As China’s electric vehicle market faces its weakest performance since 2021, major automakers are accelerating their entry into the humanoid robotics sector. This strategic shift aims to diversify revenue streams and rebrand these companies as technology leaders rather than solely car manufacturers.
Despite scrutiny over the commercial viability of humanoids, Xpeng has moved forward with production plans for its IRON robot. The launch comes as the company’s shares have dropped more than 45% this year, making it the worst performer among prominent EV makers. BYD shares have also declined over 13% amid slumping sales.
Kevin Li, associate director at Counterpoint Research, noted that the pivot is part of an effort to reshape capital valuation narratives. According to Counterpoint data, Chinese automakers account for more than half of the nearly 20 global car companies that have entered the humanoid robotics field through in-house development, investment, or incubation as of August.
Nio’s venture arm has invested in startups such as LimX Dynamics and Acorn Robot, while Xiaomi, Li Auto, and Geely are also pursuing robotics strategies. Jing Yang from Fitch Ratings described the move as a natural response to weakening profitability in the domestic EV market, which saw average profit margins fall to just 1.5% in the first half of 2026.
However, investors have yet to embrace the new narrative. Xpeng raised $900 million for its robotics unit last month, valuing the division at over $6.3 billion—roughly equal to its EV business. Despite this, shares fell following the announcement.
Xiaoyi Lei, a senior research analyst at Jefferies Hong Kong, highlighted that Chinese automakers possess distinct advantages over competitors like Tesla. She pointed out that companies like Xpeng can repurpose up to 85% of their existing supply chain, including motors, chips, and smart driving software, for humanoid production. Furthermore, these robots can be deployed immediately in company stores and factories, allowing for rapid data collection critical to AI development.
Xpeng plans to begin mass-producing its robots by the end of the year for internal use, with broader market availability expected next year. Nevertheless, challenges remain. Unitree, a leading humanoid maker, saw its stock drop significantly after its Shanghai listing, and founder Wang Xingxing warned that true commercialization may still be years away. Lei added that adapting software stacks from autonomous driving to humanoid scenarios remains a complex technical hurdle.
It’s fascinating how car companies are literally becoming robot makers. If they pull this off, it could completely change manufacturing.
I saw Unitree drop after their listing. Humanoid robotics seems like a hype trap right now, similar to the current EV squeeze.
Investors clearly don’t buy it yet—Xpeng’s shares dropped after announcing the robot valuation. The market wants proof, not promises.
Reusing 85% of their supply chain is a clever move, but software adaptation won’t be that easy. Skeptical about the timeline.