China’s electric car race increasingly becomes a matter of chip efficiency as companies focus on technology – NBC10 Philadelphia

• Price wars aside, Chinese electric car companies are now competing in driver-assistance systems and other semiconductor-based technologies.
• “It’s hard to claim your product is superior when your competitors are using the exact same chip to power their infotainment and intelligent driving systems,” said Tu Le, founder of consulting firm Sino Auto Insights.
• Nvidia has built a $300 million automotive chip business over the past few years, with partners including many of China’s largest electric car companies.

BEIJING — Chinese electric car makers, already engaged in a fierce price war, are turning up the heat on another front: chip-based technology features such as driver-assistance functions.

Nio and Xpeng have announced that their internally designed car chips are ready for production. Until now, many major Chinese electric carmakers have relied on Nvidia chips, and the company’s car chip business has generated more than $300 million in quarterly revenue over the past few years.

“It’s hard to make a case for your product being superior when your competitors are using the exact same silicon to power their infotainment and intelligent driving systems,” said Tu Le, founder of consulting firm Sino Auto Insights, explaining why EV makers are switching to their own chips.

Le said he expects Tesla 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 percent year-over-year increase in automotive revenue to $346 million in the latest quarter.

“Automotive was a key growth driver in the quarter as every automaker developing autonomous vehicle technology is using NVIDIA solutions in their data centers,” management said during its earnings conference call, according to a FactSet transcript.

“I think the main reason Chinese automakers are looking at self-driving chips is Tesla’s success in fully autonomous driving,” said Alvin Liu, a senior analyst at Canalys based in Shanghai.

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

Liu said Chinese automakers can design their own chips, customize their functions and reduce supply chain risks stemming from geopolitical tensions.

Liu doesn’t expect this to have a significant impact on Nvidia in the short term, however, as Chinese automakers will likely test new technologies in small batches in the high-end car segment.

Using the latest technologies

In late July, Nio announced that it had completed the design of an automotive-grade integrated circuit, the NX9031, which uses highly advanced 5-nanometer manufacturing technology.

“This is the first time that 5-nanometer process technology has been used in China’s automotive industry,” said Florence Zhang, director of consulting at China Insights Consultancy, according to a Mandarin translation of her remarks by CNBC. “It has broken through the domestic R&D bottleneck for intelligent powertrains.”

Nio, which mentioned the system in December, plans to use it in its ET9 luxury sedan, which is due out in 2025.

The 5-nanometer technology is the most advanced for cars, as 3-nanometer technology is most commonly used in smartphones, personal computers and artificial intelligence applications, CLSA analyst Jason Tsang said after the Nio chip was announced.

Xpeng did not disclose the nanometer technology it uses in its Turing chip at its event Tuesday. The company’s driver-assistance technology is widely considered some of the best currently available in China.

While Xpeng revealed its chip on Tuesday, Xpeng CEO Brian Gu emphasized in an interview with CNBC a day earlier that his company will primarily work with Nvidia on the chips.

The two companies work closely together, with the former head of Xpeng’s autonomous driving business joining Nvidia last year.

The giants of China’s electric car industry also recognize the importance of integrated circuits for the automotive industry.

If batteries were the foundation of the first phase of electric car development, semiconductors are the foundation of the second phase of the industry, which focuses on intelligent, connected vehicles, BYD founder Wang Chuanfu said in April at a news conference organized by Horizon Robotics, a Chinese maker of driver-assistance systems.

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

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

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

But amid growing interest in driver-assistance technologies that rely more heavily on artificial intelligence — a segment at the heart of the U.S.-China technology rivalry — Chinese automakers are turning to homegrown technologies.

Looking ahead to the next decade, Xpeng founder He Xiaopeng said Tuesday that the company plans to become a global manufacturer of AI-equipped cars.

Asked about the availability of computing power to train driver-assistance technology, Xpeng’s Gu told reporters Monday that the company had been working with Alibaba Cloud before the U.S. restrictions. He said that access likely gives Xpeng the most cloud computing power among all automakers in China.

Creating new technologies and standards

Government incentives, from subsidies to support for building battery-charging networks, have helped fuel the growth of electric cars in China, the world’s largest auto market.

China’s new passenger car sales, including pure electric and hybrid cars, topped 50% for the first time in July, industry data showed.

That scale means that companies involved in the country’s electric car development are also contributing to new standards of technology for cars, such as removing the need for a physical key to unlock the doors. Drivers can instead use a smartphone app.

How that app or device safely connects drivers to their cars is part of a set of standards being developed by California’s Car Connectivity Consortium, said CEO 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 added that the organization wants to enable a Nio car driver who uses a Huawei phone to securely send the car’s “key” to a partner who uses an Apple phone and drives a Zeekr car.

“Digital key technology is becoming much more accessible than people might think,” she said.