XPENG AI Head Xianming Liu Discusses Physical AI and Autonomous Driving
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A brief summary of my trip to Munich and some thoughts on AI, automobility and FSD I just got back from Munich, where I had the opportunity not only to speak with XPeng’s lead scientist but also to see their product lineup firsthand. In the interest of transparency, I should add that I am not a car expert. I have a solid basic understanding of the industry, but there are many people with far deeper expertise. Still, I would like to share what I took away from the visit and what I found particularly interesting. First, let’s talk about FSD. XPeng is placing a strong emphasis on bringing FSD to Germany and the rest of Europe. Their VLA 2.0 FSD model is currently trained primarily on Chinese data and now needs additional post-training to adapt to the unique conditions found across Europe. One example is the familiar German “Yield” traffic sign, which is a specifically German feature in its current form, something I did not know beforehand. What is clear, however, is that Chinese AI models are aiming to establish themselves in the German and European markets. Germany, despite being Europe’s most important automotive market, is currently struggling to keep pace in several key technologies. And I say this entirely independently of XPeng. The headlines have been filled with reports about the serious challenges facing Volkswagen, Europe’s largest automaker. Its in-house software effort proved so problematic that the original project was discontinued. The company is now developing a new software platform together with a Chinese joint venture. Europe has also fallen behind in battery technology. It has not succeeded in building an economically competitive domestic battery industry. Northvolt, the German-Swedish battery project, has failed. As a result, Europe now relies heavily on Chinese manufacturers such as CATL. While the future increasingly belongs to electric mobility, Germany remained committed to combustion engines for too long and underestimated the pace of change. The consequences are becoming increasingly visible. Volkswagen and XPeng are now working closely together. Germany appears unable to manage this transition on its own. Current discussions suggest that Volkswagen could cut between 50,000 and 100,000 jobs and close several factories in Germany. Those are the facts currently being discussed and they paint a sobering picture. Against this backdrop, significantly lower-cost vehicles from China are entering the German market. The new XPeng L03 is expected to be priced at around €36,000, making it substantially cheaper than comparable German models with similar features. That, too, is simply a fact. China’s ambitions are significant. Germany and Europe are coming under increasing pressure in the automotive industry as well. China is not standing still. In artificial intelligence, its open source models are putting growing competitive pressure on Western alternatives. The same trend is emerging in the automotive sector through intelligent vehicles equipped with advanced FSD capabilities at highly competitive prices. That is the main conclusion I am taking home from my visit to Munich.