BYD's Bold Move: Revolutionizing China's Automobile Industry

In the stillness of last night, BYD sent shockwaves through China's automotive landscape, triggering a seismic shift that has left the industry reeling. This wasn't just another product launch; it was a strategic masterstroke that signaled the dawn of a new era in the competitive world of Chinese automobiles.

The Catalyst: BYD's Ambitious High-Level Intelligent Driving Initiative

Even before the celebration of the Lantern Festival faded, BYD had already sounded the clarion call for a new round of competition in the Chinese car market. What was once a niche feature chosen by a select few consumers - "intelligent driving" - has now been transformed by BYD into a game-changing offensive.

On the evening of February 10th, BYD made a groundbreaking announcement. Not only would it achieve "full product coverage of high-level intelligent driving," but it would also introduce these enhancements without increasing prices. This decision was not only bold but also had far-reaching implications for the industry.

This move follows BYD's successful "equal price for gasoline and electric vehicles" strategy in 2023 and the further reduction of electric vehicle prices in 2024. It represents yet another significant assault on the automotive market, setting the stage for a fierce battle among industry players.

BYD's Aggressive Strategy Unveiled

During last night's event, a total of 21 BYD models received an upgrade to the "intelligent driving version." To put it simply, all of BYD's mainstream products in its Dynasty Network (Qin, Han, Tang, Song, Yuan) and Ocean Network (Seagull, Dolphin, Sea Lion, Seal, and Song PLUS) - with the exception of the entry-level Seagull, where both intelligent driving and non-intelligent driving versions will coexist - will be transformed into "intelligent driving models" by 2025.

In just a few months, consumers purchasing a BYD vehicle, excluding the Seagull, can expect to enjoy enhanced high-level intelligent driving capabilities. But what truly sets BYD apart is the "more features, same price" approach. As the name implies, the vehicles not only gain intelligent driving capabilities but also maintain their original price tags.

Based on BYD's official announcements and publicly available price databases, among the 21 models upgraded to the intelligent driving version, the entry-level model of the Han DM-i saw a minor price increase of 3,000 yuan, while the non-intelligent driving version of the Seagull experienced a price reduction of 3,000 - 5,000 yuan. The majority of the models, however, remained at the same price despite the significant upgrade.

BYD also introduced an updated intelligent driving solution, "Heavenly Eye," which was first launched with the Denza N7 in 2023. This solution has been further refined and divided into three tiers:

• Heavenly Eye A (gold tail label, model DiPilot 600): Equipped with 3 lidars, dual Orin X chips, and a computing power of 508 TOPS, this solution is currently exclusive to the Yangwang brand.
• Heavenly Eye B (red tail label, model DiPilot 300): Features 1 - 2 lidars, 1 Orin X chip, and a computing power of 254 TOPS. It offers urban NOA capabilities and is available in both Denza and BYD's main brand vehicles.
• Heavenly Eye C (blue tail label, model DiPilot 100): Adopts a pure vision-based approach without lidars, using a 5R12V configuration (5 millimeter-wave radars and 12 cameras), and 1 Orin N/Journey J6 chip with a computing power of 84/128 TOPS. It only supports highway NOA functions.

The newly updated intelligent driving models include the Heavenly Eye B and C solutions. For example, the new Seal EV utilizes the B solution. The selection of the B or C solution is primarily based on the vehicle's price range, with the red-label B solution typically reserved for models priced above 200,000 yuan.

In addition to the intelligent driving chips, cameras, and radar sensors, BYD has also "conveniently" upgraded the intelligent cockpit performance of all its intelligent driving models. The cockpits have been upgraded from the previous DiLink 50 or lower-level systems to the more advanced DiLink 100 system, which features a better car machine chip and a smoother operating system. Even the steering wheels have been replaced with capacitive steering wheels.

Hands-On Experience: The Capabilities of Heavenly Eye C

A firsthand experience of the lowest-tier "Heavenly Eye C" (tested on the Qin L) revealed impressive intelligent driving capabilities. The experience covered two key features: highway NOA and intelligent parking.

