Like the rest of China’s auto industry, XPeng, one of the country’s largest EV manufacturers, has struggled with falling sales prices amid stiff domestic competition. In response, it is seeking to boost earnings by expanding into AI systems in hardware such as robots and cars, known as physical AI: Xpeng recorded its first ever quarterly profit in the fourth quarter of 2025, although 86 percent of its revenue over those three months was still from vehicle sales. One of its AI driving technologies already has its first customer: Germany’s Volkswagen, an XPeng partner since 2023, will adopt XPeng’s Vision-Language-Action smart driving software in the Chinese market. The company has a suite of other futuristic products in development including flying cars, robotaxis, humanoid robots, and its line of Turing AI chips to power autonomous driving and robots — already used in its own EVs.
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Savannah Billman is a Staff Writer for The Wire China based in NYC. She previously worked at the National Committee on U.S.-China Relations.
