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Despite having risen nearly 63% over the last six months, Xpeng Motors (XPEV) stock is in the red in 2024 and has lost around 8% of its market value in the year to date. This was largely due to volatility for Chinese stocks across the board. Many popular names plummeted in the first half of the year, and then there was a rally in late-September after China announced a flurry of stimulus measures. XPEV stock was caught up in this, but its second-half rebound was unable to account for its drop earlier in the year.
In this article, we’ll examine Xpeng Motors’ 2025 forecast and see how analysts rate this Chinese electric vehicle (EV) stock.
The Environment for Xpeng Motors Is Mixed
The macroeconomic environment in China is quite supportive of new energy vehicles (NEVs) - a segment that includes battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs). The country’s NEV penetration rates have already surpassed 50%, and Xpeng Motors expects them to rise to 85% over the next three years.
China is also taking steps to spur its domestic economy and previously announced stimulus measures bode well for its automotive industry. The global macro situation however remains tricky for Chinese EV companies as the E.U. – which has been a key export market – has imposed tariffs on imports from China.
Donald Trump’s return to the White House is another risk that Chinese companies face as the president-elect has vowed to impose further tariffs on China. While the U.S. market is practically closed for EV imports from China, thanks to the 100% tariff that President Joe Biden imposed, an escalation in U.S.-China trade tensions would negatively impact market sentiments toward Chinese stocks.
Xpeng Motors Should Deliver Strong Growth in 2025
Xpeng Motors has shown impressive growth in deliveries and shipped over 30,000 cars in November, a fresh record for the company. The growth was led by Mona M03, its first car under the Mona sub-brand, whose shipments topped 10,000 for three consecutive months.
Xpeng Motors is set to launch at least four new models in 2025 which would help it target more buyers. The company is also coming up with extended-range electric vehicles (EREV). These cars have a fossil-fuel-backed generator, which can extend the range of the battery and help XPEV compete with the likes of Li Auto (LI) and BYD (BYDDY).
In terms of profitability, Xpeng Motors’ margins have improved over the last few quarters and it is confident of reaching breakeven by the end of 2025. While that target might sound a bit stretched considering the company’s current financials, it is nonetheless a goal it strives for. Moreover, Xpeng Motors expects to generate positive free cash flows in the second half of 2024 and said that its cash flows should improve further next year. Generating positive free cash flow is no small achievement for XPEV as the startup EV space is infamous for its massive cash burn.
XPEV Offers Advanced Autonomous Driving Software
Xpeng is believed to have among the best – if not the best – autonomous driving capabilities among Chinese EV companies and has gradually expanded its reach. In the first half of 2025, Xpeng Motors is looking to mass produce its Mona M03 Max model which would offer advanced intelligent driving capabilities for less than $20,000. Through that model, Xpeng Motors would be able to lower the pricing threshold for vehicles that come with advanced self-driving features.
No wonder, Tesla (TSLA) CEO Elon Musk described Chinese EV companies as the “most competitive globally" - something every auto executive should attest to.
Musk has been in awe of Chinese EV companies, and during Tesla’s Q4 2023 earnings call earlier this year, the world's richest person observed: “Frankly, I think if there are no trade barriers established, [Chinese automakers] will pretty much demolish most other companies in the world.”
Xpeng Motors’ Long-Term Forecast
A partnership with Volkswagen (VWAGY) could be a key long-term driver for Xpeng and they are working to jointly develop two cars for the Chinese market by 2026. Xpeng Motors is also an artificial intelligence (AI) play, and at its AI Day last month, it unveiled the advanced humanoid AI Robot Iron which is powered by its Turing AI chip. XPEV also has a flying car subsidiary named Xpeng AeroHT and expects to start its mass production in 2025.
How High Can XPEV Stock Go in 2025?
Xpeng Motors has a Street-high target price of $18.70 which is 44% higher than the Dec. 24 closing price, while its mean target price of $14.03 is just about 8.7% higher. Of the 12 analysts covering Xpeng Motors stock, 6 rate it as a “Strong Buy” while 1 has a “Moderate Buy” rating. Three analysts rate it as a “Hold” while 2 rate it as a “Strong Sell.”
While Xpeng Motors stock disappointed in 2024, I continue to believe in its story and see it as a potential multi-bagger stock that could become the “Tesla of China.”