During the 50-kilometer highway drive, the highway NOA feature demonstrated performance on par with the industry's top players. The entire "Heavenly Eye C" system seamlessly integrated sensor and map information to ensure a smooth and stable driving experience. It excelled in various scenarios, including speed adjustments, lane changes, overtaking, entering and exiting ramps, and navigating large curvature bends. The details of the co-driving and takeover processes (such as when entering a toll station outside the available area) were also optimized, making the system easy to use.

The intelligent parking function also proved to be highly capable in a variety of typical parking scenarios, such as fishbone parking spaces, side parking, extremely narrow spaces, and dead-end roads. It generally completed the parking process within one minute. Users also have the option to lock the car with the key and leave before the parking function starts, enabling a complete valet parking experience.

Overall, while the "highway NOA + intelligent parking" capabilities of BYD's "Heavenly Eye C" may seem relatively simple compared to some other automakers that boast more advanced intelligent driving features, they are highly mature and more accessible to ordinary consumers. As BYD's founder and chairman, Wang Chuanfu, confidently predicted during the press conference, "In the next two to three years, high-level intelligent driving will become an essential feature, just like seat belts and airbags. Cars without high-level intelligent driving will become the minority." However, considering the "more features, same price" strategy, BYD's push for intelligent driving in the mainstream market is bound to trigger a comprehensive competition in terms of product value and cost-effectiveness in the Chinese automotive market in 2025. Wang Chuanfu's words are likely to be seen as a challenge by other domestic automakers.

Unleashing Disruption: How BYD's New Move Will Reshape the Industry

The automotive industry had anticipated BYD's intelligent driving push, but the company's rapid progress in this area has still caught many by surprise. In 2023 - 2024, BYD conducted extensive experiments with different hardware specifications, suppliers, and technical routes in its high-end products. These efforts have culminated in the more advanced A and B solutions within the "Heavenly Eye" system unveiled at this press conference.

However, the real game-changer is the "Heavenly Eye C" solution. Thanks to the development of end-to-end technology in the intelligent driving field in the second half of 2023, which reduces the reliance on hardware, especially lidars and high-computing-power chips, and the abundance of driving data from human drivers, BYD was able to develop a solution that is set to revolutionize the Chinese mainstream automotive market.

The "Heavenly Eye C" self-developed solution was first tested on the road by engineers last April. By the end of last year, it had completed the basic debugging and optimization of highway NOA across the country, achieving the "1000 kilometers without takeover" performance announced by Yang Dongsheng, the dean of BYD's new technology research institute, during the press conference.

According to the information briefly shared by Wang Chuanfu during the press conference, BYD has already established its own supercomputing center (the scale is unknown). In 2024, the daily new training mileage reached 72 million kilometers. Tesla announced a reference value of 140 million kilometers of daily training at the end of last year, which is approximately twice that of BYD. By the end of 2025, BYD aims to reach a training capacity close to that of Tesla at the end of 2024.

With such a large amount of training data, BYD can train a cloud version every seven days. After distillation, it can be pushed to the vehicle's OTA system, further improving the intelligent driving capabilities of the entire "Heavenly Eye C" system. As Yang Dongsheng revealed during the press conference, the pure vision-based "Heavenly Eye C" is expected to achieve urban memory intelligent driving capabilities through OTA within 2025, giving users the ability to use high-level intelligent driving outside the official highway NOA area (the car machine will likely evaluate whether the route is suitable for intelligent driving).

Although BYD's self-developed intelligent driving capabilities are not yet at the level of challenging the industry's top players, this widespread adoption of intelligent driving is bound to disrupt the existing value system of intelligent driving.

One of the most significant impacts is on cost. Take the "Heavenly Eye C" as an example. If BYD were to rely on suppliers for the entire solution, the lowest cost in the industry for a pure vision-based system would be over 4,000 yuan (the unit price includes a front high-resolution camera at 300 - 500 yuan, other cameras at 10 - 300 yuan, millimeter-wave corner radar at 200 yuan, ultrasonic radar at 50 yuan, lidar at 3,000 - 5,000 yuan, and an intelligent driving domain control chip at 2,500 - 3,500 yuan per piece). For BYD, which sold 4.3 million vehicles last year but had a net profit of probably less than 40 billion yuan (the annual report has not been released yet, and the annual profit is an estimated value; the average profit per vehicle is approximately 10,000 yuan), this would still be a substantial expense.

