First quarterly turnaround from loss to profit! Has XPeng reached a turning point?
小鵬汽車2025Q4及全年業績直播
Key Takeaways (AI-Generated)
Financial Performance
- Q4 2025 total revenues reached 22.25 billion RMB, up 38.2% year-over-year and 9.2% quarter-over-quarter
- Achieved first-ever quarterly profit with net profit exceeding 380 million RMB in Q4 2025
- Annual delivery reached 429,445 units, up 126% year-over-year
- Gross margin improved to 21.3% in Q4 2025 vs 14.4% in Q4 2024
Business Highlights
- M03 became best-selling battery electric sedan in 100,000-150,000 RMB segment; P7 Plus ranked #1 in 150,000-200,000 RMB segment
- Successfully brought Turing AI SoC into mass production with over 200,000 units shipped since Q3
- Launched VLA 2.0 autonomous driving system, beginning gradual rollout to users
- Overseas deliveries nearly doubled to 45,000 units, contributing over 15% of total revenue
Financial Guidance
- Q1 2026 deliveries expected between 61,000-66,000 units with revenue between 12.2-13.28 billion RMB
- Physical AI related R&D investment to increase to 7 billion RMB in 2026
- Overseas deliveries goal to double in 2026 with international business contributing over 20% of revenue
- Plan to launch 4 new models in 2026 for global markets
Opportunities
- VLA 2.0 autonomous driving technology representing generational leap in capabilities
- Humanoid robot Iron targeted for mass production by end of 2026 for commercial, industrial, household applications
- Strategic partnership with Volkswagen as first external customer for Turing SoC and VLA 2.0
- Expanding to 10 key international markets with self-operated ultrafast charging network
Full Transcript (AI-Generated)
Operator
Ladies and gentlemen, thank you for standing by for the fourth Quarter and fiscal Year 2025 Earnings Conference Call for Xpeng Inc. At this time, all participants are in a listen only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded.
I will now turn the call over to your host, Mr. Alex Shee, Head of Investor Relations and Capital Markets of the company. Please go ahead, Alex.
Alex Shee
Thank you. Hello, everyone, and welcome to Xpeng's fourth quarter fiscal year 25 earnings conference call. Our financial and operating results were issued by our services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at IR.xpeng.com.
Participants on today's call from our management team will include Co-founder, Chairman and CEO, Mr. He Xiaopeng, Vice Chairman and President, Doctor Brian Gu, Vice President, Mr. Charles Zhang, Vice President of Finance and Accounting, Mr. James Wu and myself.
Management will begin with prepared remarks and the call will conclude with Q&A session. A webcast replay of this conference call will be available in the IR section of our website.
Before we continue, please note that this discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the Company's results may be different from the views expressed today.
Further information regarding these and other risks and uncertainties is included in the relevant public filings of the Company as filed with the US Securities and Exchange Commission. The Company does not assume any obligation to update any forward-looking statements except as required under applicable law.
Please also note that Xpeng's earnings press release and this conference call include the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Xpeng's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures.
I will now turn the call over to our Co-Founder, Chairman and CEO, Mr. He Xiaopeng. Please go ahead.
He Xiaopeng
Hello everyone, reflecting on 2025, Xpeng delivered a series of milestone breakthroughs across multiple fronts. Our annual delivery reached 429,445 units, up 126% year over year. M03 became the best selling battery electric sedan in the 100,000 to 150,000 RMB segments. P7 Plus ranked number one among pure electric sedans in the 150,000 to 200,000 segments.
The Kunpeng super extended range EV X9 entered mass production and started our one vehicle dual energy era. Our quality management system and customer satisfaction as measured by NPS improved rapidly. Overseas deliveries nearly doubled to 45,000 units with revenue from overseas markets contributing over 15% of total revenue.
In addition, benefiting from enhanced organizational capabilities centered on physical AI, we successfully brought our Turing AI SoC into mass production and began deliveries to Volkswagen. Our VLA 2.0 saw an emergence and the debut of our humanoid robot Iron got significant attention globally.
In 2025, we achieved not only high growth in scale, but also significant improvement of operational capabilities. Our gross margin for fiscal year 2025 reached 18.9%, an increase of 4.6 percentage points year over year. In response to national initiative, we substantially reduced the turnover days of accounts payable to suppliers by 50 days.
