EV maker Xpeng set to challenge Tesla in embodied AI after robotics unit raises US$900m

Chinese electric vehicle manufacturer Xpeng has secured $900 million in funding from prominent investors, such as Alibaba Group Holding and IDG Capital, to bolster its robotics unit. This substantial investment, which valued Dogotix, Xpeng's subsidiary, at $6.3 billion, represents the largest single private-equity deal involving a Chinese robotics company.

The additional capital will position Xpeng to compete with Tesla in the development and sale of humanoid robots, tapping into the global interest in embodied AI. Xpeng's co-founder and CEO, He Xiaopeng, expressed confidence that the company would not only become China's most valuable humanoid robotics firm but also a global leader in physical AI.

The fresh investment, totaling $600 million from backers including Alibaba and IDG, along with $200 million from Xpeng itself, will help Xpeng enhance its robot development and production capabilities, construct mass production facilities, and expand its presence overseas. The funds will primarily be used to further develop Xpeng's robotics technology, build mass production facilities, and reinforce its overseas expansion.

Xpeng aims to produce over 1,000 humanoid robots monthly by the end of 2026, with the initial batch of Iron robots set to begin commercial deliveries in 2027 as sales assistants at Xpeng's domestic showrooms. Tesla, in contrast, has yet to sell any of its Optimus humanoid robots, despite announcing a shift towards a physical AI-focused business model in January.