China’s electric car race is becoming all about semiconductors

BEIJING — Chinese electric car companies already engaged in an intense price war are turning up the heat on another front: chip-powered tech features like driver assistance.

Nope and Xpeng announced that their in-house designed automotive chips are ready for production. Until now, many of the major Chinese electric car manufacturers have relied Nvidia chips, the company’s automotive chip business in recent years bringing in more than $300 million in revenue per quarter.

“It’s hard to point out that your product is superior when your competitors are using the exact same silicon to power their infotainment and smart driving systems,” said Tu Le, founder of consulting firm Sino Auto Insights, explaining why automakers electric vehicles turn to the interior. chips.

He told them he was expecting adze and Chinese electric car startups to compete in designing their own chips, while traditional automakers will likely continue to rely on Nvidia and Qualcomm “for the foreseeable future.”

Nvidia reported a 37% year-over-year increase in automotive revenue to $346 million in the latest quarter.

“Automotive was a key driver of growth for the quarter as every automaker developing autonomous vehicle technology uses NVIDIA in their data centers,” company management said in an earnings call, according to a FactSet transcript.

“I think the main reason why Chinese (automakers) are paying attention (to) self-development system-on-chip is Tesla’s success in self-driving,” said Alvin Liu, senior analyst for Shanghai-based Canalys.

In 2019, Tesla switched from Nvidia to its own chip for advanced driver assistance features.

By designing their own chips, Chinese automakers can customize functions as well as reduce supply chain risk from geopolitical tensions, Liu said.

Liu does not expect a significant impact on Nvidia in the short term, however, as Chinese automakers are likely to test new technologies in small batches at the higher end of the market.

In late July, Nio said it had finished designing an automotive-grade chip, the NX9031, which uses highly advanced 5-nanometer manufacturing technology.

“This is the first time that five-nanometer process technology has been used in the Chinese auto industry,” said Florence Zhang, consulting director at China Insights Consultancy, according to a CNBC translation of her remarks in Mandarin. “Overcame the research and development bottleneck of smart driving chips in the domestic market.”

Nio, which teased the chip in December, plans to use it in the high-end ET9 sedan, scheduled for delivery in 2025.

The 5-nanometer technology is the most advanced for cars, as the 3-nanometer technology is mainly used for smartphones, personal computers and artificial intelligence-related applications, CLSA analyst Jason Tsang said following the Nio chip announcement.

Xpeng at its event on Tuesday did not disclose the nanometer technology it was using for its Turing chip. The company’s driver assistance technology is considered one of the best currently available in China.

As Xpeng unveiled its chip on Tuesday, Brian Gu, Xpeng’s president, emphasized in a CNBC interview the day before that his company will primarily partner with Nvidia for the chips.

The two companies have a close relationship, with Xpeng’s former head of autonomous driving joining Nvidia last year.

China’s electric car industry giants also recognize the importance of car chips.

If batteries were the basis of the first phase of electric car development, semiconductors are the basis for the second phase of the industry, as it focuses on smart connected vehicles, BYDIts founder, Wang Chuanfu, said in April at a press conference held by Chinese driver assistance chip company Horizon Robotics.

Wang said more than 1 million BYD vehicles use Horizon Robotics chips.

BYD announced on Tuesday that its Fang Cheng Bao off-road vehicle brand will use Huawei’s driver assistance system.

U.S. restrictions on Nvidia chip sales to China have not directly affected automakers because the cars have not yet required the most advanced semiconductor technology.

But with an increasing focus on driver-assistance technology that relies more on artificial intelligence — a segment at the heart of the tech competition between the U.S. and China — Chinese automakers are turning to domestic technology.

Looking ahead to the next decade, Xpeng founder He Xiaopeng said on Tuesday that the company plans to become a global AI car company.

Asked about the availability of computing power to train driver assistance technology, Xpeng’s Gu told reporters on Monday that before the US restrictions, the company worked with Alibaba Cloud. He claimed the access now probably gives Xpeng the largest cloud computing capacity of any Chinese carmaker.

Government incentives, from subsidies to support for building a battery charging network, have helped electric cars take off in China, the world’s largest car market.

In July, the penetration of new energy vehicles, which includes battery-only cars and hybrids, surpassed 50 percent of new cars sold in China for the first time, according to industry data.

That scale means companies involved in the country’s electric car development are also contributing to new standards for car technology, such as eliminating the need for a physical key to unlock the door. Instead, drivers can use a smartphone app.

How that app or device securely connects drivers to their cars is part of the upcoming set of standards the California Automotive Connectivity Consortium is working on, according to president Alysia Johnson.

A quarter of the organization’s members are based in China, including Nio, BYD, Zeekr and Huawei. Apple, Google and Samsung are also members, Johnson revealed.

She said the organization is trying to allow the driver of a Nio car using a Huawei phone to securely send the car “key” to a partner using an Apple phone and driving a Zeekr car, for example.

“Key digital technology is becoming much more accessible than people would think,” she said.