Just a year ago, the entry price for high-level intelligent driving vehicles hovered around 200,000 yuan, but that cost has now plummeted to approximately 78,800 yuan. This dramatic shift was highlighted on February 10, during BYD's intelligent driving strategy launch event, where the company unveiled their new Seagull smart driving model, priced at a mere 70,000 yuan. This car is equipped with the latest Tian Shen Zhi Yan C intelligent driving system, which adopts a vision-based approach and does not rely on expensive LIDAR technology, thus further driving down hardware costs.

In July 2023, BYD first announced its advanced “Tian Shen Zhi Yan” intelligent driving system, which came ten months later than its competitor Xpeng's XNGP system. While being early to market can be advantageous, the real race in intelligent driving technology is about who can deliver the fastest and most effective solutions. The recent announcement by BYD, launching 21 new intelligent driving models, marks a strong counteroffensive in the fiercely competitive automotive market. One critical aspect of developing intelligent driving technology in-house is the necessity of handling large volumes of data. BYD still has a chance to assert itself with its robust data-processing capabilities.

Cost control has emerged as a key strategy. Back in August 2024, Yu Chengdong, the chairman of Huawei's terminal business group and the intelligent automotive solutions unit, confidently announced on social media that “the era of universal intelligent driving has arrived!” To further bolster this claim, BYD's chairman and president Wang Chuanfu echoed similar sentiments at the February event, predicting that 2025 will mark the dawn of universal intelligent driving.

According to statistics from Xingye Securities, by September 2024, the penetration rate of L2+ intelligent driving in China is projected to reach 13.8%. Within this, the highway Navigation on Autopilot (NOA) system (excluding urban areas) is estimated to hit a penetration rate of 3.9%, while urban NOA could reach 9.9%. This indicates a massive potential market for high-level intelligent driving technologies.

The main barrier to the popularization of intelligent driving, as pointed out by Wang Chuanfu, is the high price associated with it. Historically, high-level intelligent driving systems have been featured predominantly in vehicles priced around 200,000 yuan. However, as it stands, approximately 70% of Chinese automobile consumers are inclined to purchase vehicles priced below this threshold. The lower-end electric vehicle market, typically less than 200,000 yuan, is where BYD has established its dominance. Bundling high-level intelligent driving as a standard feature in vehicles under 200,000 yuan is an advantageous move for BYD. During the launch, Wang confirmed that all BYD models will come equipped with the Tian Shen Zhi Yan intelligent driving system.

The Tian Shen Zhi Yan system will consist of three distinct technical configurations: Version A, which includes high-level driving capabilities with three LIDARs (DiPilot 600); Version B, which is the high-level driving LIDAR version (DiPilot 300); and Version C, which is equipped with a purely vision-based approach (DiPilot 100). The current vehicles in BYD's Ocean and Dynasty series will be utilizing the vision-based Tian Shen Zhi Yan C configuration. This version is particularly critical as it facilitates BYD's mission to democratize intelligent driving technology.

The outcomes from these advancements can be observed in the new offerings from the company, such as the BYD Qin PLUS DM-i, Song PLUS DM-i, Yuan UP, Seagull, and Dolphin models, collectively spanning a price range from 70,000 to 200,000 yuan. This move towards inclusive intelligent driving directly places BYD in a strategic position to dominate the market. The substantial reduction in costs, achieved by eliminating LIDAR expenses, means the remaining component costs consist mainly of sensors, chips, and domain controllers. Informants have revealed that BYD's domain controllers are self-developed, and with bulk procurement of domestic chips, they are positioned to reduce costs further. Industry insiders suggest that the hardware costs associated with urban NOA could drop to between 4,000 and 5,000 yuan within a year, paving the way for more cars priced under 100,000 yuan to adopt the Tian Shen Zhi Yan system. This suggests that BYD's cost control capabilities may be set to improve significantly.

