When Chinese entrepreneur He Xiaopeng founded Xpeng Motors in 2014, few in the global automotive industry took notice—least of all Volkswagen, which then dominated China’s car market and boasted an impressive lineup spanning from mainstream Volkswagen models to high-end Bentleys and Lamborghinis. Fast forward to today, and Xpeng is now collaborating with Volkswagen to develop cutting-edge electric vehicles (EVs) for the Chinese market. As Xpeng’s vice-chairman and president Brian Gu puts it, “We are the first Chinese automaker to empower a legacy manufacturer, and it will set the trend.”
This partnership underscores the rapid advancement of Chinese automakers, compressing what once took decades into just a few years. To put it in perspective, imagine a young Hyundai stepping in to assist General Motors in the late 1970s. The landscape of automotive innovation is shifting at an unprecedented pace, and Xpeng is at the forefront of this transformation.
The Rise of AI-Defined Mobility
Xpeng’s vision extends beyond electric vehicles. The company is dedicated to AI-driven mobility, investing in technologies ranging from autonomous driving to robotics and even flying cars. Currently, approximately 40% of Xpeng’s workforce is involved in research and development, with more than half focusing exclusively on software and AI. One of their most groundbreaking achievements is the in-house development of the Turing AI chip—a 40-core processor capable of handling models with up to 30 billion parameters. Xpeng claims this chip delivers the performance of three high-end processors in one, making it a key enabler of their next-generation AI-driven vehicles, including EVs designed for Level 4 autonomous driving.
This technological leap could mark a pivotal moment for the auto industry—comparable to the impact of DeepSeek in generative AI.
Why In-House AI Chips Matter for Automakers
Traditionally, automakers rely on third-party suppliers for computing and control chips. However, Brian Gu argues that developing proprietary AI chips offers a competitive edge. “Vehicles are evolving from mechanical products into technology products,” he explains. “The speed of iteration will be much faster than before. If you can’t control the development cycle and timing, you’ll be left behind.”
Looking ahead, the ability to develop advanced AI software, custom processors, and large-scale machine learning models will be just as crucial as traditional automotive engineering skills. Gu warns that not all legacy automakers will be able to keep up. “The smart EV industry is becoming increasingly complex. Success will require more than conventional automotive expertise,” he says. “Many established brands may struggle to acquire the necessary capabilities.”
The Future of AI-Driven Automobiles
AI-powered, self-learning vehicles are closer than ever, and their arrival will reshape the industry. The integration of artificial intelligence as a core competency is set to drive consolidation among both traditional automakers and emerging Chinese competitors. The Volkswagen-Xpeng collaboration is merely the beginning of a broader transformation in the automotive landscape.