We had a free cash flow inflow of approximately 5 billion RMB in 2025 and ended the year with 47.7 billion RMB cash on hand, providing robust financial support for unwavering investment in physical AI R&D. In Q4, Xpeng achieved its first ever quarterly profit with net profit exceeding 380 million RMB. This marks a new business model driven by technology leadership, which is a path to profitability distinct from that of traditional automakers.
I'm particularly glad to see that with years of hardware investment and physical AI transformation, Xpeng is at a pivotal inflection point in the application of physical AI. After years of sustained and significant R&D investment, we have built a full stack in-house developed technology system including SoC, foundational model, data, EE architecture and AI infrastructure.
We're now driving upward integration across autonomous driving and smart cockpit systems while enabling cross-domain integration downward into powertrain and chassis systems. Looking ahead, we'll continue to push the technological frontier, accelerate the development of AI and deployment and commercialization of our product technology innovations.
In early March 2026, VLA 2.0 successfully passed the physical Turing test for autonomous driving. When a passenger can hardly distinguish if it's a human or AI who's driving the car, the vehicle has effectively evolved into a physical AI agent. Xpeng's VLA 2.0 will soon cross the inflection point of both technology and large scale deployment. Fully autonomous driving can be expected to come in the next one to three years. AI powered vehicles and humanoid robots will soon fundamentally reshape how everyone travels, works and lives.
I believe this year is a major year of product portfolio expansion and upgrade in our product capabilities. We plan to launch 4 new models expanding into both large and compact sized vehicles designed by our newly restructured design team. These models are crafted for global markets and built on dual energy platforms supporting the evolution of autonomous driving capabilities from L2 plus to L4. As deliveries of new models ramp up, I'm confident we will achieve strong quarter over quarter growth in volume.
In Q2 2026, we'll start pre-orders of our flagship 6-seat full size SUV, the Xpeng GX, bringing a truly uncompromised, best in class experience to family users. The GX delivers MPV class comfort and spaciousness and features steer-by-wire and rear wheel steering. It will be our first model designed to support L4 level hardware and software capabilities.
Starting from this year, we'll further expand our AI vehicles global market share and bring our VLA 2.0 to global markets. At the same time, I will lead teams to bring both Robotaxi and advanced humanoid robots into mass production.
With global product supply increasing in 2026, we'll further solidify our global capabilities across production, supply, sales and service. Our supply chain, manufacturing, logistics, spare parts, sales and service systems are moving towards greater global synergies, underpinning sustained improvement in quality and brand perception in international markets.
For our overseas deliveries, the goal is set to double in 2026 year over year with international business contributing over 20% of total revenue. We plan to introduce 4 new models to the global market. In the key SUV segment, we aim to launch more global flagship models. We target to have 680 overseas stores for sales and service, doubling the number of stores from the end of 2025.
Xpeng's self-operated ultrafast charging network will also expand beyond China to 10 key international markets. This will bring our industry leading 5C ultrafast charging experience to users globally. With enhanced overseas competencies, our global expansion will further accelerate significantly through 2027 and 2028 and revenue from overseas markets will become one of the core drivers of the company's profitability.
To make the leap from L2 plus to L4 and enable global deployment, we have fundamentally redesigned the architecture of our autonomous driving technology. Starting yesterday, we began the gradual rollout of our VLA 2.0 to users. This is our first release designed for the L4 Full Autonomous driving era, delivering a safe and smooth experience with driving performance comparable to experienced human drivers and representing a generational gap ahead of the industry.
The VLA 2.0 is transforming advanced autonomous driving from an early adopter feature into a truly mainstream mass market capability that even everyday drivers can trust, rely on and enjoy with confidence. All of our 732 stores nationwide now offer VLA 2.0 test drives. So far in March, the number of our daily test drives has doubled month over month and the percentage of the Ultra and Ultra SE trims among all trims has also more than doubled. Over the next three to six months, VLA 2.0 will notably improve test drive conversion rate and substantially increase user engagement and retention for Xpeng.
