XPeng Co-President: Physical AI, Flying Cars and Humanoid Robots | Podcast | In Good Company

Well, I think we are leading in a few areas. I think in electrification, Chinese players obviously have the advantage of having strong battery technology capacity and cost advantages in the automotive side because China is the largest automotive market in the world. But what's really driving the competitiveness in China is also the fast evolution of technology.

Thank you, Nicolai. Very happy to be on the podcast.

Well, I would say XPeng, first of all, is a technology company. But as we now dive into the depths of all things physical AI, I think we consider ourselves really kind of at the forefront of this physical AI movement. We are building EVs, as you mentioned. It's one of the leading brands in China as well as globally. But increasingly, we have broadened our product scope to be including more areas and directions, including robots, flying cars, and other modalities as well, but using the same core.

Well, that actually is what we have done differently over the years. Even when we were a very, very small startup, let's say about nine years ago when I first joined XPeng, at that time, I think everyone was looking at starting an EV company. So the big pitch was electrified energy transition for automobiles. But even then, we told investors as well as our partners that we believe the long-term differentiation is not with electrification only; it's actually in the intelligence. And that's why, for us, we have consistently focused on building a full-stack approach in the intelligence areas that includes hardware, software, and now increasingly moving into the era of AI.

Well, first of all, when you get into a car, you have to really understand whether the car can understand you. There's obviously various degrees of understanding. First of all, it has to understand you personally: your behavior, your preferences, where you want to go to, the way you interact with the car so you feel at ease. So that's the first thing you actually understand. The second thing is when the car starts moving. I think an intelligent car can handle a lot of these driving conditions on its own. Obviously, I'm not talking about Level 4 yet, but even at the Level 2+ regime, you can feel the difference. The more intelligent, the better-trained models will handle the roads smoothly, handle very tricky situations very nicely without causing any concerns or anxiety. So all of that actually translates into the intelligence aspect of it. And ultimately, I think it's how do you unify the experiences. So what we are working on right now is to unify the autonomous driving intelligence and the smart cabin intelligence and merge them. I was actually just in the car this morning. We are going to launch our latest intelligent driving, the VLA 2.0 editions. One of the features is actually using the smart cockpit interaction to command driving: saying, "I want to pull over a little bit," the car knows what to do; "I want to actually make a quick stop," they can actually do that for you along the planning as well as delivering you there. So all of that, combined together, will deliver an intelligent mobility experience.

Well, I think with advancement in technology, I would say the Level 4 capability will just be a matter of time. It's going to happen. It's going to happen in our lifetimes. It's going to happen in a lot of ubiquitous scenarios that you encounter. If that capability becomes everywhere, then you can imagine the current way of life, current mobility experience will be completely transformed. You are not limited to a certain location. You're not limited to spending time planning your time to handle the driving. The driving is part of your daily work or daily entertainment, part of your mobility time spent. So I would say it will change people's time allocation. It will change industries like real estate, change industries like communications, and also change pretty much everything it can actually handle inside a vehicle.

Yeah, Level 4 is fully autonomous without human intervention—for example, without the steering wheel, yes.

I would say the range with the current chemistry will last for quite some time before we get to maybe solid-state. I would say that's more than five years away to be commercially feasible. So with the current chemistry, I would say the range will stay similar to what we see today, let's say between 500 to 1,000 kilometers, given the size of battery obviously. But the charging time and charging experience will change dramatically. Obviously, you saw the super-fast charging become very, very popular in China already, and it's spreading around the world. The charging time and charging speed will allow people's downtime to be very similar to a gas station stop. For example, it used to take half an hour to an hour of charging time; now it's maybe 5 to 10 minutes. So that, I would say, also changes people's mobility behavior. With charging as well as the efficiency, I would say you don't need a large battery. You don't need a car that has 2,000 to 5,000 kilometers of range; that just adds to the cost and weight of the vehicle. But I think it definitely addresses a lot of people's range anxieties already with availability of network and the charging speed improvements.

I think 1,000 kilometers is our outside sort of limit. Anything more than that is waste, in my mind.

Well, we don't make our battery cells, so we actually source from very high-quality suppliers. There's actually a couple other names, large battery companies in China we work with, not CATL. But we do design our own battery technology utilizing those cells—for example, the battery management system, the packaging technology, really the electric platform that makes our vehicle more efficient, higher, and faster charging. So those technologies we actually do ourselves.

This past month, Chinese new energy penetration exceeded 60%, maybe even close to 65%. That's a staggering number, which means that we have more EVs sold in China than ICE today. So this is actually the first time the battery electric vehicle crossed the ICE. And obviously adding on the plug-in hybrid, the new energy segment is now more than 60% of the new car sales, which means actually the EV or new energy vehicle is actually a mainstream product. A few years ago, people always saw EV as a niche product, right? Only a small portion of people bought EVs compared to the majority of people still going for the ICE. But today, because EVs and hybrids have become mainstream, all the rules are different now. For example, we're now getting rid of all the subsidies because you don't need to subsidize the mainstream product; you don't need to encourage the use of them anymore. People are naturally buying them. At the same time, you start to see gas stations disappearing, replaced by charging stations. You start to see people actually utilizing electrified vehicles, EVs and hybrids, because they have a battery, they have computing power. A lot of those intelligence features become more and more prevalent. So that actually leads to a whole new trend, not just because of energy, but also intelligence and other behaviors.

Absolutely. I think the China new energy vehicle market, which includes the EV market, is probably the most competitive segment or industry in the world. We have a lot of very, very high-quality players competing with each other. I would say China is probably the fittest gym in the world for the automotive industry. Whoever can actually survive this gym, I think, has a good chance of really becoming leading players globally.

