Market Analysis

Tesla Faces New AI Rival as BYD Links Up with DeepSee

Amos Simanungkalit · 12 Feb17.4K Views

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Chinese automaker BYD (1211.HK) has partnered with DeepSeek to jointly develop new autonomous driving technology, posing a potential challenge to competitors like Tesla (TSLA).

DeepSeek, a China-based generative AI company, has gained attention for offering AI solutions comparable to OpenAI's but at a lower cost and with reduced resource requirements. While BYD has historically been more conservative than Tesla in its approach to autonomous technology, it is now equipping all its vehicles—from the high-end YangWang models to budget-friendly cars priced below 100,000 yuan (approximately $13,700)—with its advanced driver assistance system (ADAS) known as “God’s Eye,” according to China EV site CarNewsChina.

The God’s Eye system is available in three versions, each varying in functionality and powered by BYD’s Xuanji architecture, which integrates onboard chips, cloud computing, sensors, as well as cloud-based and in-vehicle AI. This system will be linked with DeepSeek’s R1 AI model to enhance both in-car and cloud AI capabilities.

Tesla, led by CEO Elon Musk, has heavily invested in its own autonomous technology. However, regulatory restrictions have prevented the company from launching its full self-driving (FSD) features in China. Musk noted during Tesla’s Q1 earnings call that regulatory challenges include China’s ban on transferring training videos outside the country and the U.S. government’s restriction on training in China, creating a complex situation for Tesla.

Despite these challenges in China, Tesla’s FSD and robotaxi projects are progressing elsewhere. Musk confirmed that a robotaxi service powered by paid, unsupervised FSD would launch in Austin, Texas, in June, using Tesla-owned vehicles. Additionally, the company’s purpose-built robotaxi, the Cybercab, is slated for release in 2026.

BYD's advancements in autonomous driving, combined with its ability to offer competitive EVs at lower prices than Tesla’s, could give it an edge in the Chinese market. In fact, BYD is close to surpassing Tesla in pure EV sales in China. However, BYD's impact on the U.S. market is limited for now due to former President Joe Biden’s 100% tariffs on Chinese EVs.