technological innovation over manufacturing efficiency and market fit, which led many to struggle financially despite raising billions in investment3.

Recent Xpeng Motors developments