Friday Wrap-up: Physical AI and China's Speed Advantage

Marthe Skaar (0:00)

Hi, everyone, and welcome back to In Good Company, the Friday wrap up. I'm still Marthe Skaar.

Nicolai Tangen (0:05)

Nicolai Tangen here.

Marthe Skaar (0:07)

Hi, and this week's episode featured Brian Gu, which is Vice Chairman and President of XPeng. And if you haven't listened to it, you should listen to it because, Nicolai, in my opinion, this episode is mind-blowing.

Nicolai Tangen (0:19)

Absolutely, totally.

Marthe Skaar (0:30)

So let's start. In the old days, let's say back in 2020, a car company was a car company. Gu doesn't call XPeng a car company, he calls it a physical AI company.

What is that?

Nicolai Tangen (0:44)

Well, it's interesting. When we speak to the car manufacturers, they talk about the software becoming so important. And it's not only the software to drive the car, it's the software also to link in with the entertainment systems, the self-driving systems and so on. Just the software component and the chip part of it is just now so important.

Marthe Skaar (1:08)

And then he also talked about level four, which is fully autonomous cars, including no steering wheel.

And he talks about it, that this will happen in our lifetime. What's your reaction to hearing how he talks about this?

Nicolai Tangen (1:24)

Well, interesting.

We did another interview recently with a Chinese automation company. And so basically these kind of automation levels, level four, it means that you go from hands-off to eyes-off to minds-off. Minds-off is when you can be fast asleep whilst the car is taking you from A to B.

We're going to be properly hands-off according to many people in China now by 28 We'll be eyes-off by 30 and we'll be minds-off by 35 So we can then be fast asleep. And the application for society is huge, right? Doesn't really matter whether you live far from the city because your transportation time, you can use it for constructive things. There are not going to be many more queues. It just changes the concept of time and space and I cannot wait.

Marthe Skaar (2:20)

Yeah, and also how you think about cities and where you can live, etc. Okay, but let me paint a picture for you. Flying cars between skyscrapers, rowboats in the household, gadgets everywhere you look.

You know where the scene is from?

Nicolai Tangen (2:36)

Well, it sounds a bit like Back to the Future, but I think you have another idea.

Marthe Skaar (2:40)

It's Duckburg, which is the fictional city in Donald Duck. And I think all of us read a lot of Donald Duck as kids. And now these things are finally coming in to play because it turns out this is not that far into the future when it comes to flying cars.

Nicolai Tangen (3:00)

No, it's not far into the future. It's coming faster. I think it's also interesting how intertwined the supply chain is for cars compared to robots and humanoids.

It's pretty much overlapping because what you need for self-driving cars is sensors, is actuators, is all types of software companies, software elements and chips. It's very much the same overlap that you are now seeing in the robotics companies. China has got a really deep and wide supply chain here. It's really putting them at the forefront of the humanoid development as well.

Marthe Skaar (3:40)

Yeah, it sure is.

And XPeng's journey actually started here in Oslo, where we're sitting, with their first physical store. I know it's rolled out. And looking at the EV numbers here in Norway, it's tremendous. It's 98.7% of all car sales in August. But of course, we are a tiny market. So then when you look at China, it's 60% of new car sales. And then I wonder how important to have a home market like that when you are a company like XPeng.

Nicolai Tangen (4:16)

It's hugely important. There are at least 60 producers of cars in China. Supposedly, over the last year or so, they launched some 500 models. So the number of models and the specifications coming out of the Chinese EV market now is just incredible. And of course, they compete extremely hard with each other. Which means that when they go outside the Chinese borders and actually export into the rest of the world, they are unbelievably strong, both from a technology point of view, but also on a pricing point of view.

Marthe Skaar (4:51)

And talking about competition, because he calls China like a fittest gym in the world. What does that mean?

Nicolai Tangen (5:00)

Well, I think it means exactly that, that when you come out of that gym, you are a very, very good car company. And, you know, you have just fine-tuned the kind of things you do.