Bank of America thinks XPeng's partnership with Volkswagen is enough to significantly improve the company's outlook. The firm upgraded the Chinese electric vehicle maker to buy from neutral Monday with a $22 per share price target. BofA's forecast implies roughly 49% upside from Friday's $14.98 close. Analyst Ming Hsun Lee said the company's partnership with VW, where both firms will collaborate on EV technology to develop two models for the Chinese market in 2026 , will help XPeng secure a stronger financial future. Specifically, the analyst cited three benefits from the partnership: "(1) investors' concerns over XPeng's fast cash burn will be lower, which supports valuation; (2) XPeng's AD capability is endorsed. We estimate it to record annual technology service income of RMB200-300mn per annum in 2024-25; (3) XPeng could manage cost better through larger scale procurement and stronger supply chain shared with VW." The analyst added that she also expects XPeng to turn a profit in 2025, compared with a previous forecast, which called for a loss. Lee also said XPeng's improving product lineup will add to sales volume growth. XPeng has added nearly 51% from the start of the year. XPEV YTD mountain XPeng has climbed more than 50% from the start of the year. However, the stock dropped more than 4% after XPeng reported a larger-than-expected net loss for the second quarter . — CNBC's Michael Bloom contributed to this report.
