Taxation

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Taxation

24. Taxation

(a) Income taxes

Cayman Islands

Under the current laws of the Cayman Islands, the Company is not subject to tax on either income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

BVI

XPeng Limited is exempted from income tax on its foreign-derived income in the BVI. There are no withholding taxes in the BVI.

Hong Kong

Under the current Hong Kong Inland Revenue Ordinance, the subsidiaries of the Group incorporated in Hong Kong are subject to 16.5% Hong Kong profit tax on their taxable income generated from operations in Hong Kong. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax.

United States

The applicable income tax rate of United States where the Company’s subsidiaries having significant operations for the years ended December 31, 2022, 2023 and 2024 is 27.98%, which is a blended state and federal rate.

PRC

The PRC Enterprise Income Tax Law (“EIT Law”), which became effective on January 1, 2008, applies an uniform enterprise income tax (“EIT”) rate of 25% to both foreign-invested enterprises (“FIEs”) and domestic enterprises. Certified High and New Technology Enterprises (“HNTE”) are entitled to a favorable statutory tax rate of 15%, but need to re-apply every three years. During this three-year period, an HNTE must conduct a qualification self-review each year to ensure it meets the HNTE criteria and is eligible for the 15% preferential tax rate for that year. If an HNTE fails to meet the criteria for qualification as an HNTE in any year, the enterprise cannot enjoy the 15% preferential tax rate in that year, and must instead use the regular 25% EIT rate.

Xiaopeng Technology applied for the HNTE qualification and received approval in December 2022. Xiaopeng Technology is entitled to continue to enjoy the beneficial tax rate of 15% as an HNTE for the years 2022 through 2024.

Zhaoqing XPeng applied for the HNTE qualification and received approval in December 2020 and renewed in December 2023. Zhaoqing XPeng is entitled to continue to enjoy the beneficial tax rate of 15% as an HNTE for the years 2023 through 2025.

Beijing Xiaopeng applied for the HNTE qualification and received approval in December 2020. This enterprise is entitled to continue to enjoy the beneficial tax rate of 15% as an HNTE for the years 2020 through 2022. Since the qualification was expired in 2023, this enterprise applies tax rate of 25% for the year 2023. This enterprise re-applied for the HNTE qualification and received approval in December 2024, then entitled to enjoy the beneficial tax rate of 15% as an HNTE for the years 2024 through 2026.

Shanghai Xiaopeng Motors Technology Co., Ltd. applied for the HNTE qualification and received approval in December 2022. Shanghai Xiaopeng Motors Technology Co., Ltd. is entitled to continue to enjoy the beneficial tax rate of 15% as an HNTE for the years 2022 through 2024.

Shenzhen Pengxing Smart Research Co., Ltd. applied for the HNTE qualification and received approval in October 2023. Shenzhen Pengxing Smart Research Co., Ltd is entitled to continue to enjoy the beneficial tax rate of 15% as an HNTE for the years 2023 through 2025.

Zhaoqing Xiaopeng New Energy applied for the HNTE qualification and received approval in December 2024. Zhaoqing Xiaopeng New Energy is entitled to enjoy the beneficial tax rate of 15% as an HNTE for the years 2024 through 2026.

Guangzhou Zhipeng Manufacturing Co., Ltd. applied for the HNTE qualification and received approval in December 2024. Guangzhou Zhipeng Manufacturing Co., Ltd. is entitled to enjoy the beneficial tax rate of 15% as an HNTE for the years 2024 through 2026.

Under the EIT Law enacted by the National People’s Congress of the PRC, dividends generated after January 1, 2008 and payable by a foreign investment enterprise in the PRC to its foreign investors who are non-resident enterprises are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement. Under the taxation arrangement between the PRC and Hong Kong, a qualified Hong Kong tax resident which is the “beneficial owner” and directly holds 25% or more of the equity interest in a PRC resident enterprise is entitled to a reduced withholding tax rate of 5%. The Cayman Islands, where the Company was incorporated, does not have a tax treaty with the PRC.

In accordance with accounting guidance, all undistributed earnings are presumed to be transferred to the parent company and are subject to the withholding taxes. All FIEs are subject to the withholding tax from January 1, 2008. The presumption may be overcome if the Group has sufficient evidence to demonstrate that the undistributed earnings will be re-invested and the remittance of the dividends will be postponed indefinitely. The Group did not record any dividend withholding tax, as it has no retained earnings for any of the years presented.

The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law merely define the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, the Group does not believe that it is likely that its operations outside of the PRC will be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history of the EIT Law, there is uncertainty as to the application of the EIT Law. Should the Company be treated as a resident enterprise for PRC tax purposes, the Company will be subject to PRC income tax on worldwide income at an uniform tax rate of 25%.

According to relevant policies promulgated by the State Tax Bureau of the PRC and effective from 2008 onwards, enterprises engaged in R&D activities are entitled to claim an additional tax deduction amounting to 75% or 100% of qualified R&D expenses incurred in determining its tax assessable profits for that year. (“Super Deduction”). The additional deduction of 100% or 75% of qualified R&D expenses can only be claimed directly in the annual EIT filling and subject to the approval from the relevant tax authorities.