The VLA 2.0 has broken down traditional rules and validated the applicability of scaling laws in the physical world. Next, we'll continue to scale up to aggressively widen our lead. By the end of the year, we target to increase the number of parameters on the edge from several billion to 20 billion level. This will increase average miles per takeover by 25 times and the safety critical miles per takeover by 50 times. At this pace of improvement, the era of fully autonomous driving is on track to emerge within the next one to three years. Autonomous driving will become part of everyday mobility.
Our GX robotaxi powered by VLA 2.0 has received official road testing approval in Guangzhou and is now conducting ongoing L4 public road tests. In the second half of the year, we plan to launch pilot passenger operations for our Robotaxi service to validate the technology, user experience and the business model. We'll also begin overseas road testing of the VLA 2.0. As technology advances and regulatory frameworks evolve, Xpeng will be one of the few companies globally that is capable of scaling autonomous driving efficiently across multiple global markets.
The strong performance of our VLA 2.0 is underpinned by the joint optimization of our in-house Turing SoC with our foundational large model and compiler delivering a 10 times improvement in effective compute, even though the plan was only to achieve 3 times improvement. Since entering mass production and being deployed in vehicles in Q3 last year, the Xpeng Turing SoC has actually shipped over 200,000 units.
Starting from the second quarter of this year, all Xpeng models including the Max trims will transition to our in-house Turing SoC. Shipments of Turing SoC are targeted to reach nearly 1 million units this year. Turing SoC is positioned to become the leading high-compute AI SoC deployed on the edge by shipment volume.
Volkswagen is our first external customer for both our Turing SoC and VLA 2.0. Our deep collaboration with leading global automakers, together with our ability to mass produce efficiently, demonstrates that our technology is scalable, replicable and globally competitive. We welcome more automakers, AI companies and Tier 1 suppliers to adopt our Turing SoC and integrated intelligent solutions for their customers.
In my view, the ultimate competition in physical AI will be determined by fundamental organizational capabilities and AI infrastructure. Recently, we completed a critical organizational upgrade, integrating our autonomous driving center and smart cockpit center into general intelligence center. This is more than a structural change, it represents a paradigm shift in building intelligent systems.
Driving decisions and human-vehicle interactions will no longer exist in isolation. How the vehicle drives on road and how humans interact with it now share the same physical AI foundation model and infrastructure. R&D efficiency and effectiveness have improved substantially. Xpeng has established a fully integrated AI infrastructure stack, including computing power on the cloud and on the edge, data compilation, quantization, deployment, simulation, and real world testing in grayscale.
Our physical AI foundation model will evolve at an exponential speed. It will power vehicles, robotaxis, and humanoid robots and become a unified super foundation model for all of our physical AI agents.
Our next generation humanoid robot, Iron is targeted to enter mass production by the end of 2026. Powered by three Turing AI SoCs, Iron's computing power on the edge far outpaces most robots in the industry. Our technology focuses on the robot's brain and cerebellum. The brain enables independent thinking and decision making, while the cerebellum controls motions. At the same time, we continuously accumulate data for intelligence model.
Our VLA 2.0 technology stack is now running successfully on our robot. Paired with the 4th generation motion control system, Iron will deliver industry leading agility and motion control in the second half of the year, establishing a clear generational lead in intelligence capability.
Our Iron will focus on three key application scenarios: commercial, industrial and households. Initial deployment will support reception, guidance and retail assistance across Xpeng stores and facilities in China and overseas. In the first quarter of the year, we began construction of our humanoid robots mass production base in Guangzhou. Iron aims for a monthly production target of over 1,000 units by the end of this year.
Leveraging our advanced intelligence and our strength in mass production with quality and supply chain management, Xpeng will become one of the world's largest and most valuable humanoid robot companies.
Because we already saw the tremendous disruption that the physical AI world has brought to the original software development paradigm, in 2025 we invested 9.5 billion RMB in R&D, including 4.5 billion in AI. Sustained and efficient investment in AI R&D over the past few years has enabled us to build an industry leading fully in-house physical AI technology stack including SoC, foundation models and AI infrastructure.
Powered by this technology stack, the pace of advancement in physical AI will accelerate significantly starting 2026. We'll see the mass production and application of physical AI agents with their scale poised to enter a steep growth curve. Over the next 5 to 10 years, the market for physical AI is expected to surpass that of the automotive industry. Robotaxi and humanoid robots represent trillion to 10 trillion level global market opportunities.
