In "The Big Banks," Citigroup lowers XPeng's target price to 77 yuan, as rising costs delay breakeven

Citi published a research report indicating that XPeng (09868.HK)'s "dual-energy strategy" may help it penetrate northern cities in China. The firm expects that despite a sluggish domestic automotive demand in 2026, its vehicle sales will remain resilient, reaching 471,000 units, a year-on-year increase of 10%. However, rising industry raw material costs, along with additional R&D expenses for artificial intelligence, will slow XPeng's path to breakeven in 2026.

The firm has lowered its revenue forecasts for 2025, 2026, and 2027 by 8%, 28%, and 37%, respectively, to reflect weakening domestic automotive demand, and anticipates that XPeng will continue to incur losses in 2026 due to rising industry costs and increased R&D expenses.

Based on sales pressure, Citi has reduced XPeng's target price, lowering the Hong Kong stock target price from HKD 106 to HKD 77, and the US stock target price (XPEV.US) from USD 27 to USD 20, while maintaining a "outperform" rating