(Yicai) May 30 -- In the coming decades autos will be defined more by artificial intelligence than by software, and together they could account for half of a car’s production costs, according to the chairman of Chinese electric car startup Xpeng Motors

“Over the next decade, even the next several decades, cars will no longer be defined by software, but by AI,” He Xiaopeng, who is also a co-founder and chief executive of Guangzhou-based Xpeng, said in a recent interview with media outlets, including Yicai.

Software’s share of a car’s cost has climbed to 20 percent from single digits in a decade, and the cost of software and AI technologies will likely increase to 50 percent in the next decade, He said. “In other words, in the future, hardware will account for half of the cost of a car, and software and AI will account for the other half,” he noted.

While the comprehensive use of AI throughout the vehicle has yet to be fully achieved, the technology is expected to bring more profound change in the future, He said.

Xpeng is continuously upgrading its AI tech, aiming to become an "AI technology company" and accelerate its expansion into overseas markets, He pointed out.

Stemming from his view that future cars will be defined by AI, He expressed support for the recent moves by some of Xpeng's domestic peers to consolidate their brands.

“When hardware defined cars, automakers needed multi-brand strategies,” he said. “But as software and AI increasingly become the mainstream in defining cars, manufacturers must adapt to the corresponding changes by integrating their business operations.

“From the second half of this year to next year, Xpeng will launch AI-powered vehicles priced between CNY100,000 and CNY500,000 (USD13,880 and USD69,400),” He said. “We expect the market to have noticed some changes by then.”

Models in the CNY100,000 to CNY150,000 price bracket account for half of Xpeng's revenue, leading some market observers to question whether the company's efforts to move upmarket are enough.

Xpeng's first-quarter deliveries surged 331 percent from a year earlier to a record high of around 94,000 vehicles, with the Mona M03 budget sedan accounting for nearly 50,000. The all-electric vehicle has shipped more than 100,000 units in the eight months since its launch. 

Xpeng launched the upgraded Mona M03 Max on May 28, with various AI features. The new model is the world's first car in the CNY150,000 price bracket to offer 'full-feature' smart driving assistance on par with that of flagship autos costing over CNY500,000, He said at the launch event.

Editors: Tang Shihua, Martin Kadiev