BYD, Nio, Xpeng, Li Auto Ship In-House Driving AI Chips

The story worth watching in China's EV market this quarter is not the price war, it is what is happening one layer down. China's four largest EV makers, BYD, Nio, Xpeng and Li Auto, have all unveiled custom autonomous-driving chips in the past year, according to Financial Times reporting picked up by TheNextWeb. That is the layer of the stack Nvidia had assumed was safe.

The parts are more concrete than the usual we're-building-our-own-silicon announcement. BYD's Xuanji A3 is a 4nm chip that has entered mass production, delivering more than 2,100 TOPS in a three-chip cluster and natively supporting SAE Level 3 and Level 4 autonomous driving. Nio has been shipping its 5nm NX9031 across its main-brand lineup since the ET9 sedan launched in early 2025, and into its mass-market Onvo sub-brand. Xpeng's Turing chip is quoted at up to 2,250 TOPS per unit, and Li Auto's Mach M100 sits at 1,280 TOPS on a 5nm process. These are not paper products.

Why this matters if you do not cover automotive: this is the second front in China's chip-independence push, and it is the one where the cost math is easiest to make work. Nvidia and Horizon Robotics posted gross margins of 75% and 65% respectively in 2025. For an automaker building millions of cars a year and fighting a mass-market price war, that vendor margin is what they want to claw back. One estimate cited in the reporting is around 10,000 yuan of per-vehicle savings at Nio from switching to in-house silicon. On top of the cost logic, US export controls on Nvidia's most powerful chips made self-reliance a strategic imperative, not just a P&L one.

The honest caveat is what the reporting does not settle. It does not name the foundries producing these 4 to 5nm parts, so how much of the value actually accrues to Chinese fabs versus TSMC is an open question. It also does not benchmark real-world autonomy against Nvidia's Drive Thor, which the reporting notes remains the global benchmark for next-generation autonomous driving. Take the TOPS figures as what the carmakers claim, not as a verdict on driving quality.

The forward-looking piece is straightforward. If the in-house chips hold up in the field, Nvidia's Chinese auto revenue is a shrinking pie ahead of MIIT's target of 100% self-developed chips in Chinese vehicles by 2027. The near-term winners are not just BYD and Nio, but Chinese fabless design teams and whichever domestic foundry inherits the volume.