China’s EV pioneers: What China’s EV revolution looks like through the lens of XPeng’s founder (part 1)
He Xiaopeng on ambition, reinvention, and AI-driven cars
Today, I’d like to continue introducing the founders of China’s leading electric vehicle companies who sat down with Luo Yonghao — one of the country’s best-known entrepreneurs-turned-internet personalities. This edition features He Xiaopeng, co-founder, executive director, chairman, and CEO of premium EV maker XPeng.
Like Li Xiang, the Li Auto founder and CEO I highlighted in a previous post, He Xiaopeng represents a generation of entrepreneurs who first made their mark in China’s internet industry before pivoting to new energy vehicles.
Both XPeng and Li Auto belong to the group colloquially known as “Hua-Mi-Wei-Xiao-Li” — shorthand for Huawei, Xiaomi, NIO (Weilai), XPeng (Xiaopeng), and Li Auto (Li Xiang). Alongside BYD, China’s largest EV maker, these firms represent the first tier of China’s new energy vehicle players, often setting the pace for innovation and competition in the world’s fastest-growing EV market.
Given the length of Xiaopeng’s conversation with Luo, I’ve selected 10 highlights — each focusing on a different theme — and will share them across two issues.
In this first part, He Xiaopeng opens up about the ambitions that drove him as a teenager, the missteps and lessons from his earliest ventures, and what ultimately pulled him back into entrepreneurship after financial freedom. He reflects on why he chose new energy vehicles as his next frontier, how he envisions XPeng’s place in the market, and the staggering scale of R&D investment he believes an AI-driven car company must commit to. Together, these stories trace the mindset of a founder who blends bold vision with hard-earned experience.
That said, if you understand Chinese, I strongly encourage you to watch or listen to the full podcast. It’s well worth your time.
About He Xiaopeng
Prior to serving as chairman and chief executive officer of XPeng, Mr. He served at Alibaba Group Holding Limited, a public company listed on the NYSE (symbol: BABA) and the Hong Kong Stock Exchange (stock code: 9988), from June 2014 to August 2017, including serving as the president of Alibaba mobile business group, chairman of Alibaba Games and president of Tudou.com. In 2004, Mr. He co-founded UCWeb Inc., a Chinese mobile internet company that provides mobile internet software technology and services, and served as the president of product from January 2005 to June 2014. In June 2014, UCWeb Inc. was acquired by Alibaba Group Holding Limited. Mr. He previously served as an independent director and a member of the audit committee of HUYA Inc., a game live streaming platform company in China listed on the NYSE (symbol: HUYA) from May 2018 to May 2020.
Mr. He received his bachelor’s degree in computer science from South China University of Technology in July 1999. Mr. He obtained the qualification certificate of senior economist (technology entrepreneur) in business administration issued by the Human Resources and Social Security Department of Guangdong Province in January 2020.
1. He Xiaopeng discussed what motivated him to set the goal of achieving financial freedom at 18, and how he chose from the four paths to it.
He: The first time I took a plane, I picked up the in-flight magazine. You know, these magazines often blend advertising with chicken soup. I read about a woman, perhaps in her late thirties, who had successfully achieved financial freedom. As an 18-year-old, her story deeply motivated me, and it planted the seed for me to work towards my own financial independence.
Luo: Was she an entrepreneur?
He: . No, she was a senior executive at a multinational corporation.
Luo: I see. Kind of like the Chinese concept of a “working emperor” for corporate professionals.
He: Yes. So I got the idea of achieving financial freedom in university, although I didn’t immediately have a clear roadmap.
Luo: But you knew working for others wasn’t the correct path to achieving it.
He: After university, I identified three paths to financial freedom. The first was winning the lottery. I admit, I did purchase a significant number of tickets.
Luo: Oh, really? I wouldn’t have guessed that people in the tech sector would buy them.
