Xpeng Motors shares rise after the company doubles down on physical AI

Xpeng Motors (NYSE: XPEV) shares are trading sharply higher in US premarket price action today after the Chinese electric vehicle (EV) company outlined an aggressive strategy for physical artificial intelligence (AI) at its 2025 AI Day event. Here are the key takeaways from that event.

Xpeng announced it will introduce three purpose-built Robotaxi models in 2026 and commence pilot operations in Chinese cities like Guangzhou. These vehicles represent a significant leap in its autonomous driving strategy and will utilize Xpeng’s full-stack, in-house developed AI system.

Xpeng Motors doubles down on physical AI

Each robotaxi will be equipped with four Turing AI chips (developed by Xpeng Motors), providing a massive combined computing power of up to 3,000 TOPS (Tera Operations Per Second), which the company claims is currently the highest standard for autonomous vehicles.

Crucially, the vehicles will rely on a pure vision solution powered by the new VLA 2.0 (Vision-Language-Action) large model, eschewing the need for LIDAR or high-definition maps. This approach is designed for global scalability and deployment across diverse traffic environments.

To ensure maximum safety for Level 4 (L4) autonomous driving, the vehicles will feature a dual-redundancy hardware architecture. The Robotaxis will come in five, six, and seven-seater variants, with the company aiming for cost-efficient production using the same mass-production lines as its passenger EVs.

Xpeng Motors says its autonomous driving software is better than Tesla’s

Notably, Xpeng Motors CEO He Xiaopeng said that its autonomous software requires less human intervention than Tesla’s full self-driving (FSD). He added, “Next month, I will go to the U.S. to compare [Xpeng’s latest system] to FSD again.”

Xpeng has announced it will open its proprietary, partly autonomous driving system to other car manufacturers globally. This pivot transforms Xpeng from solely a car seller into a technology platform, positioning it as a leading supplier of artificial intelligence for the future of mobility.

The significance of this announcement was immediately underscored by the revelation of Xpeng’s first major client: Volkswagen. The German automotive giant is set to integrate Xpeng’s advanced driver-assist technology into its upcoming electric vehicles for the Chinese market, starting in 2026. This collaboration extends an existing partnership between the two companies and marks the first time a major Western brand has licensed a full autonomous-driving system from a Chinese manufacturer.

Licensing the VLA system and its Turing AI chips opens up a lucrative business-to-business (B2B) revenue stream, diversifying the company’s income beyond just car sales. Partnering with an established global powerhouse like Volkswagen provides significant validation and credibility for Xpeng’s technology on the world stage.

Xpeng Motors is believed to have among the most advanced autonomous driving capabilities among Chinese EV companies. The company’s focus on its XNGP advanced driver-assistance system is gaining traction, achieving an 85% monthly active user penetration rate in urban driving.

Volkswagen has partnered with Xpeng Motors

In 2023, Volkswagen invested in Xpeng Motors, and as part of the agreement, XPEV will build two EVs on its platform. The deal was a milestone for the Chinese EV ecosystem as it reflected the confidence of Volkswagen in a startup EV company. It was also a testimony to Xpeng Motor’s self-driving capabilities, which the company intends to build upon further. The two companies have since expanded their partnership and, among others, are building a charging network in China.

Autonomous driving

The autonomous driving race requires massive investment in AI training, data collection, and computing infrastructure. By licensing the system, Xpeng can share the operational burden and costs of its massive 30,000-GPU supercomputer used for AI training, ensuring its technology remains competitive and financially viable.

Xpeng Motors also unveiled the latest generation of its humanoid robot, IRON, with a clear goal of large-scale commercialization. The robot boasts a highly articulated, human-like body with 82 degrees of freedom and hands featuring 22 degrees of freedom, allowing for natural, fluid movement.

It is powered by three Turing AI chips (delivering 2,250 TOPS) and the VLA 2.0 system, enabling real-time conversation, interaction, and complex physical tasks.

XPEV to begin mass production of humanoids in 2026

Xpeng aims to begin mass production by the end of 2026. Initial deployment will focus on commercial applications within its own operations, such as guiding customers, and industrial roles like facility inspection.

Xpeng Motors’ deliveries have been strong

Meanwhile, Xpeng Motors’ core automotive business continues to do well, and it delivered an all-time high of 42,013 EVs in October. This monumental result represents a massive 76% increase year-over-year and marks the second consecutive month that the company’s deliveries have surpassed the 40,000-unit milestone.

In the first ten months of 2025, Xpeng Motors delivered 355,209 EVs, which is 190% higher than the corresponding period last year. Its cumulative deliveries stood at 945,610 at the end of October, and looking at the sales momentum, the company appears on track to reach 1 million units in cumulative sales by the end of this year.

Xpeng’s continued strong performance, driven by models like the MONA M03 and its popular SUV family (G6/G7/G9), highlights its accelerating growth trajectory. The company is pushing its global expansion and has entered several new markets in 2025.

XPEV to bring Mona products to Europe in 2026

Xpeng has publicly confirmed plans to launch a variety of MONA products in Europe in 2026. This is a key battleground for Chinese automakers, and the company is preparing for a major push into the region.

The European automotive landscape, long dominated by established local manufacturers, is undergoing a seismic shift as Chinese electric vehicle (EV) companies aggressively expand their presence. Offering a potent combination of competitive pricing, advanced technology, and rapid product cycles, these new entrants are posing a formidable challenge to European legacy automakers and even American pioneers like Tesla.

Chinese EV companies are gaining market share in Europe

Sales of Chinese-made Battery Electric Vehicles (BEVs) have seen rapid growth, with their market share increasing significantly in recent years. Chinese brands now collectively outsell some major European manufacturers like Audi and Renault in overall car sales in Europe

While BYD is leading the charge, outselling Tesla in Europe in recent months, NIO and Xpeng Motors have also received a good response in the region despite the tariffs that the EU has imposed on EV imports from China.