Chinese automakers are following Tesla’s bet that robots are the next big profit machine

Chinese automakers are increasingly investing in humanoid robots, following a path first championed by Tesla and its Optimus robot. The push comes as advances in physical robot capabilities and AI techniques used in large language models suggest these machines could learn nearly any task. Xpeng’s robotics unit recently raised over $900 million at a post-money valuation exceeding $6.3 billion, a round led by IDG Capital with participation from Gaorong Ventures, Tencent, and Alibaba. The company called it the largest single-round private financing ever recorded in China’s embodied AI industry, which refers to AI systems built directly into physical machines.

Other Chinese automakers are also moving into this space. Chery Automobile’s robotics unit AiMOGA began preparing for an IPO this month, while BYD unveiled a humanoid robot called Xiao Di. Changan, GAC, Li Auto, SAIC, and Seres are all developing humanoid robots as well. According to Michael Dunne, CEO of advisory firm Dunne Insights, Xpeng is the Chinese automaker that most closely watches and follows Tesla’s initiatives, being the first to make a major commitment to humanoid robots. Dunne noted that Xpeng founder He Xiaopeng sees razor-thin profit in cars on the near horizon, making robots look much more promising.

Xpeng’s financial commitment is personal. He Xiaopeng and Xpeng co-president Brian Gu invested about $100 million of their own funds into the recent fundraising round, according to the Wall Street Journal. The company’s bet is on Iron, a humanoid robot with a realistic human shape built for commercial deployment. Dunne said Xpeng has all the hardware to get the job done, but the question is whether it can catch Tesla on the AI side of the equation.

Other established robotics players are also chasing commercial deployment at scale. Hyundai-owned Boston Dynamics is getting closer, with plans to bring its Atlas humanoid robot to its Georgia factory this year and eventually deploy it for tasks like parts sequencing by 2028. Hyundai has partnered with Google’s AI research lab DeepMind to speed up Atlas development and is opening a U.S. facility this year called a Robot Metaplant Application Center, which will teach robots how to map movements like lifts and turns.

Beyond automakers, other automotive-related companies are entering the field. Mobileye acquired humanoid robot startup Mentee Robotics earlier this year for $900 million. Rivian is also dabbling in robots through its Mind Robotics spinout, though those robots are not expected to look like the humanoids in development elsewhere. Agility Robotics, Apptronik, and Figure are among other companies pursuing the same goal of commercial deployment.

The trend signals a broader shift in the automotive industry, where manufacturers see limited profit margins in traditional car sales and are looking toward robotics as a new revenue stream. For U.S. audiences, the developments highlight how American companies like Tesla and Hyundai are competing with Chinese firms in a race to make humanoid robots commercially viable. The investments suggest that the humanoid robot sector is attracting serious capital, with Xpeng’s round alone marking a record for China’s embodied AI industry.

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