XPeng has reported a dramatic increase in losses for the first half of 2026, driven by falling sales, reduced government subsidies, and rising R&D and financial expenses. The company is now relying more on exports as domestic competition intensifies.
XPeng, the Chinese electric vehicle startup backed by the Volkswagen Group, ended the first half of 2026 with losses that have tripled compared to the previous year. According to data from elespanol motor, the company posted a net loss of 3.121 billion yuan (398.2 million euros), a setback attributed to a sharp decline in sales, a significant reduction in government subsidies, and a notable rise in both research and development spending and financial costs.
Despite the deepening losses, XPeng managed to grow its gross profit to 6.766 billion yuan (863 million euros), marking a 20.2% year-on-year increase. This improvement was largely due to an 8.6% reduction in the total cost of sales, which helped offset some of the revenue pressure. However, the company sold 165,977 vehicles in the first six months of the year—a 15.8% drop compared to the same period in 2025. Total revenue for the period fell 3.8% to 32.777 billion yuan (4.182 billion euros), with vehicle sales revenue down 10.2% year-on-year. In contrast, revenue from service operations surged by 67%, reaching 4.731 billion yuan (603.6 million euros).
China's EV price war has cut average vehicle profit margins industry-wide, pushing manufacturers to seek growth through overseas expansion and service revenue rather than domestic car sales alone.
With the Chinese market mired in a prolonged price war, XPeng has increasingly turned to exports to cushion the blow from domestic weakness. Revenue from China dropped 15.4% to 24.55 billion yuan (3.1316 billion euros), while international sales soared by 74% to 8.226 billion yuan (1.0494 billion euros). As a result, overseas markets now account for a quarter of XPeng’s total revenue, up ten percentage points from the first half of 2025. This shift mirrors broader trends among Chinese automakers, as seen when Geely raised its export ambitions following its acquisition of a major stake in Ford España—an example detailed in this recent report.
Government support has also waned. Subsidies received by XPeng fell by 59.1% year-on-year to just 320 million yuan (40.8 million euros), reflecting both lower sales and a tightening of state incentives. Meanwhile, R&D expenses jumped 39% to 5.8214 billion yuan (742.5 million euros), and interest expenses climbed 41.8% to 289.4 million yuan (36.9 million euros), underscoring the company’s heavy investment in future technologies and the growing cost of capital.
Looking ahead, XPeng forecasts global sales of between 115,000 and 121,000 vehicles for the third quarter, representing a year-on-year change of between -0.8% and 4.3%. The company expects revenue for the quarter to reach between 21.7 and 23.4 billion yuan (2.767 to 2.984 billion euros), which would mark a 6.4% to 14.8% increase over the same period last year.
XPeng’s results highlight the mounting pressures facing China’s electric vehicle sector, where slowing domestic demand, fierce price competition, and reduced state support are forcing companies to adapt quickly. The company’s pivot toward international markets and increased investment in innovation may help stabilize its position, but the path to profitability remains uncertain as the industry continues to evolve.
