China's carmakers are turning into robot companies

Last week He Xiaopeng, founder and namesake of Chinese carmaker XPeng, put two numbers on the table.

• His car business missed expectations and posted a loss of RMB 1.34 billion (about $200 million), almost three times the loss in the same quarter last year.

• His robotics unit, which has sold nothing to date, raised $900 million and is now valued at $6.3 billion.

The robotics unit is worth half the company

Citi analysts took the group apart. Strip out the value of the robotics unit and the entire car business carries an implied $6.5 billion, barely more than the arm that has not sold a single robot.

The whole group is worth about $11 billion on the market. The stock fell 8.5% in New York after the results and 9.2% in Hong Kong the next day.

Who paid the 900 million

IDG Capital led the round, with Gaorong Ventures, Tencent and Alibaba alongside. These outside backers put in $600 million. The remaining $300 million came from XPeng itself and from entities controlled by He Xiaopeng and his executives.

The money goes into mass production and into training the in-house AI models that run on the robot itself. He Xiaopeng took over the unit in June and has run it as CEO since. Within 18 months it is to be separated from the parent company and stand on its own.

First the showroom, then the customer

IRON is due to enter mass production at the end of 2026, at a thousand robots per month. It starts in XPeng's own stores and on the company campus as a sales assistant, not on a factory floor. Deliveries to retailers and service firms begin in 2027, in China and abroad, at several thousand units per month.

It has 76 movable joints in the body and 21 in each hand. Three in-house chips do the computing on board, and the AI model runs on the robot rather than in a data centre steering it remotely.

The car business has stopped growing

XPeng delivered 103,295 cars in the second quarter, almost exactly as many as a year earlier. Vehicle margin fell from 14.3% to 12.1%. Revenue rose 8% but came in below analyst expectations.

He Xiaopeng is turning the group into a physical AI company with three product lines: robotaxi, humanoid and flying car.

XPeng is not alone in this. BYD showed its first humanoids in its own showrooms in August, Changan is putting RMB 450 million into a robotics company, Chery has launched a robot brand called Mojia. Only Nio is staying out, founder William Li calls it a late-comer strategy and wants to sell cars first.

The reason for the rush sits in manufacturing. Motors, bearings, batteries and sensors for robots and cars come out of the same plants. He Xiaopeng puts the overlap among his suppliers at more than 85%.

That does not make it easy. A general-purpose humanoid is at least twenty times harder to build than a smart car, he said on the earnings call.

FROM THE TEAM

On Friday I stood in front of 60+ partners from audit and advisory firms across Asia in Guangzhou, at the MGI World Asia Regional Meeting.

The topic: how Asia is shaping the trends in culture, AI and robotics.

Understanding what happens here matters more every year. We live in the Asian century, and this region will drive a large part of what happens in the world economy in the decades ahead.

If you want these insights for your own company, get in touch.

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