China’s EV makers shift gears to focus on humanoids as car market slows

Chinese companies rushed into electric cars a decade ago, and now they are expanding into humanoid robots as the EV market sees a slowdown amid intense competition.

While the commercial viability of humanoids has come under scrutiny, it hasn’t dissuaded companies such as Xpeng from announcing robot production plans, at a time when China’s EV sales are headed for their worst year since 2021.

It’s part of a bid to reshape “capital valuation narratives,” said Kevin Li, associate director at Counterpoint Research. He added that the automakers are also looking to boost the perception that they are tech companies, and establish a second growth curve.

Xpeng shares have tumbled more than 45% this year, making them the worst performer among major EV players. Shares of EV giant BYD are down more than 13% as sales have slumped.

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, according to Counterpoint.

The venture arm of EV company Nio has also invested in several humanoid robotics startups such as LimX Dynamics and Acorn Robot, according to PitchBook data.

The business diversification comes as slowing growth and weakening profitability put pressure on China’s EV makers. The average profit margin in China’s vehicle manufacturing sector stood at 1.5% in the first half of 2026, according to China Association of Automobile Manufacturers data cited by Counterpoint. 

Xiaomi, Li Auto and Geely are also among EV makers making moves into the robotics sector, although their strategies differ.

“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,” she said.

Investors aren’t buying the story yet.

Xpeng shares fell after it raised $900 million for its robotics business last month, the largest single round in China’s “embodied” AI industry, according to the company. Embodied AI refers to hardware-connected artificial intelligence.

The raise valued the car company’s robotics unit at more than $6.3 billion — on par with the $6.5 billion estimated value for Xpeng’s EV business, according to Citi.

While there are similarities to how electric-car maker Tesla is developing its Optimus humanoid in the U.S., Elon Musk’s company, the Chinese automakers’ push into robotics have their own…