In the future, the sales rankings of physical AI agents may matter even more than the ICE vehicle volume charts a decade ago or any EV volume charts today. They will change very, very fast. We're confident that Xpeng will become the global leader of physical AI agents.
Pushing the boundaries of physical AI is very exciting for my team and me. We're more committed than ever to intensify our R&D investments. This year in addition to vehicle development, investments in physical AI related R&D will increase to 7 billion RMB. In my view, this investment will not only help us increase our competitive advantage and deliver substantial long term returns. Scale allows us to survive in competition, but it is sustained leadership in physical AI technology and commercialization that will define our core competitive advantage.
For the first quarter of 2026, we expect deliveries to be between 61,000 and 66,000 units. Revenue is expected to be between 12.2 billion and 13.28 billion RMB. March deliveries are expected to grow sequentially by 69% to 101% month over month. As the VLA 2.0 and four new models enter mass production, we expect quarterly volumes to continuously trend upward and achieve year over year growth in the second half of the year to significantly outpace the industry.
We are on the cusp of large scale mass production of physical AI agents. Going forward, I will dedicate more of my efforts to develop strategies, establishing organization and operational capabilities for Xpeng's globalization and commercialization with a focus on transforming our technological leadership into commercial success.
The innovative business models of physical AI will add network effect and agent effect on top of the traditional automotive economies of scale, meaningfully raising market entry barriers and industry concentration. As a leader in physical AI, we will possess a long term sustainable advantage, securing a higher share in a vastly expanded market and achieving greater corporate value.
Thank you everyone. With that, I'll now turn the call over to our VP of Finance, Charles Zhang, who will walk you through our financial performance for the fourth quarter of 2025.
Charles Zhang
Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the fourth quarter of 2025. I will reference RMB only in my discussion today, unless otherwise stated.
Our total revenues were 22.25 billion for the fourth quarter of 2025, an increase of 38.2% year over year and an increase of 9.2% quarter over quarter. Revenues from vehicle sales were 19.07 billion for the fourth quarter of 2025, an increase of 30% year over year and an increase of 5.6% quarter over quarter. The year over year and quarter over quarter increases were mainly attributable to higher deliveries.
Revenues from services and others were 3.18 billion for the fourth quarter of 2025, representing an increase of 121.9% year over year and an increase of 36.7% quarter over quarter. The year over year and quarter over quarter increases were primarily attributable to the increased revenues from firstly, the technical R&D services rendered to the Volkswagen Group due to the successful achievement of certain key milestones in the current quarter. Secondly, parts and accessory sales in line with higher accumulated vehicle sales and lastly, carbon credit trading.
Gross margin was 21.3% for the fourth quarter of 2025 compared with 14.4% for the same period of 2024 and 20.1% for the third quarter of 2025. Vehicle margin was 13% for the fourth quarter of 2025 compared with 10% for the same period of 2024 and 13.1% for the third quarter of 2025. The year over year increase was primarily attributable to the ongoing cost reduction and improvements in product mix of models.
R&D expenses were 2.87 billion for the fourth quarter of 2025, representing an increase of 43.2% year over year and an increase of 18.3% quarter over quarter. The year over year and quarter over quarter increases were mainly due to higher expenses related to development of new vehicle models and technologies as the company expanded its product portfolio to support the future growth.
SG&A expenses were 2.79 billion for the fourth quarter of 2025, representing an increase of 22.7% year over year and an increase of 12% quarter over quarter. The year over year and quarter over quarter increases were primarily due to higher commission to the franchise stores related to the sales volume and the launch of new models. The year over year increase was further due to higher marketing and advertising expenses.
Loss from operations was 0.04 billion for the fourth quarter of 2025 compared with 1.56 billion year over year and 0.75 billion quarter over quarter. Net profit was 0.38 billion for the fourth quarter of 2025 compared with net loss of 1.33 billion year over year and net loss of 0.38 billion quarter over quarter. The company recorded positive net profit for a single quarter for the first time in Q4 of 2025.
