Chinese electric-vehicle makers are broadening their portfolios into humanoid robots, a shift driven by slowing auto sales and razor-thin margins that are pressuring valuations across the sector.
Xpeng has emerged as the most visible of the pivoters. The company is planning to begin mass production of its IRON humanoid robot by the end of this year, starting with deployments in its own stores and business venues before launching to a broader domestic and overseas market next year. Last month, Xpeng raised $900 million for its robotics unit — the largest single funding round in China's "embodied" AI industry — valuing the division at more than $6.3 billion, roughly on par with its EV business at $6.5 billion, according to Citi.
The move comes against a backdrop of worsening fundamentals for China's EV industry. Sales are headed for their worst year since 2021, Xpeng shares have tumbled more than 45% this year, and BYD — the country's largest EV maker — is down more than 13%. The average profit margin in China's vehicle manufacturing sector stood at just 1.5% in the first half of 2026, according to China Association of Automobile Manufacturers data cited by Counterpoint Research.
Chinese automakers accounted for more than half of the nearly 20 car companies globally that have entered the humanoid robotics sector through in-house development, investment or incubation as of August, Counterpoint found. Nio's venture arm has invested in startups including LimX Dynamics and Acorn Robot, while Xiaomi, Li Auto and Geely are also making moves, albeit with differing strategies.
"Given the slowing growth and weakening profitability in the EV market — particularly domestically — it is a natural strategic move for EV companies to diversify into new applications such as robotics," said Jing Yang, director of Asia-Pacific corporate ratings at Fitch Ratings. "This allows them to pursue alternative growth drivers, achieve economies of scale for shared advanced technologies, and potentially improve profitability over the medium term."
The supply-chain advantage is significant. Xpeng can reuse approximately 85% of its motors, chips and smart-driving software for its humanoids, said Xiaoyi Lei, senior research analyst at Jefferies Hong Kong. Deploying robots in自家的 stores and factories also provides an immediate testbed — and a cheaper way to collect the data that commercialization depends on. "Chinese players are the ones actually pushing it into daily use," Lei said.
Investors have yet to reward the thesis. Xpeng's shares fell after the $900 million raise, and Unitree, a leading standalone humanoid company, saw its stock decline in 12 of its first 16 sessions after debuting in Shanghai last month, despite an initial surge.
Commercial viability questions remain. Lei noted that Jefferies has not seen firm external orders or clear guidance on robotics revenue from the automakers it covers. Unitree founder Wang Xingxing has warned that true commercialization could still be years away, likening the sector's inflection point to a "ChatGPT moment" likely a decade off. The challenge of adapting smart-driving algorithms for humanoid scenarios is substantial, Lei added: "That is more difficult and more challenging."
