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The trade war between the U.S. and China has escalated, and monetary policy remains tight, with interest rates still elevated. Electric vehicle (EV) companies are capital-intensive by nature. They rely heavily on cheap borrowing to fund their operations and scale production. High interest rates make that tricky. Plus, customers are less likely to splurge on a new car when financing costs are steep.
Accordingly, Tesla (TSLA) has taken a beating. The poster child of the EV world has fallen from grace in 2025 due to CEO Elon Musk’s involvement in politics and a general cooldown in enthusiasm.
For other solid EV companies, this could create an opportunity to take market share. XPeng (XPEV) is one such company. Its deliveries tripled in March to 33,205 vehicles, up from 9,026 delivered in March 2024.
Why XPeng Is Seeing Record Growth
Public sentiment toward Tesla has soured lately, and that’s not just a U.S. phenomenon. In China, buyers are increasingly turning to homegrown brands. Tesla’s sales there have taken a noticeable hit as local competitors step up their game.
On top of that, the U.S. has been looking to scale back EV credits under President Donald Trump, whereas China is moving in the opposite direction and doubling down on green energy subsidies. It is also starting to stimulate its economy. XPeng seems to be a winner so far.
Q1 2025: The Delivery Boom
XPeng reported blockbuster Q1 2025 and delivered 331% more Smart EVs year-over-year. The quarterly delivery number is at 94,008. This is still less than what Tesla delivered in the entire quarter, but things could change quickly. Q1 2025 Mainland China sales of Tesla vehicles totaled 137,200 compared to 132,800 in Q1 2024. XPeng should easily surpass Tesla’s delivery figures in Mainland China in a year.
Tesla’s price cuts sparked a price war and hurt XPeng’s margins for a while. However, XPeng has fought back by making its advanced driver assist features standard across its lineup. As a result, it is now undercutting Tesla’s vehicles.
Should You Buy XPEV Stock?
While XPeng has done well regarding deliveries, one thing that Tesla can do, but XPeng can’t, is deliver vehicles profitably. Tesla has had a head start on all other EV companies and it can profitably manufacture EVs at scale. XPeng can’t do that yet and has consistently reported losses.
On that note, I do not think XPEV is a buy right now, at least not in this environment. I wouldn’t view TSLA as a buy, either. Both these stocks have significant downside risks right now. XPeng’s delivery figures for one quarter aren’t too strong of a buy signal to me.
If anything, XPEV reminds me of Li Auto (LI). That company soared significantly and became a profitable company with explosive delivery figures, so much so that management started handing out fat bonuses to employees. Still, the competition turned it into a laggard in a matter of months. The stock is down 22% over the past year and is down over the past 2-year and 3-year periods as well.
The consensus price target on XPEV stock of $22.18 does imply some upside, but it's not worth the risk.
The EV market in China is nothing like the EV market in the U.S. Multiple companies compete fiercely, so I believe that a “Hold” rating fits XPEV the best.
