Guangzhou, CHINA — Chinese electric car company Xpeng announced Wednesday that by the first quarter of 2026, it will start rolling out a new driver-assist system for navigating narrow roads.

Xpeng claimed the new system enables cars to drive themselves smoothly through tight streets — which it played up as better for the European market — and significantly reduces the need for human intervention. The Chinese company said that German automaker Volkswagen will be its first client as Xpeng opens the system to other car makers.

Speaking at the company’s “AI Day,” Xpeng CEO Xiaopeng He claimed the new driver-assist system — which builds on Xpeng’s existing systems for assisting drivers with parking, driving on highways and navigating city roads — required less human intervention than Tesla’s Full Self-Driving (FSD) system, and completed a test route several minutes quicker.

“Next month I will go to the U.S. to compare [Xpeng’s latest system] to FSD again,” He said in Mandarin, translated by CNBC.

The new model is also able to respond to traffic controllers’ hand gestures, as well as to traffic light countdowns from red to green, the company said.

Tesla has struggled to get Beijing’s approval to roll out FSD in mainland China. Xpeng started releasing its driver-assist tech in major Chinese cities in early 2023, and the systems have rapidly become a must-have feature for Chinese companies wanting to survive in the highly competitive domestic market.

Just as Tesla has expanded this year into robotaxis, Xpeng on Wednesday announced plans to launch three robotaxi models next year and start testing in Guangzhou.