Alibaba Cloud is racing in the automotive industry

Author | Chai Xuchen

Editor | Zhou Zhiyu

As the global AI arms race intensifies, the long-silent internet giant Alibaba suddenly makes a comeback and stirs the entire automotive industry.

In the spring of 2025, the automotive sector is set to ignite a wave of partnerships with cloud vendors: BMW announces a joint development of an AI engine with Alibaba Cloud, IM Motors launches the "IM AIOS ecological cockpit" in collaboration with Alibaba, XPeng and BYD utilize Alibaba Cloud for computing power reserves, Leapmotor leverages Alibaba's cloud-side large model to empower its voice assistant, and Changan begins developing automotive domain large models using Alibaba Cloud's Tongyi large model. Even Tesla China is rumored to be using Alibaba Cloud's data service center.

Automakers are flocking in, driven by a surge in demand for computing power and large models in the competition for intelligent driving and smart cockpits—when the interactive experience of smart cockpits begins to rely on the semantic understanding of large models, and the algorithm iterations of intelligent driving require the use of WanKa clusters, most automakers suddenly realize that in the wave of software-defined vehicles, they need to catch up on computing power and AI.

Alibaba Cloud, which has been quietly building its AI + cloud capabilities, is seizing the opportunity to ride the fast track of the artificial intelligence era. With the addition of new carriers like flying cars and humanoid robots to the wave of intelligence, Alibaba Cloud's service boundaries will continue to expand.

Alibaba's ambitions are also evident; it aims to achieve the ultimate vision of artificial intelligence—AGI (Artificial General Intelligence) through ecological integration. Alibaba Group CEO Eddie Wu believes that AGI can accomplish 80% of human work, which means that the business models of various industries may be disrupted in the future.

This enormous disruption harbors tremendous business opportunities. At this moment, Alibaba is rapidly transforming from an e-commerce giant into a global AI infrastructure company. Since the beginning of the year, Alibaba's stock price has repeatedly hit new highs, indicating that the market is redefining the boundaries of its imagination.

Marriage

The rush for computing power spurred by AI large model startups has now suddenly shifted to the automotive industry.

End-to-end models with billions of parameters have made computing resources a key factor in the competition of the automotive industry in the second half of intelligence.

At the recent 2025 Electric Vehicle Hundred People Forum, in response to rumors of a potential collaboration between Tesla and Alibaba, senior executives from Alibaba Cloud revealed that Tesla is generally in contact with local companies. Previous reports indicated that Tesla is in deep discussions with Alibaba to explore future cooperation possibilities, with Alibaba potentially providing GPU data center services for Tesla China's FSD rollout.

If the cooperation between the two parties can ultimately materialize, it signifies that even the most aggressive tech car companies cannot completely escape their ecological dependence on cloud service providers. Alibaba Cloud will also gain a heavyweight partner, further solidifying its position in the AI realm.

In the automotive industry, Tesla's computing resources are beyond the reach of many automakers. Alibaba Cloud's General Manager of AI in the automotive sector, Li Qiang, revealed that at the end of December last year, Alibaba Cloud conducted an assessment of global automakers' computing power, concluding that Tesla's computing power is almost equivalent to the total computing power of major domestic autonomous driving companies, indicating that it has more redundancy, innovation, and trial-and-error opportunities Even so, Tesla, the global leader in the new energy vehicle industry, still seeks in-depth cooperation with cloud service providers in the field of computing power.

Moreover, not all car manufacturers have the financial resources like Tesla to build their own computing power infrastructure. Li Qiang stated that finding a data center that can accommodate 100,000 cards and the associated energy consumption is not easy, which is precisely the role of cloud computing companies. He revealed that recently Alibaba Cloud has received numerous invitations from car manufacturers hoping to collaborate with Alibaba to achieve computing power levels comparable to Tesla within three years.