Well, I think we have a decent chance, but also there's a very, very uphill battle for everybody because, like I said, one is it's very competitive; two, it actually requires a lot more to compete than in the past. I think in the past, an automotive company could focus on their segments. They used a lot of Tier 1 suppliers, Tier 2 suppliers. They actually sourced technology from outside. But today, given the development of this physical AI, cars become more and more like robots, right? Not only is it electrified, but also because it has the intelligence I mentioned, because they have autonomous driving capabilities that need to demonstrate. In order to build a very competitive product, you need to be good at automotive engineering, but also at AI and software. You also need to be good at understanding the new electric powertrain, and at the same time, you need to also make sure you deliver the best services as required for building the brands. So having all these capabilities is making the competition at a different level compared to before. So the people who can survive and win the race will have to be the people who have full-stack technology, but also have scale and global reach in order to be competing.

Well, I think we are leading in a few areas. In electrification, Chinese players obviously have the advantage of having strong battery technology capacity and cost advantages in the automotive side because China is the largest automotive market in the world. I think it's actually just a matter of time when China produces a local champion just like what Japan has produced or Germany has produced in the past. So in that regard, I think China is leading in these segments. But what's really driving the competitiveness in China is also the fast evolution of technology. China is a market where consumers really embrace new technologies, so the speed of change and the customer adoption of new technologies is faster in China than in other parts of the world. With this kind of background, coupled also with the manufacturing advantages in supply chain, manufacturing efficiencies, etc., I think China does possess a lead in some of those key areas in EV development. At the same time, I think Chinese players also have to learn a lot from global players. First of all, Chinese players are still not used to being a leader in a multinational world, because that's an area where Chinese players still need to learn how to behave as a company that can be a leader in multiple continents, multiple regions, building a brand that people trust, building a service that people rely on, and also building local relationships that allow you to stay for the long run. All of that takes a long time to invest. So those are things we should learn from multinational leaders in Europe as well as in the US.

We started our journey, as you pointed out, in Norway about six years ago when we launched the first store in Norway at the end of 2020. It's been a very interesting and very educational process. We went through a lot of changes in our business model internationally. We entered Europe as a whole. We also entered into other regions in Southeast Asia, Middle East, Australia, and also Latin America now. So we are selling in over 70 countries at the moment. But I would say the biggest challenge is making sure that we really adjust our models to becoming a locally accepted brand and product. Chinese brands in the past have been viewed as lacking quality or having brand recognition issues. So for us, not only are we entering these countries, but we also have to build the local capabilities and brand that supports our growth. Another challenge for us is how to differentiate from the dozen other brands that currently also are trying to go global out of China. So those are things top of our mind at the moment.

I would say we're looking at a number of dimensions when we see ourselves competing with global peers. On the technology front, as a young company, I think we're probably more nimble than a lot of the global players. We make decisions quicker. We can also make technology innovations faster. So that's one of the reasons that some of the global peers are working with us, such as Volkswagen. At the same time, we are really understanding how global multinationals operate. That's something we're learning from the bigger players—from German OEMs as well as American and Japanese OEMs—how they can actually sustain many generations of product development and cultivate local recognition and brand loyalty. That is something we're learning from them as well. At the same time, given the development in EV and the technology in intelligence, there's also a thesis that you will see more and more collaboration between Chinese players and international players, such as the ones that you saw between Volkswagen and XPeng and some other examples. There is a very strong complementarity that we bring to the table. We're bringing faster innovation, consumer understandings from the Chinese market, and being able to deploy at a faster pace. Coupled with international players like Volkswagen that can help us achieve scale and make sure we can monetize some of those investments in much wider segments, those benefits coming together could encourage more collaborations down the road.

Well, I think the Chinese speed appeared because multiple factors are driving it. The first factor is that China has proven to be a very, very strong player in the software, internet, and consumer electronics area. Those expertises allow the Chinese development team on the R&D side, working with automotive engineers, to really think creatively how we can utilize those learnings and make cars smarter and more consumer-friendly. On the other side, you have the market forces, as I mentioned. There's a lot more competition in China that forces you to be more innovative, to push you to really be faster in turning some of these technology developments into actual products and features. The third piece is the consumer adoption rate is much faster. In China, people are willing to embrace new technology. You saw that in internet, in mobile internet, in mobile payment. All of that points to the same thing. So those three forces together, as well as the supply chain and manufacturing advantage I mentioned, make Chinese innovation much faster.

I think there are two ways to look at it. One is vehicle development cycles: I think we probably shortened from maybe three to five years to about two years. So there's definitely a shortening of vehicle development. The other one is how quickly you launch new features. Every OTA, we add features to our products, so that product cycle is much faster than the traditional automotive product cycle because now you have the software and OTA feature adding to that.

First of all, the DNA of the company is different. I always say that even though XPeng is obviously an automotive company, the core DNA is tech. The founders came from both the automotive world as well as the software internet world, and now increasingly with AI capabilities. So the DNA at the top really drives the way we think about product and development. The second answer is that we're small, we're young. We don't have department walls. We don't have processes that have been in place for decades, which makes it very difficult to change. We also don't have stakeholders we need to maneuver to make those changes happen. For some of the global players, you make a decision in their headquarters, and when the decision reaches China or reaches their end market, it's already maybe a year later. So that speed is not able to match the speed we see on the ground in China.

Well, I would say our team probably works very hard. It's both the China work ethic and speed of innovation, but at the same time, we have a sense of entrepreneurship because the company is only 12 years old. The management team and the team here still have that spirit I experienced when I first got here. We still keep that entrepreneurial spirit. So those two characters really drive the work ethic and teamwork much, much harder.