As they rapidly increase competition with Tesla in the world’s largest vehicle market, numerous Chinese electric car manufacturers are turning to American chip giant Nvidia to run their semi-autonomous driving systems. The Nvidia Drive Orin chip is used in the latest cars from Chinese start-ups Xpeng and Nio. Baidu, which founded an auto business called Jidu last year, and Polestar, a brand owned by Chinese auto giant Geely, both announced plans to employ the same Nvidia technology in their next cars.

Nvidia claims that this chipset and associated software platform will enable completely autonomous driving. “There isn’t much that compares to what Nvidia can offer for a Chinese EV startup, or worldwide,” said Bevin Jacob, who is a partner at the Shanghai-centered investment and consultancy firm Automobility.

These Chinese automakers, however, are not producing fully autonomous vehicles. Instead, they’re concentrating on ADAS, or advanced driver assistance systems. These are systems that allow the vehicle to do some functions, such as lane switching, semi-autonomously. For instance, Tesla’s ADAS is known as Autopilot, but Xpeng’s system is known as Xpilot.

As per Aakash Arora, who works as the managing director (MD) and partner at the Boston Consulting Group, ADAS, along with other features such as quick charging and range, are “important differentiators” in the high-end electric car industry. “From a customer expectation standpoint, most EV vehicles presently compete in pricing ranges where having ADAS is crucial,” Arora added. “EV early adopters are also often early technology adopters who place a higher emphasis on technology characteristics.”

In China, Tesla is competing.

Competition is heating up in China’s electric vehicle market, which is set to rise at a rapid pace again in 2022. Nvidia has benefited from the fierce competition among China’s electric vehicle manufacturers.

Tesla, which has manufacturing in Shanghai, sold a historic high of China-made vehicles in December, and the company’s brand is still strong despite one of the country’s greatest public relations problems last year. Nvidia chips are not used by electric vehicle manufacturers in the United States. Instead, it creates its semiconductors to be able to power the Full Self-Driving (FSD) chip, which is used to power its ADAS.

While Tesla is spending on chip design, all EV firms, particularly start-ups focused on increasing production and putting cars into customers’ hands, cannot afford to do so.

That’s why, in order to compete with Tesla, they’re looking to Nvidia for chips to power ADAS features. “Tesla has a distinct and definable advantage around FSD,” Daniel Ives, Wedbush Securities managing director, said CNBC by email. “Chinese EV players are now aggressively teaming with Nvidia to narrow this presumed technology gap.” “Nvidia has deep roots in the Chinese market, and expanding its car chip portfolio around FSD is critical from a strategic standpoint.”

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