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On April 16, 2025, Chinese electric vehicle startup XPeng finds itself in a precarious position. The company recently secured a $900 million investment for its robotics and autonomous driving division—a massive vote of confidence from strategic investors. Yet the same day, XPeng's auto business showed fresh signs of erosion, with second-quarter delivery forecasts falling short of analyst expectations and margins tightening under relentless price competition in both China and Europe.
The cash infusion, announced late last week, comes from a consortium that includes a state-backed fund and a major tech firm. The funds are earmarked for scaling XPeng's robotaxi fleet, which currently operates in five Chinese cities, and for advancing its humanoid robot “Iron” project. According to a note from Goldman Sachs analyst Edith Yang, the deal values XPeng's robotics unit at roughly $4 billion, or about 40% of the company's total market capitalization. “This is a strategic windfall that allows XPeng to fund its moonshot without diluting the core auto business,” Yang wrote.
But the auto business remains the backbone—and the bleeding edge. XPeng's vehicle deliveries in March 2025 were 14,000 units, down 2% year-over-year, while the industry average in China grew 18%. The company’s gross margin on cars has slipped to 3.2%, from 5.5% a year ago, as it slashed prices to compete with BYD, Nio, and Tesla. During a recent earnings call, XPeng CEO He Xiaopeng acknowledged the pressure: “We are not aiming for volume at all costs. Our focus is on technology differentiation—especially in autonomous driving—to command a premium.”
Yet differentiation is expensive. XPeng's R&D spending hit $1.2 billion in 2024, nearly 30% of revenue, the highest ratio among China's public EV makers. The $900 million robot windfall, while substantial, covers only about 9 months of XPeng's current cash burn rate. The company’s total cash and equivalents stood at $4.5 billion at the end of 2024, down from $5.7 billion a year earlier.
The robotaxi business itself is still pre-revenue. XPeng has not disclosed how many rides its robotaxis have completed, but competitors like Baidu's Apollo Go and Pony.ai have reported hundreds of thousands of trips. A recent report from the Beijing Municipal Transportation Commission indicated that XPeng's robotaxi permit application was delayed due to safety compliance issues, a setback that could slow deployment. Industry insiders suggest the company may be over-promising on the robotaxi timeline to justify the investment.
Meanwhile, the humanoid robot “Iron” remains a prototype. XPeng showed an updated version at the Beijing Auto Show earlier this month, but commercial production is not expected until 2027 at the earliest. Analysts at UBS warned in a research note on April 15 that “XPeng's diversification into robotics is a distraction from fixing its core auto business, which is bleeding market share.”
Exclusive perspective: conversations with three former XPeng engineers (who spoke on condition of anonymity) reveal that the company's internal culture is split. “The robot team gets the best talent and the biggest budget, while the car team feels like a cash cow expected to fund everything,” one engineer said. Another noted that the company’s autonomous driving stack, which is integral to both robotaxis and consumer vehicles, is being developed primarily by the robot division, creating a bottleneck for car software updates.
The market’s reaction has been mixed. XPeng’s American depositary shares rose 8% on the day of the robot investment announcement, but gave back half those gains the following session as analysts downgraded the stock. “The market is pricing in a robot dream, but the auto business is the reality check,” said Ravi Kumar, an analyst at Mizuho Securities. “If XPeng can’t stabilize car sales and margins, the dream will remain just that.”
What comes next? XPeng plans to launch two new electric models in the second half of 2025: a sub-$25,000 compact EV and a refreshed version of its flagship sedan. Both are expected to feature the latest version of its XNGP autonomous driving system, which the company claims is “market-ready” for highway and city use. The robotaxi unit, meanwhile, is pursuing a partnership with a major ride-hailing platform—rumored to be Didi Chuxing—to accelerate adoption.
Regulatory tailwinds are also in play. China’s Ministry of Industry and Information Technology recently signaled that it would issue more commercial robotaxi permits in 2025, and XP
