XPeng's cash went to suppliers, not losses

A loss is not the same as cash spent

A company's loss and the cash it uses are two different measures. The loss comes from the income statement, which counts sales and costs when they are earned or incurred. The cash-flow statement counts money actually coming in and going out.

The two can move far apart. Some costs, such as the wear on factories and equipment, reduce profit without any cash leaving. And cash can go out without touching profit at all — when a company pays its suppliers sooner, or buys parts before it builds and sells the cars.

That gap explains XPeng's first half. Its net loss was RMB3.12 billion. Once costs that used no cash are added back, the loss accounts for less than RMB1 billion of the RMB11.72 billion that left the business. The rest went into paying suppliers and into inventory — the parts and cars XPeng holds but has not yet sold.

RMB billion, from the cash-flow statement in each year's interim report; the lines add up to the total. A minus means cash going out.

XPeng paid its suppliers down after a year of owing them more

The biggest single use of cash was settling what XPeng owed its suppliers. Those amounts — called payables — fell by RMB7.45 billion in the half. Part of what XPeng owes is in bank acceptance bills: promises to pay that a bank guarantees and a supplier can hold or cash in early.

The fall follows a year in which the amounts grew. They were RMB23.08 billion at the end of 2024 and RMB37.16 billion at the end of 2025, as deliveries more than doubled. By 30 June 2026 they were back to RMB29.71 billion — about half the 2025 increase reversed. Rising payables helped make 2025's operating cash flow positive; falling payables worked the other way in 2026.

Most of the increase was in parts and unfinished cars

Inventory rose too. Its value on the balance sheet went from RMB10.38 billion to RMB13.73 billion, up RMB3.35 billion; the cash it tied up was RMB3.62 billion, the difference being inventory written down in value.

The rise is mostly not unsold cars. The report splits inventory into finished vehicles, raw materials and work in process — cars partly built. Raw materials and partly built cars each account for about two-fifths of the RMB3.35 billion increase; finished vehicles for the remaining fifth.

RMB billion, from the inventory note in the 2025 and 2026 interim reports.

Work in process went from RMB97 million to RMB2.91 billion in a year. XPeng does not say why. More cars on the line would fit the new models XPeng was preparing for the second half, but this is a balance on a single day, and it moves with where production happens to stand; it does not show that output grew thirtyfold.

Borrowing filled most of the gap

XPeng borrowed RMB12.88 billion and repaid RMB5.83 billion, so its net new borrowing was RMB7.05 billion. Most of it was short-term: bank loans due within a year rose from RMB4.28 billion to RMB10.07 billion, at an interest rate of 1.31%.

Shareholders' equity is what the company would be worth to its owners if everything it owns were set against everything it owes. XPeng's debt measured against that equity — what XPeng calls gearing — went from 41.8% to 73.2%. The cash position XPeng reports, which counts cash, deposits and short-term investments together, fell from RMB47.66 billion to RMB40.48 billion.

One balance-sheet line looks bigger than the spending behind it. The value of XPeng's buildings rose by RMB4.03 billion, while it paid RMB1.56 billion for all its property and equipment. The notes point to the Guangzhou plant, which XPeng leases with an obligation to buy it at construction cost and now carries as lease assets worth RMB4.88 billion. Most of that increase appears to reflect how the plant is now accounted for, not new money spent in the half.

Services revenue included a catch-up for earlier work

XPeng earns engineering fees from Volkswagen, which pays it to develop technology for Volkswagen's cars in China. Some of those fees depend on milestones, and XPeng counts them as revenue only once it is confident it will not have to reverse them.

Milestones reached in the first half let it recognise RMB680 million of revenue for work done in earlier periods; there was none in the first half of 2025. That is about a seventh of the RMB4.73 billion of services and other revenue in the half. XPeng reported a gross margin of 71.4% on that revenue — the share left after the direct costs of providing the services, before spending such as research and administration.

The report does not show what that RMB680 million cost. If little cost was recorded against it in the half, as is likely for work already done, it lifted the margin; but the filing gives no figure to measure how much.

The largest half-year outflow on file

XPeng has used cash in a first half before, in 2024, and generated it in the second. The first half of 2026 is still an outlier. It is the largest outflow of any half-year on file, and larger than any full year since 2021 — the most operations used in a whole year was RMB8.23 billion, in 2022.

RMB billion, as on file on 28 Sep 2026. A first half is as that year's interim report states it; a second half is the full year in the annual report less its first half. Free cash flow is cash from operations less spending on property and equipment, as on Financials.

Two other signals in the notes

Model changes cost far less than a year earlier. When a model is stopped or upgraded, parts ordered for it can go unused; losses on those orders were RMB2.4 million, against RMB225.6 million in the first half of 2025.

The workforce kept growing while deliveries fell. XPeng had 20,632 employees at 30 June, 24% more than a year earlier, with the largest increase in manufacturing; deliveries in the half were 16% lower.

What the report does not answer

XPeng gives no reason for paying suppliers down or for the rise in inventory. It was among the Chinese carmakers that pledged in June 2025 to pay suppliers within 60 days, but the amounts it owed kept rising for the rest of 2025, and the report does not connect the two.

It also does not say which quarter the RMB680 million fell in. The quarterly results will show the cash position at 30 September but not how cash moved; the next full cash-flow statement comes with the 2026 annual report, which XPeng has filed in mid-April in each of the last two years.