XPeng Deliveries Surge 3X in China, Should Tesla Be Worried?

Key Points

• Chinese EV maker XPeng tripled deliveries to 98,008 EVs in China for Q1 2025, up 331% year-over-year (YOY).
• Tesla’s EV sales in China fell 11% YOY to 78,828 units in March 2025, indicating a loss of market share in its second-largest market.
• BYD, the largest EV maker in China, sold over one million new energy vehicles (NEVs) for the third consecutive quarter.

Chinese Smart electric vehicle (EV) maker XPeng Inc. NYSE: XPEV reported that in March 2025, monthly EV deliveries surged 268% year-over-year (YOY) to 33,205 units. This marks the fifth consecutive month of exceeding 30,000 units in EV deliveries. The 331% YOY jump in first quarter 2025 deliveries of 94,008 Smart EVs is even more impressive.

At the same time, these numbers pale in comparison to auto/tires/trucks sector leader Tesla Inc. NASDAQ: TSLA EV deliveries, which just reported 336,681 units in its first quarter of 2025, which were short of consensus estimates of 377,000 EVs.

Q1 deliveries also fell 13% year over year from 386,810 EVs in the year-ago period. Should Tesla investors be worried about deliveries contracting compared to XPeng’s expansion?

Tesla Is Losing Ground in China

Tesla saw EV sales in China fall 11.5% YOY to 78,828 units in March 2025. Chinese automaker Xiaomi delivered a record 29,000 EV units in the month. NIO Inc. NYSE: NIO and ZEEKR Intelligent Technology Holding Limited NYSE: ZK lagged just under 20,000 units each. Leapmotor delivered 37,095 EVs, up 154% YOY. China's leading EV maker, BYD Company Ltd. OTCMKTS: BYDDY, delivered 166,109 EVs in China.

However, BYD sold over one million new energy vehicles (NEVs) in Q1 2025, marking the third consecutive quarter of hitting that milestone. NEVs include battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell-powered vehicles. As competition intensifies, Tesla is steadily losing market share in its second-largest market.

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Is Tesla Subject to Import Tariffs? Yes and No, Depending on the Country

The topic of tariffs is now mainstream news. The United States has significantly increased tariffs on imported automobiles and parts, particularly those not manufactured domestically. Additional trade measures have been directed at imports from China, raising the overall tariff burden on Chinese-made goods. In response, China announced reciprocal tariffs on U.S. products.

The good news for Tesla shareholders is that its U.S. Tesla vehicles are manufactured in its Fremont, California and Austin, Texas, facilities. However, the bad news is that 30% to 40% of its components are imported from foreign suppliers, including most of its lithium-ion battery materials coming from China.

Elon Musk stated on X, "Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant."

Ironically, Tesla's Chinese EVs have less of a tariff impact. China’s retaliatory tariffs won’t hurt Tesla since its EVs sold in China are manufactured at its Shanghai Gigafactory, with 95% of its supply chain localized.

Is XPeng the EV Play in China?

XPeng crushed its competition in YOY delivery growth at 268% and 331% for March and Q1 of 2025, respectively. Profitable Chinese automaker Li Auto Inc. NASDAQ: LI had 36,674 vehicle deliveries in March 2025, up 26% YOY, and 92,864 units in Q1 2025, up 16% YOY. XPeng is still taking losses. It reported a Q4 2024 adjusted earnings-per-share (EPS) loss of 20 cents per American Depository Share (ADS), missing consensus estimates by 6 cents.

This was an improvement over the loss of $1.51 per ADS in the year-ago period. Revenue for Q4 2024 was $2.21 billion, which still fell short of the $2.25 billion consensus estimates. However, its gross margin improved dramatically from 6.2% in the year-ago period to 14.4% in Q4 2024, despite sequentially slipping from 15.3% in Q3 2024.

Analysts Have Gotten More Bullish on XPeng Stock

From a YOY perspective, XPeng is showing improvement in terms of EV deliveries, EPS, revenue, and margin, although not in terms of consensus estimates. However, analysts have started to adjust their price targets higher by 14.27% to a consensus price target of $22.20. This is a stark reversal from the forecast just one month ago, with a $13.93 consensus price target, indicating a 37.38% downside as of April 3, 2025.

The stock is well outperforming Tesla and the S&P 500 as it still trades in very positive territory, up more than 50% year-to-date (YTD) as of April 3, 2025.