The automotive industry in China is currently undergoing a transformative phase, marked by a shift from direct price competition to a more nuanced battle over enhanced features and smart driving technologyThis year, major players like BYD and Changan Auto have unveiled strategic initiatives aimed at democratizing intelligent driving capabilities across a broader price spectrum, specifically targeting family-friendly vehicles priced between 100,000 to 150,000 yuanConsequently, more than 20 companies within the automotive supply chain have recently announced partnerships with DeepSeek, leveraging advanced open-source AI models to elevate the intelligence of their vehicles.

Experts within the industry are highlighting the growing prevalence of smart driving systems, underscoring an increase in competitive pressures that necessitate automotive manufacturers and algorithm developers to sharpen their focus on commercial viabilityThe notion of “AI on the road” is gaining traction, reflecting a landscape where manufacturers are keen to integrate sophisticated technology into their offerings.

The year 2025 is shaping up to be pivotal as major players in the auto sector, including Changan and BYD, position themselves for a fierce competition centered on smart driving equity and the incorporation of DeepSeek technologiesFor instance, on February 9, Changan Auto announced its ambitious “Beidou 2.0” plan, pledging that it would from this year onwards cease the production of non-intelligent vehicles and instead commit to launching 35 new smart models over the next three years, aiming to deliver full-scenario Level 4 autonomous features by 2028.

In a similar vein, BYD held a strategic release on February 10, where CEO Wang Chuanfu revealed plans to upgrade 21 vehicle models to “smart driving editions”, ensuring that all models priced at 100,000 yuan and above would come with built-in smart driving systems, along with a significant portion of models below that price point.

The current market has notable gaps, particularly in the segments below 200,000 yuan, where the assimilation of advanced smart driving technologies still lags

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Data from the Gao Gong Intelligent Automotive Research Institute illustrates that as of 2024, a modest 52.44% of the entry-level passenger cars are equipped with L2 or below driver-assisted functionalities, while only 8.62% feature advanced systems like Navigate on Autopilot (NOA), with only a mere 1.31% for the 100,000 to 200,000 yuan category.

In the latter half of 2024, brands like Xpeng Motors and Changan Automotive have strategically decreased the barriers to entry for high-level smart driving systems, exemplified by Xpeng's MONA M03, which officially launched at the end of AugustThis model has been a commercial success, exceeding sales of ten thousand units in September alone, and it features a Qualcomm Snapdragon 8155 chip with urban smart driving capabilities, thus repositioning the entry point for advanced systems to around 150,000 yuan.

Simultaneously, the DeepSeek model has ignited significant interest in integrating AI into vehiclesMajor manufacturers like Geely, Great Wall Motors, Leapmotor, and Chery have announced collaborative efforts with DeepSeek, signaling a robust integration of advanced data processing capabilities to elevate user engagement and service delivery.

An analysis of current partnerships reveals a marked emphasis on interactive cockpit technologies and marketing enhancements, leveraging DeepSeek’s advanced Chinese language processing capabilities to enhance the connection between vehicle users and manufacturersIndustry analysts suggest that the collaboration between vehicle manufacturers and DeepSeek is not merely a trend but a critical opportunity for automakers to enhance their technological edge and competitive advantage against complex scenarios that autonomous driving technology must contend with.

Furthermore, as the Ministry of Industry and Information Technology emphasized during a press conference, the automotive sector's competition is pivoting towards a "value battle" where added features are rolled out with minimal price increases, moving away from the previous cut-throat price wars

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Leapmotor, for instance, plans to initiate pre-sales for its new intelligent driving model, the Leapmotor B10, on March 10, which promises to integrate laser radar technology for less than 150,000 yuan.

BYD's declaration of promoting equity in intelligent driving has spurred vigorous discussions among executives of various car companies regarding what constitutes "high-level" smart drivingHuawei’s consumer business head, Yu Chengdong, recently articulated on social media that there exists a significant difference between adequately functional smart driving and genuinely safe and effective systemsHe cautioned that while reducing costs to foster basic functionality is praiseworthy, there exists a risk in misclassifying basic entry-level systems as advanced technologies.

Changan's chairman, Wei Jianjun, echoed these sentiments, stressing the reality that smart driving should not merely be a performance showcase but should fundamentally enhance safety and travel efficiency for consumersDiscussions continue around the capabilities of BYD's “Tian Shen Zhi Yan C” which focuses mainly on highway and urban rapid road scenarios, with substantial debates ongoing about its inclusion of advanced functionalities in urban settings.

Despite significant ambition within the sector, there is an undercurrent of concern related to the sustainability of many firmsRecent reports have detailed the abrupt cessation of operations at Zongmu Technology, which, at one point, was buried in venture capital investment and hailed for its abilities in Level 4 autonomous parkingOnce seen as a star in the smart driving domain, it succumbed to mounting financial pressures amid the challenging commercial landscape.

As a whole, the industry stands at a crossroadsCompanies like Xpeng, Li Auto, and BYD are stepping up their pace in developing proprietary intelligent driving technologies, while third-party solution providers see their market share dwindleAnalysts caution that with the ongoing push for widespread adoption of smart technologies, suppliers and manufacturers alike face an impending wave of competition reminiscent of a survival of the fittest scenario.

A comprehensive survey indicates that over ten autonomous driving companies are eyeing IPOs in 2024 as a means to maintain viable cash flows amid stiff competition

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