In fact, three years ago, Alibaba helped XPeng build the first ultra-large-scale computing power center in Ulanqab, which has since multiplied in growth. Subsequently, Alibaba has also assisted companies like BYD in making significant computing power reserves and provisions, accelerating their progress from research and development to implementation in the field of autonomous driving.

In addition to computing power cooperation, Alibaba Cloud's large models are quietly penetrating the intelligent cockpit of vehicles.

A week ago, BMW announced a partnership with Alibaba to jointly develop an AI engine based on the Tongyi series models for application in new BMW models. In fact, beyond BMW, Alibaba Cloud has served over 90% of automotive brands, including state-owned enterprises like FAW, SAIC, Dongfeng, and Changan, as well as new forces like XPeng, Xiaomi, ZEEKR, and Leapmotor, along with foreign car manufacturers like BMW and Mercedes-Benz.

This indicates that Alibaba Cloud's AI model capabilities are rapidly being implemented on a large scale in automotive scenarios.

It is understood that the open-source Tongyi large model allows car manufacturers to quickly implement mature commercial interfaces while also enabling the large model to be "personalized" based on an open-source framework, maintaining brand tone. In less than three months after confirming cooperation with Alibaba Cloud, Leapmotor achieved rapid implementation of a large model cockpit based on its Bailian model platform; Great Wall's intelligent cockpit foundation was also built on the support of the Bailian platform.

Additionally, Alibaba Cloud can provide greater space for innovation for car manufacturers while offering computing power support and large model capabilities. Alibaba Cloud's "Lingdong Database" technology helps reduce data storage costs for car manufacturers by 20%; the coding assistant "Tongyi Lingma" optimizes over 30% of the code for BYD and XPeng.

The automotive intelligence sector is entering a prosperous new world of AI, requiring a strong ecosystem for support. Alibaba Cloud holds the key to the door of this new world.

Ambition

In the outlook of many automotive and technology company leaders, smart cars are not just a means of transportation but a "third space" beyond homes and offices, leading to the development of a new ecosystem.

This aligns with Alibaba's AGI goals. The AI + cloud strategic reserve allows Alibaba Cloud to rapidly capture territory in the intelligent vehicle sector, becoming an indispensable "water, electricity, and coal" infrastructure for many car manufacturers.

But Alibaba's ambition does not stop there; it aims to achieve the ultimate vision of artificial intelligence—AGI (Artificial General Intelligence)—through ecosystem integration, which is the direction of Alibaba's future development.

"The primary goal of our AI strategy is to pursue AGI, constantly pushing the boundaries of model intelligence capabilities," emphasized Eddie Wu, CEO of Alibaba Group, in an earlier earnings call.

Eddie Wu defines AGI as "an intelligent agent capable of completing 80% of human work," whether it be physical or mental labor. When the day AGI is realized arrives, the inherent business models of various industries will be disrupted and reconstructed Based on his vision, Alibaba Cloud views cars as "mobile intelligent entities," and its constructed "end-cloud collaboration" architecture has revealed the early form of AGI: the vehicle-side model continuously learns the owner's habits, while the cloud invokes the Tongyi large model for logical reasoning. This kind of "distributed intelligence" is precisely an early form of AGI.

Recently, Alibaba's collaboration with IM Motors is based on this concept.

On March 17, Alibaba and IM Motors launched the industry's first "IM AIOS system." It is understood that through the deep integration of the Tongyi Qianwen large model with Amap, Ele.me, and other Alibaba ecosystem services, Alibaba has created an "AI delivery" scenario for IM Motors, allowing users to complete the entire chain of restaurant selection, route planning, and seamless payment through natural language commands.

The "AGI" capability built through this service closed loop is something traditional Tier 1 suppliers find difficult to possess. When the vehicle system can seamlessly invoke payment, logistics, entertainment, and other Alibaba services, automotive products achieve higher intelligence.

