XPeng turns profitable in Q4, invests 7 billion yuan to accelerate physical AI development

Source: Times Finance Author: Cao Yu

On March 20, XPeng Motors released its Q4 2025 and full-year financial reports. Several key metrics, including quarterly revenue, deliveries, and gross profit margin, hit record highs. In Q4, revenue reached 22.25 billion yuan, up 38.2% year-over-year; total deliveries were 116,249 units, an increase of 27.0%; gross profit margin was 21.3%, up 6.9 percentage points year-over-year.

Notably, XPeng achieved its first quarterly profit, with a net profit of 380 million yuan. XPeng Chairman and CEO He Xiaopeng stated that this milestone results from a business model driven by technological leadership, paving a different profit path from traditional automakers.

Looking at the full year, XPeng not only experienced rapid growth in scale but also significantly improved operational capabilities. In 2025, total deliveries reached 429,445 units, a 125.9% increase; total revenue was 76.72 billion yuan, up 87.7% year-over-year; gross profit margin was 18.9%, up 4.6 percentage points, all hitting new highs.

Looking ahead, 2026 is expected to be the year when XPeng’s sales explode, AI technology is implemented, and mass production of robots begins. From smart vehicles to embodied intelligence, the company’s full-scene layout is clear and highly imaginative. “We are continuously breaking through the limits of physical AI technology, accelerating product innovation, mass production, and commercialization, and expanding globally,” He Xiaopeng said. “I believe XPeng is at a historic turning point in physical AI applications. We aim to expand the global market share of AI vehicles, transition from L2+ assisted driving to L4 autonomous driving, take the second-generation VLA overseas, and achieve large-scale production of high-end humanoid robots.”

Image source: XPeng Motors

Achieving the Profitability Turning Point

Currently, the new energy vehicle industry has shifted from an “capital-driven” extensive expansion phase to a “capability-driven” phase focused on refined operations. This means profitability and self-sustaining growth have become new benchmarks for automakers.

In Q4 2025, XPeng achieved its first profit, with a net profit of 380 million yuan. This quarterly profit confirmed the feasibility of XPeng’s business model driven by technological leadership, setting it apart from traditional automakers’ profit paths.

XPeng’s profitability is not achieved by cutting R&D investments or sacrificing long-term competitiveness. Instead, it involves continuous investment in core technology R&D, combined with scale effects from popular models, creating a positive cycle of profit and technological iteration.

Specifically, in 2025, XPeng’s R&D expenditure reached 9.49 billion yuan, a 47% increase. This substantial investment in R&D enabled XPeng to expand new products and technologies.

In terms of products, 2025 was truly a product-heavy year for XPeng, with multiple high-volume models launching super extended-range versions, achieving dual-energy capabilities per vehicle and further boosting sales. In Q4 2025, XPeng delivered 116,249 new vehicles, a 27% increase; annual deliveries hit a record high of 429,445 units, up 125.9%.

Sales growth became the foundation for XPeng’s record-high annual revenue. In 2025, XPeng’s automotive sales revenue increased by 90.8% to 68.38 billion yuan; total revenue rose 87.7% year-over-year to 76.72 billion yuan.

On the technology front, XPeng’s self-developed Turing AI chip, second-generation VLA, and other core technologies have reduced reliance on external suppliers. This not only lowers costs but also begins to commercialize the company’s technological advantages. In 2025, XPeng’s service and other income reached 8.34 billion yuan, a 65.6% increase year-over-year.

From signing joint development agreements with Volkswagen to the recent production of their first jointly developed model, the ID.8, at Volkswagen’s Anhui plant, XPeng’s technology commercialization path is becoming clearer. In autonomous driving, the ID.8 will be equipped with XPeng’s VLA full-scene intelligent driving assistance system and Turing AI chip, with 1500 TOPs of computing power, enabling enhanced L2+ assisted driving. Following the ID.8, a second jointly developed model will also enter the market this year.

Currently, XPeng’s technology strategy has entered a harvest phase, shifting from a “technology investment” to a “technology profit” company.

Betting on Physical AI

With improved profitability and cash flow, XPeng is forming a virtuous cycle of revenue growth, profit enhancement, and ongoing R&D investment.

In products, 2026 is a critical year for expanding XPeng’s product line and upgrading product strength. The company plans to launch four new models, adding large and compact vehicle categories. These new models, designed by a newly restructured styling team, will target global markets, support dual-energy capabilities, and feature upgrades from L2+ to L4 autonomous driving. As new models are delivered, XPeng is confident in achieving significant quarterly sales growth.

“Q2 will see the official launch of our flagship six-seat SUV, the XPeng GX, aimed at family users. The GX offers MPV-level spacious comfort, equipped with steer-by-wire and rear-wheel steering, and will be our first model supporting L4-level hardware and software capabilities,” He Xiaopeng said. “Starting this year, XPeng will expand its global market share for AI vehicles, push the second-generation VLA worldwide, and accelerate the mass production of autonomous Robotaxis and high-end humanoid robots.”

He also stated that XPeng is at a historic turning point in physical AI applications. After years of large-scale R&D investment, the company has built a full-stack self-developed system including chips, large models, data, EEA architecture, and AI infrastructure. It is advancing the integration of autonomous driving and smart cabins, as well as the cross-domain fusion of powertrains and chassis, continuously pushing technological limits, accelerating AI development, and speeding up mass production and commercialization.

In 2025, XPeng’s R&D investment in AI reached 4.5 billion yuan. In 2026, excluding vehicle R&D, the company’s AI-related R&D investment will increase to 7 billion yuan. He Xiaopeng said, “In my view, AI R&D not only enhances our strengths but will also generate huge commercial returns in the short, medium, and long term. Scaling up allows us to survive in competition, and absolute leadership in physical AI technology and commercialization will become our core competitive advantage.”

In March, XPeng’s second-generation VLA was launched first. The second-generation VLA aims for L4 as the ultimate goal, reconstructing the technological paradigm to make high-level intelligent driving accessible from “geek novelty” to a “popular choice everyone loves.”

Since March 12, XPeng’s 732 nationwide stores have opened test drives for the second-generation VLA. The average daily test drive volume in March doubled compared to previous months, with Ultra and Ultra SE models seeing more than double the sales share.

He Xiaopeng said that in the next 3 to 6 months, the second-generation VLA is expected to significantly improve test drive conversion rates and greatly increase user stickiness.

The second-generation VLA also demonstrates its strong “generality” and “adaptability” in humanoid robots, with its technology stack successfully running on robots. In the second half of this year, the second-generation VLA combined with XPeng’s new fourth-generation motion control system is expected to showcase excellent movement and control performance in robots.

Meanwhile, mass production of XPeng’s humanoid robots is accelerating. In Q1, XPeng started building an industry-first full-chain humanoid robot mass production base in Guangzhou, aiming for a monthly capacity of over a thousand units by the end of the year.

Image source: XPeng Motors

Additionally, XPeng’s physical world AI foundational models will evolve rapidly, supporting cross-domain applications in AI vehicles, Robotaxis, and humanoid robots, becoming a super foundation model shared across all XPeng physical AI agents.

It’s clear that XPeng’s ambitions go beyond just making cars. From vehicle manufacturing to technology sales, from single products to an ecosystem, XPeng is building a tech company centered on physical AI.

“Steady progress and breaking through” will be the key themes for XPeng over the next three years. As the wave of mass production of physical AI agents arrives, XPeng is driving forward with a “global deployment” + “technological leap,” embarking on a path from an intelligent electric vehicle maker to a global leader in physical AI agents.