As of December 31st, 2025, our cash position was 47.66 billion. To be mindful of the length of the earnings call, I would encourage listeners to refer to our press release for more details on our fourth quarter and full year 2025 financial results.
This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead.
Operator
Thank you. If you would like to ask a question, please press *1 on your telephone and wait for your name to be announced. If you would like to cancel your request, please press *2. If you are on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, if you would like to ask your question to management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond and then feel free to follow up with your next question.
Your first question today comes from Tim Xiao from Morgan Stanley. Please go ahead.
Tim Xiao
I have two questions that both are related to smart driving. The first one, what type of major upgrade should we expect for Xpeng's VLA 2.0 in the coming months? How do you anticipate VLA 2.0 will impact order conversion and the user retention in the following quarters? That's my first question.
He Xiaopeng
Let me answer your first question first. So basically going forward, each quarter we are expecting at least one major version of OTA and I think we can share some of it just to give you some examples. In our Q2 OTA, for example, the autonomous driving will be able to actually cover more roads, whereas currently or traditionally it was only able to cover the major highways and in the future for Q2 OTA will be able to cover small roads, parking lots and campuses or communities in different parks.
It's actually a very critical change meaning that our capability is evolving from navigation enabled public roads to cover more areas. In addition to that, we would like to also highlight that autonomous driving in the future will also become more AI agent oriented. Actually if you looked at all of the scenarios of application for robot systems, essentially very similar to that. Also the levels of autonomous driving and navigation also follow the same logic as well.
This year we also expect to do a lot more upgrades in terms of our capabilities. For example, if you look at our model on the vehicle or the edge size, we are increasing the parameters from billion level to actually up to 20 billion level. We also hope that we can increase our mileage per takeover by about 5 to 10 times. In addition to that, apart from autonomous capability driving upgrade, we also have added some multi language support capabilities as well. So that's another level of upgrade for localization support, which will allow us to combine smart cockpit with autonomous driving. Thank you.
Now because our VLA 2.0 only started to be officially pushed to our users yesterday, as I mentioned in the prepared remarks that we started promoting it in early March and as a result we could actually see that the market reacted very, very positively. For example, our test drives actually more than doubled sequentially across our stores and also Ultra and Ultra S1 sales also more than doubled as well.
And I believe when we fully launch our VLA 2.0 to the market and to our users and continue to upgrade it, we are expecting actually higher sales volume and also higher level of conversion rate, which will also eventually raise the average selling price of our vehicles.
Now when it comes to user retention or engagement, I would like to share my own case and experience as well. After trying out the VLA 2.0, there's no going back for me honestly because I travel a lot and a lot of the times I actually rely on professional drivers who drive me around. And after trying VLA 2.0, I realize when I now use other types of autonomous driving or when I ride with professional drivers cars, they are not really as good as the VLA 2.0 because the VLA 2.0 now gives me the smoothness of driving and also on top of that peace of mind as well. That kind of experience that I've got offered is unparalleled and it's what, only 2-3 months and I'm no longer the same person. I mean, there's no going back really.
So I believe that in the future advanced autonomous driving will definitely be part of everyone's daily necessity. User rate potentially will reach basically 100%. And I feel this very, very strongly. And recently my professional drivers have been asking a couple of times that from my perspective, when will our profession, you know, he was talking about being a professional driver, be eventually phased out.
I'd like to just add one last point, which is that this is really representing a completely new paradigm, which from my perspective that's our current priority is to really address a lot of safety issues and many of our weaknesses first. However, since the launch of our second generation VLA, the rules have completely changed. It's never the same again. So I believe that we're making up our weaknesses or the weaknesses being compensated for now, we can actually spend a great deal of our time on enhancing our overall strength and deployment globally. Thank you.
Tim Xiao
My second question is also related to smart driving. So what is the deployment roadmap for Xpeng Ultra model and VLA 2.0 in the overseas market? And how will the overseas expansion of smart driving affect Xpeng's global sales? And does the smart driving software have the potential to be monetized alone? That's my second question. Thank you.
He Xiaopeng
Thank you. Let me briefly address this question. First of all, we have already launched the preparation for testing our VLA 2.0. So by end of this year or beginning of next year, we are going to gradually roll out the VLA second generation testing grayscale and also its delivery or deployment across different regions.
