Things haven't been pleasant for investors in Chinese electric vehicle (EV) companies this year. Among the emerging new energy vehicle (NEV) companies, XPeng's (XPEV) stock is down over 41% for the year, which is far worse than rivals Nio (NIO) and Li Auto (LI). In my previous article, I noted that XPEV was attractive near its 52-week lows.
It has, however, continued its downward trajectory and is now trading at new 52-week lows. Let's examine whether XPEV can recover in 2026 or if it's time to give up on this underperforming stock. The Chinese auto market is experiencing degrowth, with sales falling for 10 consecutive months.
In the first seven months of this year, domestic passenger sales in the world's biggest auto market shrunk by over a fifth. Sales of internal combustion engine (ICE) cars have been particularly weak. While new energy vehicle (NEV) penetration in the country rose to almost 65% in July, a record high, sales have fallen in all seven months this year.
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The company's monthly deliveries peaked above 42,000 vehicles in October 2025 and have since failed to breach that high bar. Its deliveries have failed to take off materially, and the average monthly deliveries in the first seven months of the year are below 30,000. Nio has fared much better and sold more cars than XPEV in the first seven months.
Unsurprisingly, its stock has performed better even though it too is in the red. Meanwhile, XPeng is pivoting to physical artificial intelligence (AI), which is arguably the buzzword these days, and changed its name from XPeng Motors to XPeng Group earlier this year. We have similar stories in the U.S., where Lucid Motors and Tesla Motors previously dropped "Motors" from their names and are known as Lucid Group (LCID) and Tesla (TSLA), respectively.
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