XPENG delivered only modest year-over-year growth in vehicle volume during the second quarter of 2026, but a sharp increase in high-margin services and other revenue materially changed the company’s revenue mix and lifted its consolidated gross margin above 20%.
Total vehicle deliveries were 103,295 during the quarter, essentially unchanged from 103,181 a year earlier. Vehicle sales revenue increased just 1.0% year-over-year to RMB17.05 billion, or approximately $2.51 billion.
Services and other revenue moved in a very different direction. Revenue from that category increased 93.9% to RMB2.70 billion, or approximately $400 million, from RMB1.39 billion in the prior-year quarter.
XPENG said the increase was primarily attributable to technical research and development services provided to another automobile manufacturer after the company achieved certain contractual milestones, along with higher parts and accessories sales.
The mix shift was especially important because services and other gross margin reached 75.1%, up from 53.6% a year earlier and 66.5% in the first quarter. Vehicle margin, by comparison, fell to 12.1% from 14.3% a year earlier and was unchanged sequentially.
That helped overall gross margin rise to 20.7% from 17.3% in the year-earlier period even though vehicle deliveries were virtually flat. Gross profit increased 28.9% year-over-year to RMB4.08 billion as total revenue rose 8.0% to RMB19.74 billion, or approximately $2.91 billion.
The quarter also showed a sharp sequential recovery. Revenue increased 51.5% from the first quarter, while gross profit rose 52.2%. Vehicle sales increased 55.0% sequentially as deliveries rebounded from 62,682 in the first quarter to 103,295.
Profitability nevertheless remained under pressure. XPENG reported a net loss of RMB1.34 billion, or approximately $200 million, compared with a RMB480 million loss a year earlier. The loss narrowed 25.1% sequentially from RMB1.78 billion in the first quarter.
Research and development expenses rose 32.1% year-over-year to RMB2.91 billion, or approximately $430 million, reflecting increased spending on new vehicle models and AI-related technologies. Selling, general and administrative expenses increased 15.2% to RMB2.50 billion.
XPENG ended the quarter with a cash position of RMB40.48 billion, or approximately $5.97 billion. For the third quarter, the company expects 115,000 to 121,000 vehicle deliveries and revenue between RMB21.7 billion and RMB23.4 billion, implying up to about 14.8% year-over-year revenue growth.
Following the quarter, XPENG also disclosed that investors conditionally agreed to subscribe for newly issued shares of its Dogotix subsidiary for an aggregate purchase price of $900 million, adding another potentially significant source of capital around its Physical AI strategy.
KEY QUOTES:
“Driven by breakthroughs in our premiumization and globalization efforts, our gross margin continued to exceed 20%.”
Hongdi Brian Gu, Vice Chairman and Co-President of XPENG
“I believe XPENG will not only build one of China’s most valuable humanoid robotics companies, but also become a global leader in physical AI.”
Xiaopeng He, Chairman and CEO of XPENG