BYD's official entry into the "intelligent driving battle" was announced last year, marking a delay of nearly three years compared to newer competitors. At the BYD Dream Day event in January 2024, the company showcased the capabilities of the Tian Shen Zhi Yan system, including its City Navigation on Autopilot (CNOA) functionality, along with highway NOA, urban NOA, and valet parking features. This contrasts starkly with Xpeng, which introduced its L2 level auto-parking feature back in 2020, scaled up highway intelligent driving applications in 2021, and began significantly deploying its NOA system in 2023.

In 2024, BYD's sales reached an impressive 4.2721 million units, surpassing the second-place SAIC Group by 750,000 units. During the same period, rival brands like NIO, Xpeng, and Li Auto recorded sales of 222,000, 190,000, and 501,000 units respectively. However, BYD’s top position conceals potential pitfalls; amidst the hustle of technological advancements and price wars, their previously enjoyed economies of scale appear to be slowing down. In the first three quarters of 2024, BYD generated revenue of 502.25 billion yuan—a mere 18.9% increase year-on-year. While their gross profit margin reached 20.8%, this only marked a modest growth of 0.98 percentage points—a significant decrease from a 3.9 percentage point increase logged in the same timeframe just a year prior. The average price per vehicle has also dipped to 138,300 yuan, representing a year-on-year decline of 12.86%.

As intelligent driving evolves into a pivotal factor influencing consumer purchasing decisions, the market that once felt comfortable for BYD at the 100,000 to 200,000 yuan price point now sees competitors with equipped high-level intelligent driving technologies encroaching on their market territory. For example, Xpeng's MONA M03 580 MAX, starting at 155,800 yuan, already incorporates NGP for highway navigation and city driving, while the Lido L60, priced at 206,900 yuan, also provides comprehensive NOA for both highways and urban areas. More notably, the Baoding Yunhai, launched last September, equipped with DJI’s intelligent driving features, has entered the market with corresponding functionalities at prices nearing the 100,000 yuan range. These developments indicate that BYD is facing significant pressure to keep up with the swiftly changing landscape of intelligent driving technology.

Despite rising sales figures, BYD appears to face an increasingly evident gap in its intelligent driving capabilities. Reestablishing dominance in the technological domain remains crucial to overcoming the sustained challenges in profit growth. Like many traditional automakers, BYD pursues a dual strategy of both in-house development and external collaboration. The year 2024 is likely to see BYD racially push through an "end-to-end" strategy. At the outset of this year, Wang Chuanfu set ambitious goals for BYD: every model priced over 200,000 yuan will be given the option for high-level intelligent driving features, with a commitment that all models priced above 300,000 yuan will standardize such technology.

Wang emphasized that the popularization of intelligent driving transcends mere technological development; it is about effectively industrializing that technology. Engineers have remarked that integrating high-level intelligent driving across more vehicle models not only serves broader consumer accessibility but also accelerates the data accumulation and iterative improvement speeds, enhancing the company's overall driving capabilities. With the recent launch of 21 smart driving models, BYD has potentially reduced the time required to scale intelligent driving functionalities dramatically. Their strategic push into affordable intelligent driving serves as a wake-up call for emerging players and autonomous brands alike. The pressure is particularly acute for companies like Great Wall Motors, scrambling to enhance their new energy vehicle penetration rates, and Geely’s Galaxy, which continues to wrestle with its footing in the intelligent driving market.

However, in the context of industry technology, BYD faces significant challenges on its road to the pinnacle of intelligent driving. The competitive focus has shifted towards L3 capabilities and seamless vehicle-to-vehicle interactions. Companies like Xpeng, Li Auto, and Huawei plan to challenge or achieve L3 intelligent driving by 2025. In August of last year, Huawei introduced its ADS 3.0 system, which boasts advanced capabilities, allowing for vehicle maneuvers from parking to driving. By the latter half of last year, Li Auto, Xiaomi, Tesla, and Xpeng had already begun to roll out similar functionalities. Other entities, such as Zeekr and Yuanrong QiXing, are set to join this competitive arena by 2025, indicating an increasingly crowded field for BYD.

Conclusively, the era of intelligent driving is upon us; both automakers and suppliers are heavily engaged in the race. Companies that have yet to incorporate standard intelligent driving features into their vehicles must accelerate their efforts to remain relevant in this rapidly evolving landscape.