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Auto China 2026 spotlighting AI-driven shift in car industry

Centralized computing, large language models and Level 4 autonomy redefine the market

By LI FUSHENG | China Daily | Updated: 2026-04-27 09:58
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Chery displays its Mornine humanoid robots and vehicle models at Auto China 2026 event. LI FUSHENG/CHINA DAILY

One of the most explicit articulations of this transition came from XPeng CEO He Xiaopeng, who outlined the company's strategy centered on "physical AI".

XPeng's latest model, he said, is the first Chinese vehicle designed with full hardware redundancy to meet robotaxi standards and has already obtained road testing permits in Guangzhou, Guangdong province.

The company is currently conducting regular Level 4 pilot operations and plans to begin passenger-carrying tests with safety drivers later this year, targeting fully driverless operation by early 2027.

He also extended the concept of physical AI beyond vehicles. XPeng is developing humanoid robots following a "commercial-first" path, with initial deployment in retail environments. The company aims to sell more than 10,000 units by 2027.

Underlying these initiatives is a broader industry view: hardware iteration is slowing, while software, particularly AI-driven capabilities, is becoming the primary driver of differentiation.

The integration of AI is also reshaping the underlying computing architecture of vehicles.

At a technology event two days ahead of the show, Horizon Robotics introduced its Starry chip, built on a 5-nanometer automotive-grade process.

With 650 TOPS of computing power, the chip supports both intelligent driving and cockpit AI models on a unified platform.

This shift toward centralized computing, combining previously separate domains, is expected to reduce system complexity, lower costs and shorten development cycles.

According to the company, integrated architectures could cut vehicle-level costs by up to 4,000 yuan ($585) and reduce development timelines from 18 months to eight months.

More than 10 carmakers and suppliers including BYD, Chery, Volkswagen and Bosch have shown interest in the chip, said the company, indicating growing industry alignment around unified computing platforms.

Horizon Robotics CEO Yu Kai described autonomous driving as "the first large-scale application of physical AI", placing the current technological wave within a broader transition toward intelligent systems interacting with the physical world.

For the first time, core suppliers and automakers have appeared in the same exhibition halls — a structural change that reflects shifting power dynamics across the industry.

Battery makers, chip companies and AI solution providers are no longer operating behind the scenes. Instead, they are presenting integrated system solutions directly to the market.

CATL, for example, built a 1,500-square-meter energy technology zone at the entrance of one hall, showcasing its next-generation battery concepts, including solid-state and sodium-ion technologies.

Other major suppliers, from Bosch to SenseAuto, are also displaying full-stack solutions rather than individual components.

Global automakers accelerate localization

International carmakers are deepening their engagement with China's AI ecosystem.

Volkswagen Group CEO Oliver Blume said the company is moving beyond electrification and driver assistance toward "agentic AI for all".

"Starting this year, our in-car AI Agent will begin coming to our locally developed cars," he said. "With this step, the Volkswagen Group is the first global automaker to deploy agentic AI across an entire vehicle portfolio in China at scale."

The system, based on a locally trained large language model, is designed to proactively understand user intent and execute complex, multisystem tasks through natural interaction, while keeping data processing within the vehicle.

BMW Group CEO Oliver Zipse emphasized a similar approach to localization.

"In China, we can integrate local partners such as Momenta and Alibaba," he said, highlighting the flexibility of software-defined architectures.

Zipse added that artificial intelligence will underpin the future of driving itself. "The vehicle will anticipate your next move — slowing down before a turn or adapting to your habits," he said. "AI and sheer driving pleasure are not contradictory; they are fundamentally connected."

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