Xpeng Plans to License EV and AI Technology to Other Automakers, Sources Say

Chinese electric vehicle manufacturer Xpeng Inc. plans to license its technology to other foreign automakers, a strategic expansion beyond its current partnership with Volkswagen, according to a Reuters report citing two people familiar with the matter. The move is aimed at establishing new, high-margin revenue streams as the company navigates a competitive EV market.

Expanding on the Volkswagen Model

Building on the experience from its alliance with Volkswagen, Xpeng is preparing to offer a suite of its proprietary technologies to other companies. According to one source, the company has already been in contact with potential partners who have expressed interest.

The potential offerings include:

• Electrical and electronic (E/E) architecture
• Cockpit and smart-driving systems
• Advanced-driver assistance software (ADAS)
• Turing AI chips

This initiative follows the establishment of a dedicated strategic commercialization team at Xpeng approximately six months ago, tasked with exploring new technology partnerships.

A Strategic Shift to High-Margin Services

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The push into technology licensing represents a significant strategic pivot for Xpeng, which remains unprofitable. The company's collaboration with Volkswagen, initiated in July 2023 with a $700 million investment from the German automaker, has already proven to be a lucrative source of income.

In the second quarter, while Xpeng's vehicle sales revenue was flat and its vehicle margin narrowed to 12.1%, revenue from services and other businesses nearly doubled. This drove the segment's profit margin to an impressive 75.1%, up from 53.6% a year prior. Xpeng's management attributed this growth primarily to technology services provided to Volkswagen.

Context and Future Ambitions

This strategy extends beyond passenger cars. The company also plans to license technology for robotaxis, robotics, and other artificial intelligence applications, including the operational deployment of its robotaxi fleets. CEO He Xiaopeng has previously stated that ventures like humanoid robots could eventually generate significantly higher margins than vehicles.

Xpeng's ambitions are part of a broader trend where Chinese EV makers are increasingly influential in global vehicle technology and design. The company continues its international expansion, having surpassed 100,000 cumulative overseas sales since 2020.