According to information obtained, XPeng Inc. has recently launched an internal investigation into former employees regarding their compliance with non-compete obligations.
It is understood that XPeng's legal department has already filed a labor arbitration case against one former employee for allegedly breaching their non-compete agreement. The employee in question signed a non-compete agreement upon joining the company and, upon leaving at the end of 2025, provided written confirmation to continue fulfilling a one-year non-compete obligation.
Since the employee's departure, XPeng has been making full monthly payments for the non-compete compensation. However, the employee reportedly joined a competitor shortly after leaving and continued working in relevant research and development, constituting a serious alleged breach of the agreement.
During the investigation into former staff, XPeng discovered this individual's actions and has formally applied for arbitration with the local labor dispute arbitration committee, demanding the employee continue to honor the non-compete obligations.
Furthermore, XPeng is seeking the return of the non-compete compensation already paid, the proceeds from the sale of restricted stock, and payment of a penalty, with the total claim amount approaching 10 million yuan.
Legal experts commented that China's Labor Contract Law clearly stipulates the legal validity and fulfillment conditions for non-compete agreements. XPeng's actions in investigating and pursuing arbitration are seen as a reasonable effort to protect its legitimate business rights.
In this specific case, if the employee joined a competitor in a short timeframe and engaged in related R&D work, and if that competitor's business competes with XPeng's areas such as physical AI, robotics, or low-altitude aircraft, a breach of contract may be established. A critical point in such disputes is defining the "competitive relationship," requiring proof that the new employer is a direct or indirect competitor and that the employee's new role involves similar R&D work.
Given the complexities of defining competition and the high amount in dispute, the case is likely to proceed to first-instance and potentially second-instance court proceedings after arbitration. Courts will focus on reasonably defining competitive relationships, reviewing the fairness of compensation payments, and assessing whether penalty amounts are excessive relative to actual losses.
XPeng has been significantly increasing its investments in areas like physical AI, robotics, and low-altitude aircraft. Data shows the company hired 8,000 new employees in 2025, with R&D expenditure reaching 9.49 billion yuan, including 4.5 billion yuan for AI-related projects. For 2026, projected R&D investment is approximately 12 billion yuan, with about 7 billion yuan earmarked for physical AI.
To safeguard its core technology, XPeng initiated this investigation to ensure former employees in key technical positions have not violated their non-compete clauses, with a focus on departments like the General Intelligence Center and Robotics Center.
This case highlights the frequent disputes over non-compete clauses in fast-evolving, talent-mobile sectors like AI and robotics. Companies need to balance protecting technology with allowing reasonable talent mobility, avoiding the misuse of non-compete agreements to stifle industry innovation. Agreements should clearly define competitive scope, compensation standards, and liabilities. Investigations must be conducted lawfully with proper evidence collection, and compensation must meet local standards without unduly restricting ordinary employees' future employment.
For employees subject to such agreements, it is advised to carefully review the terms before signing and to adhere to the obligations after leaving to avoid legal disputes.