And I believe that VLA 2.0 has a significant advantage overseas. First of all, we found that it's actually very generalizable in our testing across multiple markets, we realized that even without any overseas actual local data, our VLA alone performs really well and achieves excellent results.
The second point is that compared to some of our competition, for example FSD out there, our VLA has a particular advantage over them in the capabilities across smaller roads and also country roads or unstructured territories and we've tested, we've seen that in some overseas markets such as Southeast Asia and Europe, so that made me again having a stronger conviction that our VLA 2.0 can actually provide high quality, safe autonomous driving for our users overseas at a higher quality and also lower cost.
So with that, we now have done all the preparation in the hardware and so by second half of this year, we definitely are ready for a bigger test and also for the future launch as well. And I believe that we are also considering some business model upgrade or transition for our smart driving software in the overseas market and I believe there's definitely a lot of opportunities for commercial or monetization and we have strong confidence in converting our great technology into good business opportunities and revenue. Thank you.
Operator
Your next question comes from Nikolay from JP Morgan. Please go ahead.
Nikolay
My first question is really related to humanoid robot ambition and the long term strategy. First of all, you mentioned that in the near term we'll see the launch at Beijing Auto Show followed by mass production by year end. Aside from that, is there any major milestone that investors should be mindful in the next say one or two years? And in addition to that, when we expand our footprint from a smart vehicle to humanoid robot, anything we can leverage regarding R&D, production and supply chain? Thank you.
He Xiaopeng
First of all, thank you for your question. And I would like to clarify something. We didn't mention April, but very much in the second half of this year, just want to clarify that from your question. And again, what you ask is very, very big and I'll try to address it.
First of all, last year, a lot of supply chain partners and also a lot of companies ask us the same question about robots supply chain or humanoid robot supply chain and whether or not it should be car grade. We believe that car grade is the minimum requirement because obviously cars typically have one engine, and if the engine breaks down it already causes A class accidents and when you look at humanoid robots they have at least 70 to 80 joints. And any kind of damage to those joints will cause information loss or signal loss and it will cause very, very serious accidents and will compromise our safety.
And so we need to look at humanoid robots from at least a car grade level standards and since beginning of last year we already started the development for our humanoid robots using car grade standards as well in preparation for its manufacture.
So overall, you can see that Xpeng is a very unique robotic company because we are adopting the same kind of high level rigorous standards of developing a vehicle in developing our humanoid robots and you can actually see that we have a lot of in-house development covering not only the joints, but also the torso and other parts of the body from the SoC to the foundational model, from data to all the training of the brain and cerebellum, etc. And they are very unique in that sense.
I believe that we are actually using a very, very challenging way or a very new methodology, which can be 10 times harder than developing robotaxi in doing our humanoid robot to achieve the highest quality mass production and by end of the year our target of production is at least 1,000 units. And I think future vehicle companies will also be robotic companies.
However, one of the biggest difference between humanoid robots and vehicles is that robots actually generate a lot of value from the software and it can start at 50% already since day one and cars may start slow with only 10 percent, 15%, it will take them some time to actually ramp up in the value creation and I believe that they actually come from the same logic and also share the same origin.
So whether when it comes to R&D, mass production, supply management, quality, etc. and also the global management, globalization management, the supply chain, sales and marketing services, etc. There's going to be a lot of similarity between car and robotic development and that sets us apart from our competition because we have always been doing things in-house with full stack technology and also cross domain integration.
And fundamentally, we use the same kind of logic as well when we develop our robots from the elbows, hands to legs to feet. We do everything in-house, or at least we do joint development, which again set us apart from other car companies or robot companies. Thank you.
Nikolay
My second question is also related to humanoid robot regarding the cost and the selling price. And how should we expect the cost reduction after mass production from year end? And also should we expect any external sales after mass production from year end? Thank you.
He Xiaopeng
This is a very good question and I think when it comes to thinking about the cost structure for humanoid robots, first of all, very different from what we've seen in cars. There are three major cost items for humanoid robots. First of all, you have the hardware cost and then the R&D cost. Lastly, you have the operational cost.
