Artificial intelligence is rapidly becoming the central focus in the automotive industry, mirroring the advancements seen in electric vehicles and battery technology, where Chinese manufacturers currently hold a significant advantage. The integration of AI into vehicles, from advanced driver-assistance systems (ADAS) to comprehensive vehicle operations, is poised to be the next major competitive arena, potentially demanding billions in investment from Western automakers.
AI Integration Accelerates in Automotive Sector
Recent announcements from auto manufacturers highlight a clear intention to infuse their products with AI capabilities. Chinese automotive conglomerate Geely Auto, which is reportedly considering a U.S. expansion, is prioritizing AI development, particularly in enhancing its advanced driver-assistance systems (ADAS).
Geely’s G-ASD, or Geely Afari Smart Driving, represents a ‘Full Domain AI 2.0’ initiative. This system aims to move beyond mere industry buzzwords, with Geely stating that the AI integration is designed to optimize the driving experience. It is intended to serve as the foundation for its upcoming Level 3 ADAS, enabling eyes-off, hands-off driving capabilities.
The AI algorithms developed by Geely are created in-house, leveraging vast datasets collected from millions of vehicles operating on Chinese roads. This AI system is slated for deployment across Geely’s entire brand portfolio, encompassing electric vehicles (EVs), extended-range EVs, plug-in hybrids, and traditional combustion-engine vehicles.
Beyond Autonomy: Efficiency and Safety Gains
Geely asserts that the benefits of AI extend beyond autonomous driving. According to a Geely spokesperson at CES, the company aims to reduce energy consumption by up to 15%. This is achieved as the vehicle learns from the driver’s habits and its operating environment to optimize power management and consumption levels. This adaptive learning can also be applied to enhance safety in emergency situations or during spirited driving, enabling quicker reactions such as engaging all-wheel drive or utilizing the air suspension to mitigate potential accidents.
Sister brand Volvo is also set to feature a Google Gemini-based AI assistant in its new EX60 model. However, due to national security concerns, Geely must maintain a separation between its Chinese software and any potential U.S. market offerings.
Convergence of AI, Robotics, and Autonomous Driving
Geely’s overarching AI strategy aims to unify all vehicle functions, enabling real-time data processing from the environment and immediate responses. The company views this as essential for the future of autonomous driving, where self-driving cars must operate effectively without human intervention.
This trend aligns with the broader emergence of “physical AI,” which extends beyond virtual assistants to encompass machines capable of interacting with the physical world. This convergence is evident in the development of robots, AI systems, and autonomous vehicles, all of which utilize similar underlying technologies for perception and movement.
Xpeng, another Chinese automaker, has also announced its commitment to advancing towards Level 3 assisted driving and beyond, emphasizing its top-down AI integration. The company claims its AI algorithms are being developed to power both self-driving capabilities and the logic for future robots designed for household or industrial tasks.
While companies like Tesla have long discussed the synergy between their Full Self-Driving technology, AI, and planned robot ventures, and firms like TomTom and Mobileye are openly utilizing AI for ADAS development, Chinese manufacturers appear to be actively implementing these advancements ahead of others.
China’s Ambitious AI Investment and Global Strategy
Companies like Xpeng and Geely are exploring strategies to offer their AI and ADAS services as platforms or solutions for other brands, both within and outside China. This reflects a broader push by China into global technology markets, with AI being a central pillar.
Goldman Sachs projects that China’s AI sector will see investments totaling $70 billion within the next year, covering areas such as data centers and chip manufacturing. This investment phase, described as “build it and they will come,” spans various AI-related initiatives.
The Evolving Automotive Competitive Landscape
The automotive industry is witnessing a new race, shifting from the focus on electric vehicles to autonomy, driven by the pursuit of profitability. AI was a prominent theme at CES 2026, with companies like Nvidia discussing physical AI and Nvidia’s role as an open-source AI service provider. Hyundai’s Boston Dynamics showcased a robot with potential applications in manufacturing, and Ford demonstrated an AI assistant for its vehicle lineup.
The ultimate winner in this AI-driven automotive evolution remains unclear. While Xpeng, Tesla, and Geely are early and visible players, many others are entering the field. It is also uncertain whether other companies will adopt AI technologies developed by these firms.
Li Chuanhai, VP and CTO of Geely Auto Group, expressed that even within China’s competitive AI landscape, Geely views AI as a foundational element of its future operations, not requiring intense battles for differentiation. “Chinese automakers are very hard working, and the whole industry is aligned to focus on AI [integration] as the future of the industry,” Chuanhai stated at CES. Geely intends to integrate its AI tools across its products, manufacturing, and operations, regardless of whether other brands adopt its offerings.
Western Automakers’ AI Integration: A Varied Approach
Western automakers’ AI integration varies. General Motors, for instance, has utilized AI tools to streamline development for models like the Cadillac Optiq.
However, for some, AI integrations are more akin to demonstrations of advanced features, such as Ford’s AI assistant capable of determining if Home Depot purchases fit into a truck bed. The question remains whether these functionalities are comparable to comprehensive AI algorithms designed for a wide range of vehicles, irrespective of powertrain.
The success of China’s AI systems will ultimately depend on their real-world performance, which will become evident once they are deployed and approved for public use in China. Reports suggest that Ford is in discussions with Geely regarding potential partnerships, including in automated driving technology. This indicates that Western manufacturers are closely watching the advancements made by their Chinese counterparts. The competition between Western and Chinese automakers is now extending beyond EVs, with AI poised to be a critical differentiator.