After M03 exceeds expectations, P7+ may take over and continue to reduce dimensions. At the world debut of the Xiaopeng P7+, the pre-sale price of the new car will be announced at the Paris Motor Show on October 14th. Following the success of M03, we believe that the pricing of P7+ will still adopt a more active strategy and will take over the baton and continue to reduce the impact. We think the P7+ has the following main highlights: 1) Large space: The length, width and height of the P7+ are 5056/1937/1512mm, respectively, and the wheelbase is 3000mm, reaching the size of a C-class car. He Xiaopeng also used “hippopotamuses”, “space monsters”, etc. to describe the P7+ space. With the exception of the Zhijie R7 (which is more expensive), the P7+ is also one of the few pure electric sedans that use space as an important highlight this year. 2) Comfort: All cars are equipped with seat heating, ventilation, and massage. The rear seats are equipped with 10° electric adjustment as standard. All models have Nappa seats with microfiber ceilings. All models also come standard with three fragrances and 20 speakers. 3) First launch of the AI Hawkeye Vision Smart Driving Solution: Xiaopeng P7+ or all models are equipped with the AI Hawkeye Vision Smart Driving Solution as standard. The smart driving package for new cars may not require additional payment. The P7+ uses dual Orin X chips and 26 sensing hardware to eliminate the higher requirements of lidar's ability to sense the environment. Xiaopeng's AI Hawkeye Vision smart driving solution uses the Lofic architecture for front-view binoculars + rear-view cameras.

The starting price of P7+ may be lower than RMB 0.2 million, and the initial equity price may drop to around 0.18 million yuan, so we can expect an explosion. The P7+ continues Xiaopeng's consistent excellent electricity consumption. It only uses 11.6 kilowatts of electricity for 100 kilometers, so a relatively small battery can be used to reduce BOM costs. According to the declaration information disclosed by the Ministry of Industry and Information Technology, the entry version will be equipped with a 180kW motor and a 60.7 degree lithium iron phosphate battery provided by Everweft Power, with a pure electric range of 602 kilometers. At the same time, the AI Hawkeye Vision Smart Driving Solution removed lidar and reduced the cost of smart driving hardware. With the reduction in the cost of the two core BOMs of batteries and smart driving, we think the pricing will be surprising, and the explosion can be expected.

Increase sales forecasts and target prices. We raised our 2025/2026 sales forecast by 35%/27% to 0.338 million/0.381 million units, respectively, to reflect the M03's higher-than-expected sales volume and the increase in the P7+ sales forecast. The scale effect of loss-benefiting sales growth and cost control will narrow year by year. We raised our target price to HK$77.36/$19.91 (XPEV US) based on the latest sales volume and revenue forecasts, corresponding to twice the projected market sales ratio for 2025. Maintain a buy rating.