The Chinese car market has become incredibly competitive, and that battle is starting to be exported to other markets, including Europe. Automakers from China must find ways to differentiate themselves. In March 2026, XPENG launched its VLA 2.0, an autonomous driving system that isn’t just in public testing phase like Tesla’s FSD, but a full shipping product. It’s already reported to be a major factor boosting sales. Could this have a similar impact in Europe, where emotional brand attachment and heritage are much more important factors?
VLA 2.0: Driving XPENG Sales In China
Having experienced VLA 2.0 in action at the Beijing Auto Show, with myself in the driving seat of an XPENG P7 Ultra, I can confirm that it is very capable. It drove confidently around the urban streets of the city, navigated traffic, and coped with unpredictable motorbikes, narrow streets, and complicated junctions faultlessly. I’ve also experienced Tesla FSD as a passenger, which is impressive too, but VLA 2.0 had a more human-like operation, even pulling across lanes when a truck at a junction looked like it might try to enter the lane we were in. No human interventions were required at all across over 40 minutes of driving, apart from exiting and entering a barrier-controlled car park.
“Our best feature is autonomous driving,” says He Xiaopeng, Chairman & CEO, XPENG. “VLA 2.0 has had very good results. The first generation was already the top autonomous driving system in China. With our latest generation, we are the best of the best. Our new generation can run everywhere, and even your mother is safe driving VLA 2.0. Our consumers use it almost 120% more than the previous generation. Next year, we also want to go global, including European and other countries. We are testing VLA in Europe. Maybe next year, quarter one to quarter two, we can deliver autonomous driving there.”
“There’s a lot of competition in the car market in China,” adds Brian Gu, Vice Chairman & President, XPENG. “What’s different about XPENG is that when you buy a car from us, it’s developed for the future, but at the same time it addresses some of the pain points of people’s mobility lives now.” VLA 2.0 is certainly a painless experience. It shows great environmental awareness but also isn’t so timid that you get stuck at a busy junction or behind slow moving traffic.
“We created one of the most advanced autonomous driving technologies on the Chinese market because our customers want to have a hassle-free driving experience – both convenience and safety,” says Gu. “We are also known for having one of the most advanced smart cabin experiences in China, because our customers want to be more productive and have a more relaxed experience inside our vehicles.” These features are regularly upgraded via Over The Air software updates.
“We want to deliver this to our customers internationally as well, continues Gu. “It will take time, because some of the technologies are not approved yet in Europe. We hope the regulation will change. Once it’s changed, we want to be the first to launch these capabilities.”
From Software Defined To AI Defined XPENG Vehicles
In the most recent S&P Global Mobile SDV Readiness ranking, where Nio came top and Volvo second, XPENG’s technological focus was rewarded with a top-ten Level 4 ranking one position above Tesla. The benefits of an SDV are harder to explain to consumers than a beautiful exterior design or leading performance figures, however. Last year, Gu told me XPENG has shifted beyond the SDV to what he called AI Defined Vehicles, which is even more esoteric. “What we’re doing outside of the EV – the flying car, the human robot – is so our customers feel that we’re a company that is thinking about the future,” he says “What you buy is part of the future.” But most consumers purchase based on features that are here now, and VLA 2.0 isn’t available in Europe yet, even if it’s promised soon.
“We really hope that we can get through local regulatory processes to launch some of these capabilities, because the best thing is to experience them,” says Gu. “All the futuristic things that we’re doing, showcasing our flying car, our human robot, and maybe at some point, robotaxi testing around the world in different cities, could also help our customers get a sense that we are doing things that are quite different from a typical EV company.”
Tesla’s FSD (Supervised) has been approved for use in the Netherlands, but this piecemeal approach is painfully slow, with launch dates in other European countries still not revealed. “We are working with the United Nations DCAs system, which is moving forward,” says Gu. “We’re not seeking just single market approvals; we’re looking at how the overall regulatory environment can enable that to be used in larger markets. We hope to see something that come to fruition early next year.”
XPENG was pitching itself as a Physical AI company at the Beijing Auto Show 2026, but this was always the vision. “We’re 11 years old,” says Gu. “Even when we were very young, before we had the first car, store, or factory, when I was talking to our early phase investors, people always asked why we wanted to do automobiles, because there’s a lot of big companies already. We told the market that we don’t think electrification is going to be the biggest differentiator for us. We think the biggest differentiator is intelligence. Fast forward 10 years, and we have been consistent, developing a full stack approach, software defined, and moving that focus on intelligence now to AI Defined.”
Intelligence is central to what XPENG claims differentiates it from other Chinese automakers, and even global brands. “This has changed over the years,” says Gu. “Ten years ago, the phrase was ‘connected vehicle’. Then it was Software Defined Vehicle. The focus was to change the user experience in a vehicle, utilizing software capabilities and connectivity to provide differential features. How do you enjoy a vehicle? How do you enjoy a mobility experience? How do you drive? All those changes are what we want to focus on. We think that will become the ultimate differentiator that changes people’s mobility lives.”
“Now fast forward 10 years,” continues Gu. “We think this whole concept now has a broader meaning in Physical AI, which is turbo charging that software defined connectivity to even more intelligence. Now our vehicles have the processing power of a supercomputer of only a decade ago. We are now utilizing the large language models that people start to engage with in their daily lives. We can leverage our vast cloud-based computing power to train and process data that was not available 10 years ago. That development also points to not just changing the vehicle experience. Now, equipped with intelligence DNA and physical capabilities, we can tackle other sectors such as flying cars and human robots.”
Can XPENG Autonomous Driving Drive Sales In Europe Too?
However, while Chinese consumers are very open to adopting new technology, European car buyers could be more reticent towards this kind of product driven by artificial intelligence. “European consumers like high tech, but Chinese consumers are different,” says He. “They try anything. In Europe, our consumer is older. The mindset is younger in China.” Chinese automaking was really in its infancy just 20 years ago, too. If you travel around a major city in China, almost all the cars you see will be virtually brand new and could even be the first four-wheel vehicles their owners bought. In contrast, European (and American) buyers have huge brand history – family favorite marques, memories of manual gearboxes and engine noise nostalgia. How can you target both types of market with one product, even if you think technological benefit is a common factor?
“Customer preferences and also driving behavior are quite different between China and Europe,” explains Gu. “Every market has some unique distinctions. One example is that a lot of buyers of our products in China are young people, 20-30-year-olds. They look for cutting edge technology. In Europe, people who can afford new cars are mostly in their 40s and older, so the design language is very different. To appeal to that customer, you must design in a way that they like, whereas in China, it’s very flashy features. We need to pick out the products from our lineup that are suitable, and what kind of features we can make resonate with our European customers. The adoption rate of certain changes in China is also much faster. People are very willing to experience new technology – new apps or new ways of communicating or consuming, whereas in Europe, people take time to adopt a lot of new features. We must be very patient.”
“That’s why, with some of the technology or features we launch, we do not want to make too dramatic a change to their driving behavior, because that takes time to learn,” concludes Gu. “We want to gradually educate them. With some of the technology, such as the robots, the speed is slower than compared to China. But putting those aside, ultimately people want to have the same goal of a safer, more relaxing and more enjoyable mobility experience. That is consistent throughout markets. It just depends on XPENG to deliver that in the way they would like to enjoy and accept at their own pace.”