He: My very first ticket won me 500 yuan (about 70 U.S. dollars), which led me to believe I might have a knack for it. Regrettably, that initial luck didn’t persist across subsequent purchases, spanning several hundred tickets. In 1999, I graduated from university. It was around that period that I began considering acquiring a property as a second path.
Luo: China’s housing market took off at that time.
He: At that time, housing in China was extremely affordable. However, the primary obstacle was the lack of money. My third path to financial freedom was through stock options in a promising company. I was fortunate to join AsiaInfo, and within my second year there, the company went public. This meant I was one of the first individuals in China to receive stock options from a private Chinese company that achieved an IPO.
Luo: You joined AsiaInfo a bit after the initial wave, but you still made some money, right?
He: In that IPO year, I received an allocation of 1,000 shares. That was only my second year at work. The value of those shares was substantial; had I been able to sell them at that time, I could have purchased two properties in Guangzhou.
Luo: They were worth a lot, indeed.
He: Unfortunately, by the time I left AsiaInfo, the stock had fallen below its initial offering price. I remember the offering price was around 20 yuan or 24 yuan, and it was trading at 4 yuan when I left.
Luo: You would lose money when you sold your shares.
He: Exactly. As a result, I didn’t buy a house, and those shares, in a way, became a lifelong reminder of that period.
Luo: What’s the fourth path?
He Starting a business. How did I have the idea? I learned that a senior executive, two levels above me, was among the top individual taxpayers in Guangzhou. My initial thought was, “Wow, if I could reach that level of tax payment, I’d consider myself successful.” However, upon realizing he was nearly twenty years my senior, I reassessed. It occurred to me that it might take me another 20 years, and even then, there was no guarantee I could surpass him, given his significant achievements at that time. At that time, I felt that working for others wouldn’t work out for me, so I decided to pursue entrepreneurship.
Luo: Which year? Was China in the midst of the PC internet wave or approaching the mobile internet era?
He: 2002. In 2002, both China and the global internet market had just emerged from the dot-com bubble. Subsequently, around 2003 and 2004, the internet saw a resurgence, bolstered by sectors such as SP (Service Provider) and gaming. In fact, at AsiaInfo, we were involved with email and SP. We weren’t directly charging users for things like ringtones. Instead, we functioned as a payment gateway company for China Unicom, so we actually performed quite well during that period.
Luo: Once you decided to pursue entrepreneurship, how did you secure your initial funding? Typically, individuals with technical backgrounds are not as accustomed to engaging with capital or venture capitalists, especially in the early stages.
He: Well, in my very first entrepreneurial endeavor, I followed others into a startup.
Luo: What does that mean?
He: Being a follower means I had a minimal equity stake and was not required to contribute any capital. It was during my subsequent ventures, from UCWeb to XPeng, that I began actively engaging with capital and investors.
2. Luo Yonghao and He Xiaopeng talked about unforgettable experiences in He’s early entrepreneurial efforts, including missing out on precious investment opportunities after being misled and not printing his real title on his business card.
Luo: Could you share any memorable experiences you’ve encountered? For example, as a founder seeking capital from major institutions, did you ever have to deal with stakeholders who presented themselves in an overly proud or even belittling manner?
He: Looking back on those experiences now, I actually believe the issue wasn’t with them, but rather with us.
Luo: Many successful entrepreneurs do often say that in retrospect.
He: Back then, I believed I was misled regarding valuations, which led to a significant misjudgment. We had multiple investment institutions willing to invest, but we felt their proposed valuations were unfairly low. To illustrate, they might have presented another company with a valuation of 100 yuan, while offering us only 50 yuan. We couldn't accept this, as we believed our company was stronger. However, it turned out that the other company’s valuation was actually 30 yuan, and they had exaggerated it to 100 yuan.
Luo: It’s true. People tend to puff up the numbers a bit when they’re presenting their case.
He: Sadly I wasn’t aware of it. My focus was primarily on the presented figures. In the end, I declined the offers from several interested investment institutions.
Luo: You missed out on capital that could have been utilized then.
