XPeng's consolidated gross margin rose to 20.7% in Q2, driven mainly by businesses beyond vehicle sales. In Q2 2026, the gross margin on vehicle sales declined year over year, but gross profit growth from services and other businesses offset the decline in vehicle gross profit and also lifted the company's consolidated gross margin.

Vehicle revenue is 6.3x larger, yet gross profit is about the same

"Gross profit" in financial reports is the amount left after subtracting the corresponding cost of sales from revenue. Measured this way, the difference between XPeng's two business categories is striking.

In Q2, vehicle sales revenue was RMB 17.046 billion, contributing RMB 2.059 billion in gross profit. "Services and others" revenue was RMB 2.697 billion, contributing RMB 2.025 billion in gross profit.

XPeng Q2 2026 revenue and gross profit composition, calculated from official financial reports, figures rounded.

Vehicle sales revenue is about 6.3 times that of the latter, yet gross profit is only about RMB 34 million higher."Services and others" contributed 49.6% of gross profit with 13.7% of revenue. Vehicle sales account for the bulk of revenue, but their gross profit contribution is now close to half.

In the same period last year, services and others accounted for 23.5% of gross profit. This segment has evolved from a supplement to vehicle sales into an important source of gross profit for XPeng.

Where does this RMB 2.7 billion come from

"Services and others" includes technical R&D services as well as parts and accessories sales. The Q2 report lists these two businesses as the main sources of revenue growth for the quarter, with technical cooperation reaching several key milestones that increased related service revenue.

Volkswagen is an important client for this type of technical cooperation. XPeng's 2025 annual report disclosed that technical service revenue depends mainly on the Volkswagen Group. The two parties signed a platform and software technology cooperation agreement to jointly develop two B-segment battery electric models for the Volkswagen brand. XPeng conducts R&D for its own models and also provides R&D services to other automakers, generating revenue beyond vehicle sales.

Therefore, this RMB 2.025 billion in gross profit includes contributions from both R&D services and the parts business. The financial report does not separately disclose gross profit from technical services; the 49.6% corresponds to the entire "services and others" category.

The direct reason this segment contributed more gross profit is that revenue grew far faster than the corresponding cost of sales. Revenue rose from RMB 1.391 billion in the same period last year to RMB 2.697 billion, nearly doubling; cost of sales rose from RMB 645 million to RMB 673 million, an increase of only about RMB 27 million. After deducting costs, gross profit rose from about RMB 745 million to about RMB 2.025 billion.

The corresponding gross margin rose from 53.6% to 75.1%. Based on quarterly data, for every RMB 100 of services and other revenue, about RMB 75 in gross profit remains after deducting the corresponding cost of sales; for every RMB 100 of vehicle sales revenue, about RMB 12 remains.

Service gross profit growth offsets the decline in vehicle gross profit

The vehicle business faced gross profit pressure during the same period. The vehicle gross margin in Q2 was 12.1%, down from 14.3% in the same period last year, which the company attributed to model transitions. Vehicle gross profit fell from about RMB 2.422 billion to about RMB 2.059 billion, a decrease of about RMB 363 million.

Services and other gross profit increased by about RMB 1.279 billion. Combined, the company's total gross profit was still about RMB 916 million higher than the same period last year.

Gross profit comparison of the two business categories: bars show amounts (RMB 100 million), right side shows year-over-year change, calculated from XPeng official financial reports.

Vehicle sales gross profit declined, but the surge in services and other gross profit drove total company gross profit growth

The rise in consolidated gross margin is also related to revenue composition. Services and others' share of total revenue increased from 7.6% to 13.7%. This category has a higher gross margin, and its revenue share expanded, while its own gross margin rose from 53.6% to 75.1%, together lifting the company's consolidated gross margin.

Excerpt from XPeng's official Q2 report. Amounts in RMB 10 billion; the column dated June 30, 2026 corresponds to this quarter.

XPeng's R&D capability now has a way to generate returns beyond vehicle sales.

R&D for its own models must be recouped through vehicle sales; providing R&D services to partner automakers means clients pay for the development work itself. XPeng's customers have thus expanded from car buyers to automakers purchasing R&D services. The Volkswagen partnership is a concrete example of this commercialization path.

This gives "strong technical capability" a practical business meaning: beyond helping its own cars compete, R&D capability itself can win client purchases. Its value has already entered the process of generating revenue and gross profit.

In Q2, technical R&D services and parts businesses together contributed nearly half of gross profit, supporting group gross profit growth when vehicle gross profit declined.XPeng's business changes now need to be explained through two businesses simultaneously: vehicle sales support revenue scale, while external R&D services and parts businesses raise the overall gross profit level. Whether R&D capability can win client payments is now directly tied to this company's financial performance.