Composition of income tax expenses (benefit) for the years presented are as follows:

	For the Year Ended December 31,
	2022		2023		2024
Current income tax expenses		24,731		18,014		22,297
Deferred income tax expenses (benefit)		—		18,796		(92,077	)
Income tax expenses (benefit)		24,731		36,810		(69,780	)

Reconciliations of the income tax expenses computed by applying the PRC statutory income tax rate of 25% to the Group’s income tax expenses of the years presented are as follows:

	For the Year Ended December 31,
	2022			2023			2024
Loss before income tax expenses and share of results of equity method investees		(9,118,358	)		(10,393,705	)		(5,830,975	)
Income tax credit computed at the PRC statutory income tax rate of 25%(i)		(2,279,590	)		(2,598,426	)		(1,457,744	)
Effect of preferential tax rate(ii)		202,968			29,362			29,108
Tax-free income		(14,000	)		(33,657	)		(9,110	)
Effect of change in tax rate		16,554			(79,401	)		1,054,824
Effect of different tax rate of different jurisdictions		322,514			114,036			(127,510	)
Effect of additional deduction for qualified R&D expenses		(515,288	)		(1,184,717	)		(815,144	)
Non-deductible expenses		92,906			(230,127	)		512,324
Other adjustments(iii)		—			(494,696	)		150,721
Changes in valuation allowance		2,198,667			4,514,436			592,751
Income tax expenses		24,731			36,810			(69,780	)

(i) The PRC statutory income tax rate is used because the majority of the Group’s operations are based in the PRC.

(ii) The effect of preferential tax rate resulted in a deduction of the income tax credit computed at the PRC statutory income tax rate of 25%.

(iii) Income tax credit amounting to RMB536,974 resulted from acquisition of subsidiaries was included in other adjustments for the years ended December 31, 2023.

(b) Deferred tax

The Group considers positive and negative evidence to determine whether a portion or all of the deferred tax assets will be more-likely-than-not realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses and forecasts of future profitability. These assumptions require significant judgment and the forecasts of future taxable income are consistent with the plans and estimates the Group is using to manage the underlying business. The statutory income tax rate of 25% or applicable preferential income tax rates were applied when calculating deferred tax assets.

	As of December 31,
	2023			2024
Deferred tax assets:
Net operating loss carry-forwards		10,189,606			9,759,109
Government grants		41,713			33,719
Impairment of long-lived assets		29,660			43,592
Inventory reserve		69,730			81,922
Accruals and others		457,366			1,474,063
Leases		502,799			462,825
Valuation allowance		(10,277,822	)		(10,870,573	)
Total deferred tax assets, net of valuation allowance		1,013,052			984,657

	As of December 31,
	2023			2024
Deferred tax liabilities:
Leases		(509,441	)		(462,906	)
Acquired intangible assets		(907,629	)		(833,393	)
Others		—			(298	)
Total deferred tax liabilities		(1,417,070	)		(1,296,597	)
Deferred tax assets, net		—			29,992
Deferred tax liabilities, net		(404,018	)		(341,932	)

Movement of valuation allowance is as follow:

	For the Year Ended December 31,
	2022			2023			2024
Valuation allowance
Balance at beginning of the year		3,564,719			5,763,386			10,277,822
Additions		2,221,222			3,990,147			1,798,296
Acquisition of subsidiaries		—			536,974			—
Loss utilized and expired		(6,001	)		(92,086	)		(150,721	)
Effect of change in tax rate		(16,554	)		79,401			(1,054,824	)
Balance at end of the year		5,763,386			10,277,822			10,870,573

For the years ended December 31, 2023 and 2024, with the growth of its business performance, some subsidiaries of the Group are generating profits and utilizing tax losses brought forward from prior years.

The Group has tax losses arising in Mainland China of RMB47,271,245 that will expire in one to ten years for deduction against future taxable profits.

Loss expiring in 2025	1,047,290
Loss expiring in 2026	1,839,526
Loss expiring in 2027	4,958,034
Loss expiring in 2028	11,539,623
Loss expiring in 2029	10,178,620
Loss expiring in 2030	1,847,352
Loss expiring in 2031	2,329,586
Loss expiring in 2032	4,143,097
Loss expiring in 2033	6,540,974
Loss expiring in 2034	2,847,143
Total	47,271,245

The Group has tax losses arising in Hong Kong and Others of RMB5,988,826 that will not expire for deduction against future taxable profit.

Hong Kong	785,061
Others	5,203,765
Total	5,988,826

Uncertain Tax Positions

The Group did not identify any significant unrecognized tax benefits for the years ended December 2022, 2023 and 2024. The Group did not incur any interest related to unrecognized tax benefits, did not recognize any penalties as income tax expenses and it also does not anticipate any significant change in unrecognized tax benefits within 12 months from December 31, 2024. In general, the PRC tax authorities mandate a period of up to five years to review a company’s tax filings. Accordingly, tax filings of the Company’s PRC subsidiaries and VIEs for tax years 2020 through 2024 remain subject to the review to be performed by the relevant PRC tax authorities.