He: Yes. It was a crucial learning experience from the early stages.
Luo: I recall hearing a widely circulated story from your early days. You had titles like VP on your business cards, but not CEO. Was this indeed the case? And wouldn’t investors find it strange? Did you tell the truth when meeting them?
He: Only when they asked us.
Luo: So, when you went out to discuss business cooperation, you were all Vice Presidents, without a CEO. Didn’t you ever encounter major clients questioning you, like “Why are you all VPs? Where’s your actual CEO?” Did that kind of situation ever come up?
He: We would typically respond by saying, “We need to discuss this internally.” We did this for a good reason. At that time, our professional and social experience was still quite limited. A well-known entrepreneur — I won’t mention his name — once invited one of our founding members to dinner. He booked an entire 1000-square-meter hall for the occasion.
Luo: I can imagine. I’ve encountered similar situations myself.
He: A room of that scale isn’t typical. He’d essentially rented out a large hall, filled a table with an abundance of food, all to demonstrate his financial strength. Then, he pressured us to sign something on the spot. The danger was, if you got swept up in the moment, thinking “This person is incredibly impressive,” and signed impulsively, it could lead to significant negative consequences.
Luo: Yes.
He: That’s why, in such circumstances, making on-the-spot decisions is absolutely ill-advised.
Luo: So, using the VP title became a strategic buffer to make it legitimate for you to discuss things internally. However, when you were genuinely engaging with potential partners for actual collaboration, you would be transparent about your true situation, right?
He: Exactly. As our discussions deepened and the potential partners inquired about our organizational setup, we would readily explain our roles.
3. He Xiaopeng revealed the motivations behind his return to entrepreneurship after achieving financial freedom and his rationale for choosing the new energy vehicle sector.
Luo: The second time you started a business, did you ever consider other options than auto?
He: My initial focus was not on the auto sector, which is why the company was not originally named XPeng. I recognized the significant difficulties in shifting from the internet domain to hardware, especially large-scale hardware. The underlying logic is quite different. Within the internet ecosystem, there was a prevalent mindset fueled by stories of rapid success — companies achieving Series A funding in three years or Series B in five. This created a perception that such rapid growth would be universally attainable. Yet, building a business in hardware is a far more arduous path.
Luo: A further reason was the perception among internet entrepreneurs that they represented the vanguard of advanced productivity. This led them to view engagement with traditional industries as a simple choice: either they would succeed, or they wouldn’t even try. There was a strong conviction that if they did decide to enter these established fields, they would undoubtedly excel. This was a prevalent attitude in the industry years ago.
He: Precisely. When I fully committed to XPeng, I brought in someone from my previous tech sector to guide our auto team on the process of car manufacturing. Frankly, I was taken aback, as he had no prior experience in manufacturing cars. His approach was remarkably straightforward: he brought in a Maserati, parked it at the company, and instructed our auto team leads to replicate it, stating, “Just make it like this. You don’t need to achieve the exact same level.”
Luo: Interesting.
He: Tell me about it.
Luo: Then sell the product at a price one third or one fifth that of a Maserati.
He: He expressed this with an unfounded confidence, a trait common among many in the tech industry then, without truly understanding the practical steps required. This meant that entrepreneurs from the internet background had to essentially grow and acquire new competencies to succeed in hardware development.
Luo: This is a pertinent point when it comes to emerging and traditional sectors. The rise of e-commerce led many to believe that traditional retail was destined for demise. However, the market demonstrated that certain aspects of the retail experience are inherently challenging to digitize, even as e-commerce continues to expand its reach.
He: In reality, for everyone, the most challenging aspect of resilience isn’t about mustering courage and uniting a team to press forward during adversity. Instead, it’s about making sound decisions and avoiding impulsive expansion during periods of extreme success, maintaining a controlled pace. It’s unfortunate, but many businesses ultimately collapse due to these very factors.
Luo: From a human nature perspective, achieving that level of control is indeed exceptionally difficult.
