Xpeng says China close to building ‘killer’ rival to Tesla Model Y
Elon Musk’s SUV remains top-selling electric vehicle in many parts of the world as well as second most popular in China
Xpeng has said China will soon produce a “killer” electric vehicle that will beat Tesla’s best-selling Model Y as the Volkswagen-backed carmaker seeks to take on Elon Musk in Europe.
Tesla has come under strong pressure from BYD and other Chinese EV makers but six years after its launch its Model Y sport utility vehicle remains the top-selling EV in many parts of the world as well as the second most popular in China.
“I think we’re not far from beating Model Y,” Xpeng co-founder He Xiaopeng said at a vehicle launch event in Munich, signalling a rival model could come from Chinese carmakers. “I really believe in that.”
Xpeng is one of the more technology-focused new EV start-ups in China, with bold ambitions to compete against the likes of BMW and Mercedes-Benz in Europe’s premium car segment with its advanced software and autonomous technology.
Despite the proliferation of EVs in China, no single electric model has disrupted the global car market in the same way that Musk has done with the Model Y.
Xpeng on Thursday unveiled its most affordable electric SUV, the L03, which has a starting price of €35,600 and is the first model to launch simultaneously in China and Europe. It is a direct competitor to Tesla’s Model Y, which starts from €39,990.
“L03 has the potential to be a blockbuster model in terms of being a volume driver and certainly one of the Model Y killers, but not the killer,” said Lei Xing, founder of Chinese consultancy AutoXing.
In addition to its EVs and range-extended models such as the L03, Xpeng is seeking to set itself apart from other Chinese rivals and EV start-ups with flying cars and “the most humanlike” humanoid robots, which it plans to bring to Europe in the future.
Non-European carmakers including Toyota and Hyundai have historically struggled to crack the region’s premium segment dominated by German brands. But Håkan Samuelsson, chief executive of Geely-owned Volvo Cars, warned that it would be dangerous to assume that the premium segment was “safe” from Chinese competitors.
“They will probably have a lot of technical features which some premium customers will be impressed by,” Samuelsson told the FT. “We have put them in the same category as BMW, Mercedes and Audi. For us, Xpeng is probably in that group as well.”
Xpeng is in talks with VW and other carmakers to secure its second manufacturing facility in Europe. “Mainly I think, it’s going to be . . . some part of Germany,” He said.
The group plans to release its second-generation Vision-Language-Action (VLA) software in Europe from 2027 pending regulatory approval, which would directly compete with Tesla’s Full Self-Driving (FSD) system.
Its self-designed Turing artificial intelligence chips are also used in VW’s new models in China. He added that the company would also aim to license its smart driving software to other carmakers.
Tesla is seeking to expand regulatory approval of its partially autonomous FSD software in Europe after winning its first clearance in the Netherlands in April but the regulatory process has been slower in Europe compared with the US.
Analysts such as Xing said there was still a technology gap between Tesla’s FSD and Xpeng’s VLA but the Chinese group’s AI head Xianming Liu countered that it was “very hard to say who is better or who is worse”.
“Autonomous driving is very easy to love,” He said. “When [my kids] grow up, I don’t think they will need a driver’s licence any more.”