Hardware cost of the robot is similar to a car, but when it comes to R&D cost, AI related R&D cost will be way higher than that of vehicles especially in the past cars used to partner with Tier 1 suppliers when they can actually do the rule based system and they can just borrow other people's already very established software and hardware solution. But that was in the past, in the AI era, you cannot do it the way that it was for, especially in humanoid robots development.
And when it comes to operational costs, it's a completely different world as well, because there's different data with different scenarios and when you apply it, deploy it in the new scenario, you need to retrain the AI and the robot as well. And there are two types of humanoid robots. You have the general purpose and you have the specialized purpose robots as well.
What we mean by general purpose basically if you've attended college, you know that you first would take some general purpose courses that allow you to have some transferable skills and general knowledge. However, if you want to specialize in investment, for example, or in medical practice, that will require a lot of special training, right? And it's the same for humanoid robots.
So I believe that when it comes to mass production, there will be chances or mass production will allow us to continue to drive down the BOM costs for humanoid robot. However, software and operational costs will continue to improve depending on what model and also what application scenarios that we're talking about.
And we are different from a lot of the other companies out there because we do not target academia. We actually target actual deployment and commercialization and we will first go into the commercial scenario before going to industrial and lastly household. Commercial application actually requires a lot of motion control, especially for the full body control which is something that we're really good at and beating the industry.
Industrial application will focus more on the hands movement and the agility of both hands, which we're working towards and then household will be the most challenging scenario to actually deploy humanoid robots in, and so we'll gradually move towards the commercialization from commercial to industrial into household. Thank you.
Operator
Your next question comes from Tina Ho from Goldman Sachs. Please go ahead.
Tina Ho
Thank you for taking my question and congrats on a strong set of results. So my first question is regarding our overseas expansion. Wondering which will be the key markets for us to achieve the 100% volume growth in overseas this year? And also looking at 2027 and 2028, what kind of products or technology are we going to introduce in order to drive further expansion overseas? And then also related to that, when will we start to launch our super hybrid platform models in the overseas market? Thank you.
Brian Gu
Hey, Tina, it's Brian. Let me address your question in terms of key markets. Obviously we started our global journey in Europe and now European market I would say represents our largest regional market, approximately 50% of our overseas volumes in Europe. And we actually saw our premium positioned EVs in a number of countries especially in Nordic countries have a leading position in their categories. And also we saw very encouraging growth in large markets like Germany, France and Great Britain.
So I think obviously Europe will represent a key focus for us and then after Europe, Southeast Asia last year also represent a large important growth market for us. We saw very, very exciting growth for Thailand, for Indonesia, for Malaysia and we continue to see that market become a very key growth point for our business.
Outside of these two large markets, additional emerging markets like Middle East, like Central Asia, like Latin America also has great growth potential and we actually have established operations last year and we see continued penetration will lead to also good growth prospects in those emerging markets.
So how do we really accelerate that development. I think it's actually a number of factors contributing to our growth prospects, first of all, as you mentioned, is actually we are launching more products that covers wider market segments for these international markets. As we mentioned earlier, this year, we intend to launch 4 new products. All four of them actually are global products. All four of them actually complements our current market segments either on the lower end or the high end. It also has SUV formats and that's actually I would say very, very attractive and potentially are useful for international markets as well.
Also as you just alluded to this year, we also intend to launch our extended range product line by the end of this year to select markets. I think that will also help us cover some of the international countries where charging facility as well as driving distances has been a building block for EV penetration. So I think that's one of the areas that we are focused on supporting the global growth.
On top of it, we also have been stepping up our localization efforts. For example, last year in our key markets in Europe, in Southeast Asia, we have started local production for some of our products. And I think that will definitely be a very important part of our growth strategy by providing more attractive products, better service closer to the customers with local production facilities and supply chain.
Associated with that, we also intend to launch our smart driving technologies along with obviously the expected regulatory framework in place by the end of the year, hopefully by early next year. Our autonomous driving VLA 2.0 system can be utilized in international markets such as Europe and select markets in Southeast Asia as well.
And on top of it, I think there's other things we have to do as a company in organizational structure development, talent recruitment, brand building and marketing as well as we actually are starting to roll out our proprietary charging facilities in select countries as well. All those efforts are intended to increase our competitiveness in international markets and elevate Xpeng's brand awareness and positioning.
