Xpeng’s chairman and CEO, He Xiaopeng, has issued a stark warning to the Chinese auto industry, suggesting that a failure to innovate beyond traditional sales models could lead to a “smartphone-like predicament” of stagnating consumer demand. He tempered expectations for fully autonomous vehicles, projecting that Level 4 (L4) autonomy is unlikely to see rapid adoption in the next one to two years but will be achieved within the next decade.
"If the domestic market continues to sell cars under the old model, it will fall into a predicament similar to the smartphone industry, with declining consumer willingness to replace vehicles," He Xiaopeng said. He argued that the real leap forward will be the realization of L4 autonomous driving, which would allow users to avoid frequently touching the steering wheel across more than 90 percent of their mileage.
The CEO’s comments provide a dose of realism as a wave of Chinese electric-vehicle makers push toward higher levels of automation. While Xpeng is developing its technology to L4 standards, He estimated that it is more likely to be commercialized overseas before it is widely adopted in China. This aligns with a broader trend of Chinese EV brands like BYD, Chery, and Nio using international markets as a proving ground.
He’s vision for the future is directly tied to Xpeng’s latest product strategy. The company recently launched its new flagship SUV, the GX, priced from 279,800 yuan ($41,144). The GX serves as the foundational hardware for Xpeng's robotaxi, which is the first in China to be mass-produced entirely in-house, including both hardware and software. The vehicle relies on a "pure vision solution" powered by four proprietary Turing AI chips and the company's VLA 2.0 end-to-end AI model, eschewing more expensive LiDAR sensors used by many competitors.
The Road to Robotaxis
Xpeng's focus on vertical integration and a vision-based system is a direct challenge to rivals like Tesla and Geely. By leveraging its existing GX consumer platform, the company aims to reduce costs and accelerate the development of its autonomous ride-hailing fleet. The company plans to begin pilot operations in the second half of 2026, with a goal of achieving fully unsupervised operation without on-site safety drivers by early 2027.
This long-term bet on autonomy contrasts with the company’s current sales drivers. While the premium GX and future robotaxis represent the company's technological ambitions, Xpeng continues to rely heavily on lower-priced models for volume. The M03 sedan, sold under its affordable MONA sub-brand, started at 119,800 yuan and accounted for more than half of Xpeng's total sales in April, according to data from Dcar.
A Market in Transition
He Xiaopeng’s remarks highlight the strategic crossroads facing Chinese automakers. The domestic market is shifting from a fierce price war to a new phase of competition centered on premium features, brand perception, and advanced technology. Competitors are also moving upmarket, with BYD unveiling an upgraded Denza N9 SUV and Li Auto launching its L9 SUV, creating a crowded field for affluent buyers.
For investors, He's comments suggest a long-term strategy focused on achieving a significant technological moat in autonomy, even if near-term sales remain dependent on budget-friendly models. He believes breakthroughs in physical AI, particularly in robotics, will ultimately drive the implementation of autonomous driving. Xpeng's stock, which has seen significant short-selling interest representing over 28% of volume, may be affected as investors weigh this decade-long vision against more immediate market pressures and the company's dual-track strategy of pursuing both high-tech ventures and mass-market sales.
This article is for informational purposes only and does not constitute investment advice.
