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Published on Sep. 04, 2026

China’s young robotics industry has just received a huge vote of confidence. The humanoid robotics business of the EV maker XPeng has raised more than US$900 million in its first funding round. The post-money valuation amounts to more than US$6.3 billion.

China’s embodied AI sector hadn’t seen anything of this size before, reported the Chinese tech portal Huxiu. (in Chinese).

The round was led by IDG Capital, with Gaorong Ventures participating and Tencent and Alibaba joining as strategic investors.

The participation of Tencent and Alibaba, in particular, raised eyebrows among observers in China. It is rare for these two internet giants to back the same company in the same financing round. They are fierce competitors in cloud computing, large AI models, autonomous driving and a lot of commercial services for daily life.

This time each of them invested US$100 million, while IDG Capital contributed US$300 million and Gaorong Ventures a further US$100 million. Both had also invested in Unitree Robotics, whose IPO was the subject of our Must Read two weeks ago.

Apart from these outside backers, XPeng itself pledged US$200 million. Top executives of the company, including founder He Xiaopeng, added US$100 million of their own money. XPeng Group retains control of the robotics arm, which operates internationally under the name Dogotix.

XPeng positions itself as “the world’s leading Physical AI company”. It is leveraging its expertise in chips, AI models, supply chain and manufacturing systems from its automotive business for the production of humanoid robots.

“I believe Xpeng will not only build one of China’s most valuable humanoid robotics companies, but also become a global leader in physical AI, spearheading the large-scale adoption and commercialisation of advanced general-purpose humanoid robots and autonomous driving technologies in China and overseas,” the founder wrote in a statement.

It would be too narrow to view this purely through the lens of international competition, but it so happens that Tesla also has big ambitions in the same space. A little bit later than XPeng, the US carmaker this January also announced that it plans to transform itself from a hardware-centric business into a physical AI firm. XPeng’s international ambition and new access to capital put pressure on Tesla, which has yet to sell any of its Optimus humanoid robots.

Tesla CEO Elon Musk, known for his frank assessments, has endorsed XPeng’s flagship robot IRON on social media, although it is a formidable competitor to his own Optimus. He predicted that Chinese companies would dominate the global robotics market alongside Tesla.

XPeng now aims to reach a monthly output of 1,000 units of its IRON humanoid robot by the end of this year. Initial deployments are planned at its own retail stores and industrial campuses, reported Reuters.

The first machines will work as sales assistants in XPeng’s Chinese showrooms.

Commercial sales and deliveries in China and overseas markets are scheduled to begin in 2027. He Xiaopeng announced in June that he would personally lead the robotics business.

When IRON first walked down a “catwalk” at the 2025 XPeng Tech Day, its extremely natural looks and smooth gait stunned the audience. XPeng later cut the robot open to prove that it had not sent a human actor posing as a robot.

The current generation offers 76 degrees of freedom across the body and 21 in each hand, wrapped in a fully enclosed flexible lattice structure, according to the company. Three of XPeng’s self-developed Turing AI chips give the robot up to 2,250 TOPS of computing power, enough to run the company’s Physical AI foundation model directly on the machine.

Such details matter if a humanoid is expected to perform complex tasks without remote operation and with a sufficient ability to deal with long-tail scenarios. “Our ambition is for IRON to become a trusted partner for people and a meaningful part of everyday work and life,” He Xiaopeng stated in a press release.

The XPeng founder is anything but a skeptic regarding humanoid robots and flying cars, the two most prominent commercial use cases of physical AI. His company entered the legged robot business as early as 2020. Last autumn, He Xiaopeng said his company would sell more robots than cars in the next 10 years.

It is this belief in and early bet on the convergence of two industries that investors have just rewarded. Automakers can generate new growth from parallels between intelligent vehicles and robots, including expertise in sensors, software, batteries and supply-chain management.

Citi analysts point out that the carmaker XPeng can apply its strengths in algorithms, AI models and chips to humanoid robots. “Automobiles and robots seem to be two different categories, but in the AI era, their underlying logics are converging,” wrote GeekPark.

“The embodied AI industry stands at a pivotal juncture, transitioning from technical breakthroughs to scalable manufacturing and commercial deployment,” the lead investor IDG Capital stated, again pointing to synergies between XPeng’s smart EV and autonomous driving businesses and its new robotics subsidiary.

Tencent and Alibaba, of course, bring assets that purely financial investors lack. Robots that are meant to enter daily life need cloud computing, AI infrastructure, users and real application scenarios such as retail and logistics.
The existing ecosystems of the two internet companies will enable XPeng to find such real-world scenarios faster. This will create a closed loop of data, models and applications for XPeng.

Embodied intelligence needs actions, interactions and scenario data from the real physical world. Robots that enter more scenarios generate more such data. The data then help to upgrade the models. Better models in turn let the robots master more complex scenarios. Whoever enters real scenarios earlier can iterate their own models faster.

Skeptics still question whether humanoid robots will ever play a big role in industry or households. For sure, large engineering problems currently remain in dexterous manipulation, battery life, reliability, safety and cost. A verified mass market comparable to those for smartphones or electric cars does not exist yet. However, that is always the case when a new technology emerges.

Doubters may also rightly point to the fact that XPeng is losing money. On the very day of the robotics funding news, XPeng also reported that its quarterly net loss had widened 179 percent year on year to 1.34 billion yuan (US$199.4 million). Revenue rose 8 percent year on year to 19.7 billion yuan (roughly US$2.9 billion), however.

A lot of XPeng’s new service revenue was generated by providing technology to Volkswagen. Still, XPeng’s shares temporarily fell by more than 9 percent after the quarterly loss was reported.

Markets strongly price in future promises. The valuation of XPeng’s brand-new robotics business already roughly matches the implied value of its EV business, which stands at around US$6.5 billion, Citi analysts remarked.

The confidence demonstrated by investors has relevance beyond XPeng as a company. Long-term capital of this magnitude also helps the supply chain mature and attracts further investors. “Humanoid robotics is moving beyond demonstrations of mobility and dexterity toward reliable mass production and tangible value creation in real-world settings,” the investor Gaorong Ventures stated in XPeng’s press release. Nicely put.