Chinese electric vehicle manufacturer XPeng (9868) has projected fourth-quarter revenue below market expectations, signaling potential challenges ahead as an intense price war and rising competition reshape the world’s largest EV market.

XPeng’s U.S.-listed shares slipped nearly 3% in premarket trading, despite having more than doubled in value earlier this year. The company’s cautious outlook reflects growing pressure across China’s crowded EV sector.

Revenue Outlook Misses Estimates

XPeng expects Q4 revenue between 21.5 billion yuan and 23 billion yuan ($3.03 billion), falling short of analysts’ estimates of 26 billion yuan, according to LSEG data. This tempered guidance arrives even though XPeng and rival NIO reported record deliveries in October, contrasting sharply with Tesla’s China sales, which fell to a three-year low.

Brand Positioning Challenges

Analysts point to strategic shifts that may be weakening XPeng’s appeal in higher-end segments.

Third Bridge analyst Rosalie Chen noted that XPeng has “lost its brand appeal in models priced above 200,000 yuan” following the launch of the more affordable Mona 03 and reduced investments in intelligent driving technologies.

The Mona M03, developed under XPeng’s mass-market sub-brand in partnership with ride-hailing giant DiDi, represents the company’s bid to capture China’s growing lower-cost EV market.

Long-Term Bet on Flying Cars and Robots

At its recent AI Day, XPeng showcased research into futuristic consumer “flying cars” and humanoid robots designed for industrial use. While these innovations could strengthen XPeng’s position in the long term, they require heavy R&D spending that may weigh on short-term profitability.

Third-Quarter Performance

For Q3, XPeng reported:

• Revenue: 20.38 billion yuan — in line with expectations
• Vehicle Deliveries: Up 149.3% year-on-year
• Expected Delivery Growth (Q4): 36.6% to 44.3% YoY
• Net Loss: Narrowed to 380.9 million yuan, compared with 1.81 billion yuan last year

Despite narrowing losses and strong delivery growth, the company’s financial outlook suggests that competitive pressures will continue to challenge profit margins.