BEIJING — As competition heats up among Chinese electric vehicle manufacturers, the emphasis is increasingly shifting from merely price wars to advancements in chip-driven technology, particularly in driver-assistance features. Leading companies such as Nio and Xpeng have made strides by announcing the production readiness of their in-house designed automotive chips. Historically, many Chinese electric vehicle manufacturers have depended on Nvidia for their chip needs, a partnership that has proven lucrative for Nvidia, yielding over $300 million in quarterly automotive segment revenues in recent years.
Industry analyst Tu Le, founder of Sino Auto Insights, notes the strategic necessity for electric vehicle manufacturers to develop proprietary chips, stating, “It is challenging to differentiate your product when competitors utilize identical silicon for their infotainment and intelligent driving systems.” He anticipates that both Tesla and emerging Chinese startups will increasingly pursue their own chip designs, while traditional automotive manufacturers are likely to maintain their reliance on Nvidia and Qualcomm for the foreseeable future.
Nvidia’s latest financial remarks indicate a remarkable 37% year-on-year growth in its automotive sector, reflecting the rising demand among automakers for advanced autonomous vehicle technologies, primarily powered by Nvidia in their data centers.
The shift toward self-developed chips is influenced significantly by Tesla’s success in creating proprietary chips for advanced driving functionalities, commencing this transition in 2019. Alvin Liu, a senior analyst at Canalys, asserts that Chinese automakers are motivated to customize features while mitigating supply chain risks stemming from geopolitical tensions.
Despite the ongoing transition, Liu does not project an immediate adverse effect on Nvidia, as many Chinese manufacturers are likely to test their new technologies on a limited scale targeted at higher-end markets.
In late July, Nio announced the successful development of the NX9031 automotive-grade chip, which is notable for employing cutting-edge 5 nanometer fabrication technology, a first in the Chinese automotive landscape. Consulting director Florence Zhang remarked that this breakthrough addresses existing challenges in domestic intelligent driving chip R&D. Nio plans to implement this advanced chip in its high-end ET9 sedan, expected for delivery in 2025. 5 nanometer technology stands as the most sophisticated standard in the automotive sector, given that the 3 nanometer technology is predominantly reserved for consumer electronics and artificial intelligence applications.
Xpeng, while highlighting its own chip development, has emphasized its continued collaboration with Nvidia. Xpeng’s driver-assist technology is regarded as among the finest available in China.
The significance of semiconductors in the current phase of electric vehicle development is echoed by BYD’s founder, Wang Chuanfu, who has identified semiconductors as foundational to the evolution towards smart connected vehicles. At a recent press conference, he noted that over a million BYD vehicles currently utilize Horizon Robotics chips. Additionally, BYD confirmed that its Fang Cheng Bao off-road vehicle brand would incorporate Huawei’s driver-assist technology.
While U.S. limitations on Nvidia’s chip sales to China have not yet directly impacted automotive production—given that less advanced semiconductors have sufficed—the intensifying focus on AI-driven driver-assist technologies compels Chinese manufacturers to invest in in-house solutions.
Looking towards the future, Xpeng’s founder He Xiaopeng envisions his company evolving into a global leader in artificial intelligence for automobiles. The company has secured substantial cloud computing resources, purportedly making it the most formidable player in cloud capacity among Chinese automotive manufacturers.
Furthermore, government incentives have spurred electric vehicle adoption within China, the world’s largest automotive market, with new energy vehicles surpassing 50% of new passenger car sales for the first time as of July.
This rapid growth implies that the nation’s electric vehicle programs are poised to set new industry standards, notably with the development of technologies that eliminate the need for physical keys in favor of smartphone applications for unlocking vehicles. According to Alysia Johnson, president of the California-based Car Connectivity Consortium, several member companies—including Nio, BYD, Zeekr, and Huawei—will contribute to these standards, enabling seamless connectivity across various automotive platforms.
In summary, the evolution of China’s electric vehicle sector is increasingly characterized by a competitive focus on in-house chip innovations, essential for advancing driver-assist technologies and enhancing overall vehicle intelligence. As manufacturers like Nio and Xpeng forge ahead in these developments, their ability to adjust to regulatory landscapes and technological demands will be pivotal in securing their positions in a rapidly evolving marketplace.
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