Barclays has cut its price target on XPeng stock to $17 from $20, maintaining an Underweight rating after the Chinese EV maker delivered just 20,011 vehicles in January. The weak delivery numbers signal a challenging 2026 for the company as sales momentum has remained soft through January and early February.

Analysts warn that government subsidies likely played a significant role in XPeng's recent break-even achievement, raising questions about the sustainability of its financial performance. The broader Chinese EV market presents additional headwinds, with government VAT rebates halved in 2026 compared to the previous year, while EV penetration already exceeds 50%, limiting expansion opportunities.

Margins are expected to face pressure from rising component costs, particularly for chips and batteries, with vehicle gross margins projected to improve only marginally from 2025 levels. The company's investment in future technologies like robotaxi and humanoid robots will likely increase R&D spending. Analysts caution that recovery will depend on the planned launch of the Mona SUV in the third quarter, though there's no certainty the model will gain strong market traction.