At the Ocean Terminal in Tsim Sha Tsui, well-dressed social media influencers swarmed a lineup of sleek electric vehicles from Chinese automaker Xpeng, among the buzziest brands in the world’s premier EV market.

Xpeng had come to the cruise-ship terminal ahead of this week's Shanghai auto show to unveil its upscale X9 minivan priced from 359,800 yuan with automated-driving features, a drop-down screen to entertain rear-seat passengers – and even a built-in refrigerator.

The biggest crowds surrounded Xpeng's concept flying car, which sat alongside a six-wheeled van designed to carry it.

Xpeng chief executive He Xiaopeng and president Brian Gu bristled with ambition, predicting the company would emerge as one of few survivors from China’s hypercompetitive EV industry by expanding globally and building in-house artificial-intelligence capabilities. Like Tesla, it aims to develop robotaxis and humanoid robots.

Unlike Tesla, Xpeng has yet to turn a profit, despite fast-growing sales since its first car debuted in 2018 and an investment from Volkswagen.

The same is true of scores of other China EV makers, even as the sector leads a technological revolution that is upending the automotive industry globally.

Only a handful make money, most notably BYD, China's biggest EV-and-hybrid producer and Tesla's leading rival.

The burning question facing China’s EV industry as it gathers in Shanghai is how and when it can convert explosive sales of ground-breaking vehicles into sustainable profits. The intense competition driving the sector's innovation has also made China a market with precious few winners, foreign or domestic.

Gu takes a clear-eyed view of the challenge.

"In the past two decades, we can see that only a few companies are performing well," he said. "I’m very concerned about Chinese automakers … I think in the end, only 10 will survive."

Xpeng is among the Chinese EV startups best positioned to thrive as the industry moves from the "electrification" era to "smartification" – competing on self-driving and other AI-driven technology, said Bo Yu, a China-market expert at research firm Jato Dynamics.

"They're not profitable because they've invested in a lot of new things, but their profitability is improving," she said of Xpeng.

"They've started in-house development of AI and self-driving, and the flying car isn't just a show – they really believe in it."

Jato Dynamics data show that 169 domestic and foreign auto brands are fighting it out in China, but only 14 have a market share higher than 2 percent. Last year, 86 brands produced a total of 327 EV models, not including hybrids.

The competition has depressed prices to levels unfathomable outside China. As Tesla and other automakers struggle to produce EVs to sell for less than US$30,000 in the United States, BYD's entry-level Seagull electric hatchback – the star of the 2023 Shanghai auto show – is priced below US$10,000.

Xpeng founder He said his company would have to balance chasing technological breakthroughs with cost control – and "globalisation" to seek profits outside China.

Xpeng entered 30 new markets in 2024 and aims to enter another 30 countries this year. It aims to eventually sell half its vehicles outside China, where it will have more "pricing power," the CEO said.

Gu said Xpeng's "core regions" for expansion will be Europe, Southeast Asia, Middle East and Latin America. Conspicuously absent from that list is the United States, where President Donald Trump is escalating a long-running trade war with Beijing that has effectively banned Chinese cars and components.

Such protectionism could backfire on US automakers, said Cameron Johnson, a Shanghai-based supply-chain consultant with Tidalwave Solutions.

"Chinese firms have the best automotive connected technology in the world, and foreign firms need it to be competitive around the world, especially as Chinese brands go global," he said.

Gu said the industry revolution requires automakers to become tech companies themselves rather than relying on suppliers. Xpeng announced last week that it would soon equip its vehicles with its own AI chips.

"You have to possess capabilities in AI, in software, in technology and in manufacturing,” Gu said. “The players that can possess this full-stack capability will have a greater chance of survival.”

Xpeng focuses on the higher-end segment and has seen accelerating sales, which last year totalled about 190,000 vehicles. The automaker said it remained committed to its goal of turning a profit this year. (Reuters)