Asia Pulse

Emerging Chinese EV makers XPeng and Leapmotor both reported triple‑figure sales growth in 3Q25, signalling ongoing market‑share gains; both achieved the highest volume growth among peers despite relatively small bases. On the flip side, profitability remains weak — Xpeng is still loss‑making and Leapmotor is only marginally break‑even. XPeng has also guided for a softer‑than‑expected 4Q25 revenue outlook. Both stocks fell after the results as investors reacted to near‑term profitability concerns and the end of China’s EV purchase tax exemption at end‑2025.

Xpeng (XPEV US/9868 HK): Revenue rose 102% YoY in 3Q25, driven by 149% volume growth. Vehicle gross margin slipped to 13.1% (from 14.3% in 2Q25), reflecting ongoing price pressure, while overall group gross margin improved to 20.1% (vs. 17.3% last quarter) thanks to growth in services. Net losses narrowed to RMB381m (vs. RMB478m in 2Q25 and RMB1.8bn in 3Q24). The company showcased a humanoid‑robot prototype targeting mass production by end‑2026, though its commercialisation potential is uncertain given likely high price comparable to that of an EV. Management’s guidance for lower‑than‑expected 4Q25 revenue growth (c. 34–43% YoY) contributed to the post‑results sell‑off.

Leapmotor (9863 HK): The company reported 97% YoY revenue growth in 3Q25, driven by 101% volume growth. Gross margin improved to 14.5% (vs. 13.6% in 2Q25 and 8.1% in 3Q24). Net profit reached RMB150m in 3Q25 (0.8% net margin), versus RMB690m net loss in 3Q24 and RMB160m profit in 2Q25. Leapmotor has already hit a 500k sales run‑rate target for 2025 and expects full‑year volume of ~600k, with a 2026 target of ~1m units supported by several new models.

End of China’s EV purchase tax exemption

From 2026, buyers will face a 5% tax for EVs priced below CNY300k, or a 10% tax minus CNY15k for EVs priced above CNY300k, which could weaken demand. On the plus side, both XPeng and Leapmotor focus on the low‑end segment and should be relatively more defensive than premium rivals, although their limited margin cushions mean they still remain vulnerable to price and cost pressure.

This article is for information only and is not investment advice or a solicitation to buy or sell securities. This article does not constitute a “Personal Recommendation” or investment advice under UK FCA regulations. The author holds NO position in the securities mentioned. There is no warranty as to completeness or correctness. Please do your own due diligence or consult a licensed financial adviser. Investing in Asian markets involves significant risk. Please read the Full Disclaimer before acting on any information. Images and videos created with the assistance of Gemini AI.

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Disclaimer: This is for information only and is not investment advice or a solicitation to buy or sell securities. There is no warranty as to completeness or correctness and the author accepts no responsibility for errors or omissions. Please do your own due diligence or consult a licensed financial adviser before making any investment decisions. Images and videos created with the assistance of Gemini AI and NotebookLM.