Autonomous Driving Battle: BYD's Price "Weapon" VS Tesla's "Dilemma"

For a long time, the competition between Tesla and BYD mainly focused on who could claim the title of "BEV sales king," but as we enter 2025, the battle between the two giants has quietly shifted to the field of autonomous driving.

The latest research report from Barclays' Jiong Shao analyst team points out that as autonomous driving technology becomes the new battleground in China's electric vehicle market, the showdown between Tesla and BYD has evolved from a simple sales comparison to a comprehensive competition in autonomous driving technology, with BYD's outstanding performance in price advantages posing a severe challenge to Tesla.

The shift in competitive focus was triggered by BYD's launch of the "God's Eye" autonomous driving system in February this year. Previously, Tesla's FSD was widely regarded as the best L2+ level autonomous driving system, far surpassing BYD's assisted driving products among its Chinese peers. However, with BYD introducing its "God's Eye" autonomous driving assistance system, the original market landscape has been completely disrupted.

Although Tesla holds a leading position in autonomous driving technology, it faces dual challenges of regulatory oversight and market competition in the Chinese market. Moreover, Tesla's FSD is priced at 64,000 RMB, which is significantly less competitive compared to BYD's free "God's Eye."

BYD's "God's Eye" System: Free and Popularization

Earlier this month, BYD officially launched its autonomous driving system "God's Eye" in China. The system is divided into three levels (A, B, C), each with different functions and sensor configurations:

Level A is specifically equipped for high-end models, featuring three LiDARs;

Level B is used for the Tengshi brand and high-end BYD models, equipped with one LiDAR;

Level C covers all BYD brand models, using only cameras.

The Level C system, as BYD's popular autonomous driving assistance system, is primarily applied to mid- to low-end models and is provided completely free to consumers. Barclays believes that this strategy significantly lowers the threshold for autonomous driving technology, allowing BYD to rapidly expand its market share of autonomous driving vehicles.

According to Barclays' estimates, models equipped with the "God's Eye" system will account for about 60% of BYD's total sales in 2024. Based on BYD's sales expectation of 5.5 million units in 2025, BYD alone is expected to contribute about 3 million vehicles with NOA (Highway Autonomous Navigation Driving) capabilities in 2025. In contrast, it is reported that the total number of vehicles sold in China with NOA support in 2024 is about 2 million.

In terms of data and cloud computing, BYD collects approximately 72 million kilometers of driving data daily in 2024, and this is expected to exceed 150 million kilometers per day by the end of 2025. However, in terms of computing power, BYD currently lags behind domestic peers and is even further behind Tesla (which has about 100+ EFLOPS of computing power).

Tesla's Challenges in the Chinese Market

As a pioneer in autonomous driving technology, Tesla's FSD (Full Self-Driving) system has long been regarded as the industry benchmark in the U.S. market. However, in the Chinese market, Tesla faces numerous challenges. The report points out: First, technical limitations are the biggest obstacle for Tesla in the Chinese market. According to Chinese regulations, Tesla cannot transmit data from its Chinese fleet to the United States for training, resulting in its FSD system experiencing symptoms of being out of place in China. This restriction significantly undermines Tesla's technological advantage in the Chinese market.

Secondly, the regulatory environment has also brought many inconveniences to Tesla, increasing its operating costs and limiting the promotion and application of its technology.

Furthermore, market competition is also one of the significant challenges Tesla faces in the Chinese market. Unlike the U.S. market, competition in autonomous driving technology in China is exceptionally fierce. Many Chinese OEMs offer similar functional systems at lower prices or for free.

For example, BYD's "Tianyan" system is not only powerful but also completely free, which makes Tesla's FSD system lose its competitive edge in terms of pricing. Tesla's FSD pricing in China is RMB 64,000 (approximately USD 8,800), far higher than BYD, which may affect its market acceptance.

In the next three years, competition in autonomous driving will become increasingly fierce

With the continuous development of autonomous driving technology, Barclays Capital predicts:

By 2025, urban autonomous driving functions (L2+) will begin to become popular, completing the popularization process by 2026. By 2026, urban autonomous driving functions (L3) will begin to be commercialized, thanks to: 1) the reduction in lidar prices; 2) improvements in the performance of vision-only systems.

Finally, by 2027, urban autonomous driving functions will continue to improve and begin a slow transition to L3+, meaning that drivers will hardly need to take over during daily driving.

This trend also indicates an increasingly fierce market competition, and BYD, with its price advantage and rapid technological iteration, is expected to occupy a favorable position in future market competition