XPeng Courts New Tech Customers as Vehicle Margins Weaken

XPeng plans to offer its electric-vehicle technology to more foreign automakers, seeking new revenue beyond its partnership with Volkswagen. The move comes as the Chinese carmaker’s second-quarter net loss widened to 1.34 billion yuan ($200 million), nearly triple the loss a year earlier.

Reuters reported on September 17 that XPeng had contacted potential partners interested in its technology. The company is considering licensing its vehicle architecture, cockpit systems, AI chips and driver-assistance software. The potential partners have not been named.

XPeng formed a team about six months ago to pursue technology partnerships, Reuters reported, building on its Volkswagen alliance. The automakers’ first jointly developed model, the ID.UNYX 08, entered mass production in March, 24 months after work began.

The deal is already boosting XPeng’s services business. Second-quarter revenue from services and other activities rose 93.9% year over year to 2.70 billion yuan, while the segment’s gross margin reached 75.1%. XPeng said the increase reflected technical research services and parts and accessories sales.

Cars still provide most of XPeng’s revenue, but their margins weakened. Vehicle sales brought in 17.05 billion yuan in the quarter, up 1% from a year earlier. Vehicle margin fell to 12.1% from 14.3%, which the company attributed to a transition between product generations.

The service revenue helped lift total gross margin to 20.7%, but did not prevent a larger net loss. Research and development spending rose 32.1% year over year to 2.91 billion yuan, partly because of investment in new models and AI technologies.

XPeng ended June with 40.48 billion yuan in cash. It forecast third-quarter deliveries of 115,000 to 121,000 vehicles and revenue of 21.7 billion to 23.4 billion yuan. Investors will watch whether new technology deals can add repeatable revenue while car margins recover.