Chinese EV maker XPeng has announced it will invest millions in artificial intelligence (AI) and hire around 4,000 employees this year as it looks to compete with rivals in the world’s biggest EV market.

CEO He Xiaopeng said the EV company will invest $486m (3.5bn yuan) into AI research and development, which will be used in intelligent driving. 

In a letter penned by Xiaopeng, he said: “Facing the pessimistic macroeconomic situation, many business partners are drawing back and afraid to invest. I think this is an opportunity for our development.

“In 2024, we will buck the trend and enter a high-speed positive cycle in the fourth quarter or earlier,” he said. 

In 2023, German automobile manufacturer Volkswagen bought almost 5% of Xpeng for $700m (€649.64m) and signed a partnership to create two new models. The partnership hopes to boost Volkswagen’s sluggish sales in China. 

The announcement of expansion and investment from Xpeng comes as other EV manufacturers in China look to cut costs. 

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The reduction in demand for EVs in China has hit manufacturers hard. A cut in subsidies and a reduction in consumer spending has seen growth in the sector slow down.

In every year of the 2020s, research and analysis company GlobalData expects the industry to add millions more units of EV capacity.

According to GlobalData’s Thematic Research: Electric Vehicle 2022 report, around 15.5 million EVs will be built, equating to a 15.1% share of total light vehicle production by 2025.