Chinese electric vehicle makers are moving beyond battery dominance and turning their attention to the chips that power advanced driver-assistance and automated driving features. According to InsideEVs, major brands like BYD, NIO, XPeng, and Li Auto are now developing their own smart-driving chips, aiming for greater control over key vehicle technologies.
China’s Next Automotive Frontier: Smart-Driving Chips
After establishing a global lead in EV battery manufacturing, Chinese automakers are now focusing on the next critical component: the chips that enable advanced driver-assistance systems and automated driving. Companies such as BYD, NIO, XPeng, and Li Auto are all pursuing in-house chip design projects, seeking to reduce reliance on third-party suppliers and tailor hardware to their own vehicles.
The shift comes as advanced driver-assistance hardware becomes increasingly important and costly. Automakers are looking to make these technologies more affordable and better integrated with their own software platforms.
BYD Leads With In-House Chip and Major Investment
BYD, already recognized as the world’s second-largest EV battery maker with a 14.4% global market share in the first five months of 2026 (SNE Research), has now unveiled its first in-house smart-driving chip. Founder Wang Chuanfu has stated that BYD can supply the key chips needed for its intelligent vehicles.
The company has announced plans to invest over $14.8B (~AUD 21.3B) into intelligent technology development over the next three years, according to the Wall Street Journal. BYD’s new Xuanji A3 chip is a specialized 4-nanometer semiconductor designed to support Level 3 and Level 4 automated driving, offering capabilities comparable to Nvidia’s Thor chips but reportedly at one-third the price.
Other Chinese Automakers Join the Chip Race
NIO has developed its own 5-nanometer Shenji NX9031 chip, which is already in use in NIO models. Chinese industry reporting indicates that this chip could save roughly $1,472 (~AUD 2,123) (about $1,400 (~AUD 2,020)) per car compared with Nvidia-based hardware.
XPeng released its Turing AI chip in 2024, presenting it as the ‘world’s first multi-end universal chip’ for autonomous driving. XPeng has also been collaborating with Volkswagen on China-market EVs using XPeng technology and is reportedly in discussions with other car brands about its chip.
Li Auto has introduced the Mach M100, a 5-nanometer AI chip designed specifically for its flagship L9 Livis SUV.
Why this matters
The move toward in-house smart-driving chip development marks a significant step for Chinese automakers as they seek to control more of the technology stack in their vehicles. This could allow them to reduce costs, improve integration, and respond more quickly to market demands.
As Chinese brands expand globally, their ability to design and produce key components like batteries and smart-driving chips could further strengthen their competitive position against established Western automakers.
What this means for buyers
For consumers, the development of in-house chips by Chinese automakers may lead to more affordable and technologically advanced vehicles. Buyers can expect to see advanced driver-assistance features become more widely available, even in lower-priced models, as companies integrate their own hardware and software solutions.
Key Specs
- BYD Global Battery Market Share (Jan-May 2026): 14.4%
- BYD Investment in Intelligent Tech (next 3 years): $14.8B (~AUD 21.3B)
- BYD Xuanji A3 Chip: 4-nanometer, supports Level 3/4 automated driving
- NIO Shenji NX9031 Chip: 5-nanometer, used in NIO models
- NIO Estimated Cost Savings Per Car: $1,472 (~AUD 2,123) (~$1,400 (~AUD 2,020))
- XPeng Turing AI Chip: Released 2024, ‘multi-end universal chip’ for autonomous driving
- Li Auto Mach M100 Chip: 5-nanometer, designed for L9 Livis SUV