He: Too difficult.
Luo: You started out as an investor in the auto sector. At what point did you make the decision to personally lead a venture? Was it a realization that a promising company you’d invested in was stagnating, prompting you to take the helm yourself, or was it more of a growing passion for building your own business that emerged organically during that period?
He: There were two reasons. In 2013, I recognized that intelligent automobiles were the future. The following year, I established a team and told them that I'd invest as much as they need as long as they were willing to put effort into this sector. Around 2016, my own aspiration to lead a venture finally emerged.
A significant moment occurred when I was discussing the future of the internet industry with a close friend. As he was leaving, he told me that my eyes truly lit up when we spoke about cars. He said that my interest in other topics seemed relatively average, but was uniquely enthusiastic when talking about cars.
Luo: So, in a sense, your friend’s words led you to the auto sector.
He: His words had a profound impact on me because my initial inclination was that I shouldn’t pursue the auto industry. But after that conversation, I began to question whether I genuinely possessed a deep-seated passion for cars that I was perhaps unconsciously resisting.
The birth of my child in 2017 served as another significant catalyst, and prompted me to reevaluate whether to start a new entrepreneurial journey. Around the same time, I received a call from Fu Jixun, a senior managing partner at Granite Asia. He said to me in the phine that he believed the convergence of auto and AI is about to come, and that if I didn’t seize this opportunity soon, the window for this sector would close gradually. He strongly recommended that I step out and build my own company, which once again spurred my consideration of founding an car company.
Following those conversations, I spoke with numerous friends. Many, as you’ve touched upon, had taken long breaks of two to three years after achieving significant financial success. I asked about their future plans on their lives and careers. Upon hearing their words, I became more sure that I'm not the type for professional investing, not the type for living a life of pure leisure and indulgence, or even going for emigration. Ultimately, I made the decision to start up a business once more. While I had several viable options, I deliberately chose the most challenging one: the auto sector, which I viewed as a significantly more demanding undertaking than my previous ventures — perhaps a “200%” difficulty compared to a “100%” baseline.
Luo: Absolutely.
He: My thought was that if I was going to undertake entrepreneurship again, I might as well select a path that presented a greater challenge. So the idea of starting a second business came gradually.
Luo: Furthermore, you were young enough to afford to fight for another one decade or two decades. And importantly, at that time, you were still young enough to commit to a decade or two of focused effort without feeling overly burdened.
He: Not as young as one might think. I was already in my forties.
Luo: When I founded my mobile phone company, I was also 40 years old. Looking back, I was a late bloomer; in my youth, I was more of a literary type. While I had a strong affinity for technology, I never considered pursuing it professionally. By the time I had the idea, I was already approaching 40.
He: I consider that fortunate. You were a literary enthusiast, whereas in our youth, we were more like impetuous youths, which is even more unfortunate.
Luo: Even that, you were one with a background in science and engineering, which means you already possessed an inherent alignment with this industry.
Do you remember your first time driving a Tesla? What was that experience like?
He: For me, the most memorable moment was the actual delivery of Tesla in China. I was among the first owners, though not within the absolute first ten. What impressed me most was how someone coming from outside the traditional auto industry could make such a better car. I was driving a Land Rover at the time, and then transitioning to a Tesla came as a revelation. It felt like a sports car — remarkably fast, incredibly quiet, and featuring a large screen. Previously, I rarely listened to music in my car, primarily because the engine in higher-displacement vehicles was noisy, making it difficult to enjoy audio. However, driving the Tesla, I discovered that listening to music in an electric vehicle could be a truly delightful experience. It fundamentally changed my perception, showing me that creating an excellent car was entirely achievable for those without auto manufacturing experience.
4. He Xiaopeng's brand positioning of XPeng
Luo: So who exactly is XPeng’s target audience? And what feature does XPeng stand for?
