China’s EV price war is turning into an AI arms race over cheap cars

BEIJING — China’s electric car makers have used some of the same artificial intelligence features as they try to survive a long-running price war in the world’s largest auto market.

The competition has changed over the past few years, from expanding battery range to rolling out driver assistance systems and using more powerful automotive chips. Now, car manufacturers are focusing on a series of car AI features.

More than 50 car models now use ByteDance’s Doubao AI model, the company’s cloud platform Volcano Engine announced last Friday at the Beijing Auto Show, where the technology division had a booth alongside robotics company Pony.ai.

That means Doubao is in 145 cars and more than 7 million cars, said Volcano Engine. Apart from domestic cars, Doubao AI has also been integrated into new foreign-branded models, like all electric ones. Mercedes-Benz GLC, i SAIC Audi E7X and SAIC Volkswagen ID. ERA 9X.

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

Despite the rapid release of new features, car manufacturers face constant sales pressure.

“It will still be difficult, because the power is there,” he said. “This price war will definitely not end next month.”

The shift to AI reflects consumer demand for connected features, including Huawei-smartphone-compatible communication or voice assistants such as Doubao.

ByteDance’s Doubao is the most used AI chatbot in China, with more than 155 million active users as of the beginning of this year, according to consultant Chozan. The Volcano Engine exhibit area included demos of both Chinese-language and English-language AI systems for the cars.

The price war has become a war around cockpit technology, said Stephen Dyer, partner and managing director and head of AlixPartners’ Asia automotive and industrial consultancy.

The challenge, however, is that many of those technologies quickly become the same, making it difficult for companies to stand out.

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

“Technologically, they’re going to have to run and keep running, because it’s spreading so fast that you can’t support different technologies for a long time,” Dyer said.

Instead, he expects Chinese companies to start competing more with “out-of-car experiences,” such as luxury products that offer a special life experience.

Chinese automaker Niofor example, it offers its customers exclusive access to products and clubhouses, over cars with premium interiors.

The Chinese electric car company is struggling with the costs of providing such benefits and the slow growth of the market. But Nio said last week that its ES8 is the first car model in the industry’s 400,000 yuan-and-above segment to deliver 100,000 units in just 215 days.

Alibaba also announced on Friday that its Qwen Artificial Intelligence model will be integrated into vehicles from car manufacturers including BYD and a local Volkswagen joint venture. The system allows drivers to order food delivery, book hotels, buy tickets for attractions and track packages, among other features, with voice commands.

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

At the end of the day, AI should run in the background to support the user experience, not necessarily a feature of the car, Tu Le, founder and managing director at consulting firm Sino Auto Insights, told CNBC’s Eunice Yoon.

Even if it is difficult for car manufacturers to stand out in China, they can compete effectively with foreign peers.

“What we’re thinking is that maybe the convenience features and other, common features in mass-market cars in the Chinese market, will be expected in the Western market sooner rather than later,” Le said.