Next, if this solution can be replicated in global automakers like BMW and Tesla, it will incubate an ecosystem that surpasses Apple's CarPlay, achieving the ultimate form of "car as a service."

At this moment, Alibaba's AI strategy is penetrating from the digital world into the physical world. Jensen Huang, the head of NVIDIA, has stated that the ultimate goal of AI is physical AI. For Alibaba Cloud, the technological potential explored in the automotive industry can also be replicated and extended to manufacturing, healthcare, finance, scientific research, telecommunications, and other fields, thereby constructing a more scenario-based and ecological AI application landscape.

It is understood that the Tongyi large model has already served over 1,000 government and enterprise clients, commercial banks, internet companies, mobile phone brands, leading home appliance manufacturers, universities, and research institutions, and is still accelerating its penetration into various industries.

As the Tongyi large model begins to be implemented in various business scenarios across thousands of industries, and as enterprises' computing power demands show exponential growth, a more profound industrial transformation is occurring. Alibaba Cloud is also rewriting the valuation logic of traditional cloud services in this transformation.

Thus, Alibaba's ambition has gradually become apparent; it aims to build Alibaba Cloud into a new era of infrastructure, achieve faster growth, and move towards the utopia of AGI.

Revaluation

In the rapidly changing AI era, Alibaba Cloud is not only seen as Alibaba's new growth engine but also becomes the focus for investors to reassess Alibaba's value.

In mid-February, Alibaba announced that it would invest over 380 billion yuan in the next three years to build cloud and AI hardware infrastructure, exceeding the total of the past decade and setting a record for the largest investment in cloud and AI hardware infrastructure by a private enterprise in China.

With a massive investment of hundreds of billions, Alibaba aims to seize the strategic high ground of the end-cloud collaboration era. Goldman Sachs estimates that about 80% of this significant investment will be used for AI servers, while the remaining portion will be allocated to general servers, data center infrastructure, and other business segments.

Subsequently, foreign investment institutions have also raised Alibaba's target price. Goldman Sachs pointed out that against the backdrop of rapidly growing demand for AI training and inference, this investment plan will significantly enhance Alibaba Cloud's AI competitiveness.

From an internet e-commerce company to an AI technology giant, Alibaba Cloud is racing forward with the entire Alibaba Group on the path of revaluation Goldman Sachs analyst team led by Ronald Keung expects that Alibaba Cloud's AI-related revenue will reach 29 billion and 53 billion yuan in fiscal years 2026 and 2027, accounting for 20% and 29% of total revenue, respectively. This will further drive Alibaba Cloud to achieve over 20% revenue growth in fiscal years 2026-2027.

It is worth mentioning that in recent years, Alibaba Cloud has continuously faced the challenge of slowing growth—from a revenue growth rate of 84% in fiscal year 2019 to 3.5% in fiscal year 2023. However, the AI-driven transformation has allowed it to return to triple-digit growth for six consecutive quarters.

With a number of global giants recently extending olive branches to Alibaba, the AI capabilities of Alibaba have finally ushered in a moment of large-scale scenario implementation and commercialization.

A landmark event was Apple's announcement in February of a collaboration with Alibaba to develop AI features for domestic iPhones, indicating that Alibaba's AI capabilities have been recognized by international tech giants. Subsequently, in March, Alibaba received an olive branch from BMW, which plans to leverage the Tongyi model to shape its own AI cockpit. Now, there are also reports of potential cooperation between Alibaba and Tesla.

This is just the tip of the iceberg. As new carriers such as flying cars and humanoid robots join the wave of intelligence, the service boundaries of Alibaba Cloud will continue to expand.

The ultimate outcome of this technological revolution is not a simple competition of computing power, but a comprehensive competition and cooperation of ecosystems.

Currently, Tencent Cloud and Huawei Cloud are also accelerating their follow-up in areas such as intelligent driving data and cloud computing. In this race that has just begun, Alibaba Cloud needs to accelerate its pace to maintain a leading position