He: We went through a lot of detours in defining our brand. In the very beginning, we gave ourselves a really simple definition: we wanted to be a tech company, a company with real technology DNA. But the truth is, as a car brand, we didn’t specify our brand positioning enough. You can stack up all the technology you want, but in the end, it’s still just technology. What really matters is how people see you.
Eventually, the image of our brand comes down to two words: technology and fashion.
In China, our customer base is rather younger. When we first started, most XPeng buyers fell within the 150,000 to 300,000 RMB annual income bracket—young customers who love technology and also care about fashion. And even though we wavered a bit on brand positioning along the way, we’ve managed to hold on firmly to this group of users.
5. He Xiaopeng explained how much R&D investment an AI-driven car company needs in a single year
Luo: In one of your interviews, you mentioned that for a car company to truly lead in AI, its annual R&D expenditure has to reach at least 50 billion yuan (about 7 billion U.S. dollars). I wasn’t totally sure what you meant by that. Are we talking about being ahead across the board, or just leading in one or two key metrics? And the other thing is—if we’re really saying 50 billion every year, where does that money even come from?
He: AI has really become a massive trend today. But for small and micro enterprises, this AI game is kind of unfair to them.
Back in the mobile internet age, the bar to start a business was way lower. An internet startup could survive for years with only a couple million RMB. But now, if you put that same amount into AI, maybe you’ll get somewhere if you’ve managed to nail a very sharp niche, but for most companies though, you can hardly get anywhere.
Luo: Maybe a little chance in vertical AI. But for foundation models? Don’t even think about it.
He: For them, building the infra (infrastructure) is already hard enough, let alone a complete foundation model.
Looking at ourselves, we've actually made a lot of choices about what not to do. For example, we’re not touching digital foundation models. Instead, we’re all-in on the physical world—things like autonomous driving, vehicle VLM (Vision Language Models) which is basically a car’s brain, and robotics. The physical world is where our focus is.
Now, out of the 50 billion yuan R&D budget, I’d say maybe 30 billion goes into AI, and the other 20 billion into hardware and other software. Put that together, and honestly, I already think that’s only a very baisc number. Because if we really want to build foundation models, infrastructure, and applications for the physical world, for me, 50 billion is already a conservative figure.
So why would people say that in the future, only big carmakers can survive? Well, if you want to put 50 billion yuan into R&D every year, you need at least 500 billion in annual revenue, because your R&D budget has to stay around 10 percent.
Tesla only spends less than 5 percent of its revenue in R&D, but most tech companies would spend somewhere between 7 percent to 12 percent. So if you take the middle, that's around 10%.
Having 500 billion yuan in revenue is not unusual among Chinese automakers. Many companies would claim that they're making 300 billion to even 800 billion. But what they’re really talking about is what I describe as "gross weight". It’s mostly the revenue from their joint ventures, and they count that as their own. In my view, that doesn’t really count. What truly matters is the part you actually own, and I compare that as "net weight". If you set the bar at 500 billion of "net weight", there are very few Chinese automakers that can really get there.
And even then, you also have to make sure that your business can make solid profit. Some companies might be able to achieve a shiny sales volume, but their cars only sell for 60,000 or 70,000 yuan each, which leaves them just about 1,000 yuan in gross profit per unit, and sometimes the net profit is negative. That’s basically like selling iron by weight.
Luo: Yeah… it’s basically hell.
He: So this business is not for me.
Luo: How much did XPeng earn last year?
He: Over 40 billion.
Luo: So you’d need to hit four to five hundred billion before you can make sure you’re putting 50 billion a year into R&D.
He: At least. We don’t have this year's number yet, but we've already sold more cars in the first half than the last entire year.
In the next piece, He Xiaopeng looks ahead — offering his take on the future of China’s EV market, his perspective on industrial design, and how autonomous driving may evolve differently in China and abroad. He also talks about venturing into low-altitude aircraft and shares candid views on which Chinese companies are truly committed to AI and which are merely paying lip service. Stay tuned for part two.
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