China’s EV price war turns into AI arms race beyond cheaper cars

BEIJING — Electric car makers in China are using more of the same AI features as they try to survive a protracted price war in the world’s largest auto market.

Competition has shifted over the past few years from expanding battery range to introducing driver assistance systems and using more powerful automotive chips. Now automakers are focusing on a number of in-car AI features.

More than 50 car brands Volcano Engine, the company’s cloud platform, announced last Friday that its technology unit opened a booth next to robotaxi company Pony.ai at the Beijing auto show.

Volcano Engine said this means Doubao is available on 145 car models and more than 7 million vehicles. Besides domestic vehicles, Doubao AI has also been integrated into new foreign-branded models such as fully electric cars. Mercedes-Benz GLC, SAIC Audi E7X and SAIC volkswagen ID. ERA 9X.

“We will continue to integrate new features faster,” Audi and SAIC Collaboration Project CEO Fermín Soneira told reporters ahead of the auto show this month. He noted how automakers can quickly distribute technology updates remotely or “over-the-air.”

Despite the rapid rollout of new features, automakers face continued pressure on sales.

“It will continue to be difficult because the capacity is there,” he said. “This price war won’t really end next month.”

The shift towards AI reflects consumer demand for connected features, including Huawei smartphone-compatible interfaces or voice-based assistants like Doubao.

ByteDance’s Doubao is by far the most widely used AI chatbot in China. More than 155 million weekly active users As of early this year, according to consultancy Chozan. Volcano Engine’s auto show booth featured demos of artificial intelligence systems for cars in both Chinese and English.

Stephen Dyer, partner and managing director and chairman of AlixPartners’ Asian automotive and industrial consulting practice, said the price war has evolved into a features war around cockpit technology.

But the problem is that much of this technology quickly becomes similar, making it difficult for companies to stand out.

Among the 20 best-selling electric car models in China, those priced at 100,000 yuan ($14,645) or more offered similar driver assistance and in-car entertainment functions, according to AlixPartners.

“They’re going to have to compete and continue to compete with technology, because technology spreads so quickly that you’re never going to be able to sustain a differentiated technology for long,” Dyer said.

Instead, he expects Chinese companies to start competing more on the “experience outside the car,” similar to luxury brands offering exclusive lifestyle experiences.

Chinese car manufacturer NioFor example, it offers customers exclusive access to products and clubhouses, as well as vehicles with premium interior materials.

The Chinese electric car company has struggled with the cost of offering such benefits and slowing market growth. However, Nio claimed last week that the ES8 was the industry’s first car model in the 400,000 yuan and above segment to deliver 100,000 units in just 215 days.

Alibaba’s also announced on Friday that its Qwen artificial intelligence model will be integrated into automakers’ vehicles. BYD and a local joint venture of Volkswagen. The system allows drivers to order food, book hotels, purchase tickets to attractions and track packages via voice commands, among other features.

The model is designed to run on Nvidia’s automotive chip system and work even with limited network connectivity.

Tu Le, founder and chief executive of consulting firm Sino Auto Insights, told CNBC’s Eunice Yoon that at the end of the day, AI should work in the background to support the user experience, not necessarily be a feature of a vehicle.

Even though it may be difficult for automakers to stand out in China, they can compete more effectively with foreign rivals.

“What we consider to be simple features and similar standard features in mass-market vehicles in the Chinese market are expected to eventually be expected in the Western market as well,” Le said.