BEIJING — Chinese electric-vehicle startup Xpeng has raised more than 1 trillion won in funding for its humanoid robot business, placing a bet on physical AI as a future growth engine amid a severe domestic slump and slowing EV growth in China.
Xpeng said on the 25th that its humanoid robot subsidiary, Dogotix, secured $900 million (about 1.25 trillion won) in its first round of outside equity investment. The round was led by IDG Capital, one of China's leading venture capital firms, with participation from Gaorong Capital and others, while Tencent and Alibaba joined as strategic investors. The investment values Dogotix at $6.3 billion (about 8.7 trillion won). Xpeng stressed that it was "the largest private equity investment on record in China's physical AI sector for a single funding round."
Xpeng is developing a humanoid robot called IRON as its flagship product. The company says the robot leads the industry with 76 degrees of freedom (DOF) across its whole body and 21 DOF in a single hand. When it was unveiled last year, its exceptionally fluid movements prompted doubts that a person in costume was posing as a robot, leading the company to peel back the robot's outer skin on the spot to prove it was a machine. The robot is also differentiated in intelligence by its Turing Chip, an in-house AI chip, with effective computing power reaching up to 2,250 TOPS (tera operations per second). Xpeng stressed that the robot "can autonomously perform complex tasks without remote control, while achieving low inference latency and data security."
Xpeng plans to invest the funds raised in software and hardware research and development, training and upgrading its physical AI models, collecting high-quality data, building mass-production bases across the value chain, and expanding global commercialization. The company also plans to begin mass production of IRON late this year. It will first launch commercial applications at its own stores and business complexes before formal release and delivery in Chinese and overseas markets next year. If mass production proceeds as planned by the end of this year, Xpeng's robot unit is expected to become the first Chinese automaker to enter large-scale mass production and delivery of humanoid robots.
Analysts see the investment as a positive sign that Xpeng is shifting its business focus from EVs to physical AI applications, including robots. Many Chinese EV makers face growing pressure on profitability from chronic weak domestic demand and rising component costs. At its second-quarter earnings announcement the previous day, Xpeng reported revenue of $2.9 billion and a loss of 10 cents per share. Although the loss was narrower than the market had expected (a projected loss of 20 cents per share), revenue fell short of forecasts, and its American depositary receipts (ADRs) listed on the U.S. stock market closed down 8.53% on the 24th local time.
In a report, Citi analyst Jeff Chung said Xpeng's launch of fundraising for its humanoid robots "demonstrates Xpeng's capability to transition from an automaker to a humanoid robot maker," adding that Xpeng can replicate the strengths it holds in AI chips and that the move is a long-term positive for the Xpeng group.
Still, growing concerns about a bubble in robot companies are a variable. According to the Shanghai Stock Exchange, Unitree, a leading Chinese robot company, closed at 603 yuan per share on the 24th, tumbling nearly 45% from its peak just four days after listing. Analysts note that because humanoid robot technology is still in its early stages, it is difficult to immediately deliver results matching the market's high expectations. In fact, Unitree's net profit excluding one-off items came to 244 million yuan in the first half of this year, down 19% from a year earlier. An official at a Beijing asset management firm told Reuters that "investors have been swept up in the story of a technological revolution," adding that "every bubble eventually bursts."
