Which humanoid robotics firm should I buy for a Stocks and Shares ISA? In the past, someone asking this question would probably have plumped for Tesla, as choice was limited.
Today though, there are more options available as the industry gears up for full-scale commercialisation. Here, I want to highlight XPeng (NYSE:XPEV), whose shares are down 49% year to date.
What is XPeng?
China’s XPeng is an electric vehicle (EV) maker with big ambitions. Indeed, founder and CEO He Xiaopeng — from whom the firm derives its Romanised name — has a similar vision to Tesla’s Elon Musk: a future filled with millions of robotaxis and humanoid robots.
These dreams are fast becoming reality. XPeng’s robotaxis are already driving about on China’s roads, albeit still in the testing phase. And in May, the vertically integrated company’s first self-driving taxi rolled off the production line.
XPeng is aiming for passenger-carrying rides without a safety driver by early 2027.
As a full-stack automaker with in-house capabilities spanning software, chips, and complete vehicles, XPeng is positioned to move directly to scaled delivery upon completion of technical validation, thereby shortening the cycle from R&D to commercial operations.
Xpeng
This week, the firm’s next-generation humanoid robot, IRON, also strutted off a new automated production line. This lifelike bot was greeted by the CEO, who assigned it an official staff badge. The bot will need that as it begins a ‘career’ in the firm’s EV showrooms (greeting guests and showing them around).
XPeng plans a full market launch of IRON in China and overseas in 2027.
[IRON] is being developed as an advanced general-purpose humanoid robot platform, capable of supporting a broad range of applications and continuously improving through self-reinforcement in the real world.
XPeng
Three pillars of growth
While the robots are exciting, EVs remain the firm’s breadwinner for now. In the second quarter, it registered 103,295 deliveries, including 20,000 overseas (up 81% year on year). Overseas markets contributed 25% of overall revenue in the first half.
Second-quarter revenue grew 8% to RMB19.74bn (roughly $2.9bn), while group gross margins reached almost 21%. Yet, despite this growth, XPeng’s still unprofitable. Net net loss for the quarter was RMB1.34bn (about $199m), as R&D spending remained elevated.
Obviously, the lack of profits makes the stock riskier, as does the fierce EV price wars in China. But the unit economics are better in international markets, so profitability could improve rapidly as overseas sales ramp up. Note that profits are forecast for 2027/28.