So we have a very exciting prospect in the next, I would say three to four years. We anticipate the global overseas market will represent much faster market growth compared to our overall growth rates as well as becoming a core profit center for our business.
Tina Ho
My second question is regarding our AI investment and then overall computing power. So as Mr. He Xiaopeng mentioned that this year the physical AI investment will increase to 7 billion RMB. So wondering what is our compute power right now and also the plan for the next few years and whether these investment are all recorded in R&D or some of it will be also allocated to capital expenses? Thank you.
He Xiaopeng
Thank you for your question since this involves long term investment. I can only provide a relatively general response to your question. In the coming years, I believe that R&D in the automotive sector of our business will continue to converge and we will gradually stay like that, but investment in AI will gradually increase and will trend upwards because of our conviction in AI development and however, the R&D spending will become more efficient.
So in the subsequent years, the growth rate of our AI R&D investment will not be as significant or aggressive as previous years. Also our major investment will include autonomous driving, smart cockpits and also robotaxi and humanoid robots among multiple categories and capabilities. And so in the future, after mass production of humanoid robot begin to launch, we also see great investment in humanoid robots as well. And all of those investments will be booked as R&D expenses, not CapEx.
Regarding the second part of your question, I think nobody nowadays can pinpoint exactly what is the compute power requirements in the long term for physical AI and right now we have tens of thousands of GPUs. In the future, I think we need to at least reach 100,000 units for computing power accumulation for physical AI based training purposes at least that number and I believe that car training computing power requirement is going to be 1000 times over digital AI and humanoid robot or robotics training will be 1000 times of that of vehicles computing power requirements or standards.
And in the future definitely I believe new methodology will be used to solve the computing power issue or shortage for physical AI and also the infrastructure including power generation as well. Those will be long term challenge for physical AI. However, we believe that we're going to figure something out to address that in the long term. Thank you.
Operator
Your next question comes from Ming Lee from Bank of America. Please go ahead.
Ming Lee
So what is our current progress of the robotaxi testing, what do you expect the important milestone and the timing for our robotaxi business with safety driver and without safety driver in operation?
He Xiaopeng
Thank you. I think I've already touched upon that question, we believe that a fully autonomous driving capability on the software side will actually arrive in about one to three years time, not only in China but also around the world. Our hardware development regarding that has been moving and progressing smoothly.
And right now what is left is to address the regulatory requirements and I think it will take time to do it step by step to obtain the testing license and also to move from having a safety driver on board to going without a safety driver on board. And we are also doing some extra R&D for Robotaxi global operation as well.
And so I believe that by second half of this year, we should be able to do some test drive with safety driver on board. And by the beginning of next year, hopefully we can do without the safety driver on board. And in the future, we're going to open the whole system to cover not only China, but also the world, partnering with reliable operational partners around the world using our platform, our technology and also our products so that we can provide this global robotaxi capability or autonomous driving capability for users around the world. Thank you.
Ming Lee
So what do we expect the scale or capacity number of our robotaxi business in the future and which models will provide the robotaxi service?
He Xiaopeng
Regarding this question, I think the expansion or the actual deployment of robotaxi services depends on the regulatory development. And I think in the future, all parts of this ecosystem need to quickly develop and whether and what kind of vehicles or what kind of model will support robotaxi. I think in the couple of years there will be a lot of thinking and exploration.
And I think fundamentally we need to really figure out whether or not the robotaxi should be driven by cars or should be driven by robots. And I think in some time from now people will actually see clearer with very clear results or answer to that. Thank you.
Operator
As there are no further questions now, I would like to turn the call back over to the company for any closing remarks.
Alex Shee
Thank you once again for joining us today. If you have any questions, please feel free to contact Xpeng's Investor Relations through the contact information provided on our website or through Piacente Financial Communications. This concludes today's conference call. You may now disconnect your line. Thank you.
Details at XPeng IR
Tips: The content presented above were generated by AI language model with publicly available information and auto-generated subtitles from third-party. The above material does not represent the position of Futu and shall not constitute any investment advice. Futu makes no express or implied warranties or representations regarding the accuracy, timeliness, or completeness of the information shown in the above content.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
Comments (214)
to post a comment
74
1