However, BYD's excellent cost control capabilities come into play. Despite showing the Nvidia Orin N as the intelligent driving chip for the "Heavenly Eye C" solution during the press conference, domestic intelligent driving chips are already being supplied simultaneously. The Horizon J6M will be supplied alongside the Orin N for the "Heavenly Eye" system, and there is a possibility of purchasing Horizon chips for even more advanced solutions in the future.

In terms of lidars used in the A and B solutions, two domestic leading lidar manufacturers have received orders. Although introducing multiple suppliers adds some complexity to the development of intelligent driving capabilities, it gives BYD greater control over the cost of key components.

In addition to intelligent driving chips and lidars, Yang Dongsheng also hinted at BYD's ability to produce and supply other sensors on its own. For example, BYD's self-produced millimeter-wave and ultrasonic radars, which are crucial in the pure vision-based solution, even outperform industry-standard products in terms of performance.

At the press conference exhibition, there were even intelligent driving surround cameras with the BYD logo engraved on them. While no similar marks were found on other components within the visible range, it is reasonable to assume that for BYD Electronics, which has strong consumer electronics manufacturing capabilities and experience, these components with relatively low technical barriers and the potential for significant cost reduction through mass production will likely be produced in-house. Just imagine the cost savings when producing 60 million cameras for 5 million vehicles.

Based on the available information, it is estimated that BYD can reduce the cost of the intelligent driving system by 30% - 40% through increased demand driven by the popularization of intelligent driving (self-produced cameras and sensors can reduce costs by 50% - 60%, chip bulk purchasing can reduce costs by about 30%, and self-assembly production can reduce costs by 40% - 50%). This unique ability of BYD will squeeze the intelligent driving value of other automakers in two ways.

Firstly, other domestic automakers directly competing with BYD in the mainstream market will have to follow suit in the popularization of intelligent driving capabilities and the corresponding competition in terms of comprehensive product value. However, intelligent driving is not the comfort zone for most automakers. If they still rely on suppliers, they will face a cost gap of at least 1,500 - 2,000 yuan per vehicle in the intelligent driving system compared to BYD, adding another disadvantage in the final market competition.

Secondly, new energy vehicle manufacturers that have been promoting "intelligent driving" and using this label to gain a price premium will also be affected. Driven by BYD's move, domestic automakers will likely extract the mature high-level intelligent driving capabilities from L2+ and introduce them to the mainstream market in the next two years. Although the overall intelligent driving capabilities of new energy vehicle manufacturers are still stronger, both the marketing strategies of manufacturers and the intuitive thinking of consumers will change. The additional intelligent driving capabilities of new energy vehicle manufacturers compared to domestic brands are often relatively immature and less user-friendly, and consumers' willingness to pay a premium for these capabilities is on the decline.

If new energy vehicle manufacturers want to maintain their strong "intelligent driving leadership" label, they may have to strive for the "L3 commercial" label in 2025 (L3 means that the automaker will be responsible for intelligent driving accidents), thereby increasing the sales risks of their products. This will ultimately result in greater operational pressure for new energy vehicle manufacturers.

The Road Ahead: Continuous Acceleration in the Pursuit of Innovation

It is foreseeable that in the coming days, there will be voices complaining about BYD's "aggressive competition." However, as pointed out in the outlook for the Chinese automotive market in 2025, the development of the Chinese automotive market is not as calm as it appears. Against the backdrop of the global automotive demand reaching its peak and Chinese automakers still facing challenges in fully accessing the European and American markets, continuous efforts in technology and product development are crucial to further widen the gap with competitors.

Intelligent driving is an opportunity that Chinese automakers cannot afford to miss. Thanks to China's unique and complex road environment, Chinese automakers can train intelligent driving systems that are more adept at "game theory" and better adapted to diverse scenarios. This wave of high-level intelligent driving popularization will stimulate Chinese automakers to build more globally competitive intelligent driving capabilities, injecting new impetus into the globalization of the Chinese automotive industry.

Before achieving absolute product leadership, Chinese automakers must continue to delve deep into technology, refine their products, and piece together a larger development puzzle. The competition between technology and the market has just begun, and the future of the Chinese automotive industry remains full of possibilities and challenges.