China's EV makers shift gears to focus on humanoids as car market slows

Xpeng said Tuesday it plans to begin mass production of its robots by the end of this year, starting in its own stores and business venues. Next year, the company plans to launch the robots to the broader market in China and overseas.

Automakers also know how to build things at scale, Lei said. Producing thousands of robots that are reliable and serviceable is what Chinese automakers already do every day, she added.

"Chinese players are the ones actually pushing it into daily use," Lei said, noting that in-house deployment makes it easier and cheaper for the automakers to collect data — which is critical for humanoid commercialization.

Xiaomi, a consumer electronics company that only launched its first electric car in 2024, started testing humanoid robots at its factory this year. BYD can also deploy robots in its factories, Counterpoint's Li pointed out. But he said over the medium-to-long term, Geely and Xpeng could better capture the benefits of diversifying beyond cars, pointing to Xpeng's greater emphasis on its physical AI strategy.

Whether humanoid robots can generate demand beyond automakers' own operations remains an open-ended question. Lei said Jefferies has yet to see firm external orders from the automakers it covers or clear guidance on external customers and robotics revenue for next year. While there are similarities to how electric-car maker Tesla is developing its Optimus humanoid in the U.S., Elon Musk's company, the Chinese automakers' push into robotics have their own advantages, said Xiaoyi Lei, senior research analyst at Jefferies Hong Kong.

She pointed out that Chinese automakers can reuse a significant portion of their supply chain — Xpeng, for example, can use 85% of its motors, chips and smart driving software for humanoids. The robots can then be immediately deployed in the automakers' stores and factories, rather than having to wait for consumers to buy them, she added.