NextFin news, XPeng Inc. (NYSE:XPEV) experienced a significant stock price decline on Saturday, October 12, 2025, after former President Donald Trump publicly discussed the possibility of imposing substantially higher tariffs on Chinese imports. This announcement sparked a broad selloff across US-listed Chinese companies, including XPeng and its electric vehicle (EV) sector peers.
Despite the sharp daily drop of approximately 8%, XPeng has posted record vehicle deliveries in September 2025 and achieved an impressive 81.99% share price return year-to-date. Over a longer horizon, the company’s total shareholder returns have reached 151% over the past three years. However, the recent tariff threat has heightened market volatility and cast uncertainty over the future trajectory of Chinese EV makers listed in the United States.
Market analysts are now closely examining whether XPeng’s current share price of $21.02 reflects a buying opportunity or if it already incorporates optimistic growth expectations. According to a valuation narrative published by Simply Wall St, XPeng’s fair value is estimated at $26.29, suggesting the stock could be undervalued by about 20% if the company meets ambitious profit and margin expansion targets.
The bullish outlook is supported by XPeng’s rapid development and deployment of proprietary artificial intelligence (AI) hardware, including the Turing AI System on Chip (SoC), and advanced driver-assistance systems (ADAS) based on vision technology. These innovations are expected to enhance vehicle autonomy and smart cockpit features, aligning with growing consumer demand for intelligent, software-centric vehicles. This technological leadership could drive higher-margin software revenue streams and improve gross and net margins.
However, risks remain. XPeng continues to report net losses, and intense price competition in the Chinese EV market may constrain its path to sustainable profitability. These factors could challenge the optimistic projections embedded in the current valuation.
From a different perspective, XPeng’s price-to-sales (P/S) ratio stands at 2.4 times, which is above the US auto industry average of 1.3 times and its own fair ratio of 2.1 times. This premium valuation indicates that the market may have already priced in significant growth, increasing the risk for investors if the company fails to meet expectations.
The tariff threat and resulting market reaction underscore the sensitivity of Chinese EV stocks to geopolitical developments and trade policy uncertainties. Investors are advised to monitor ongoing developments closely as the market evaluates the implications for XPeng and its peers.
This report is based on data and analysis from Simply Wall St as of October 12, 2025, and does not constitute financial advice. Investors should consider their own financial situation and objectives before making investment decisions.
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