Chinese automaker BYD: A case study in a world leader in artificial intelligence and the rise of the Chinese economy, and the news of DeepSeek
Some auto industry watchers had a feeling of déj vu this week. Seemingly out of nowhere, a Chinese firm made international headlines by besting Western companies at the tech they supposedly invented.
As it began to export low-price electric vehicles all over the world, it wasn’t BYD, the 20-year-old automaker that gained sudden global recognition. (BYD built more electric vehicles in 2024 than Tesla.) The buzz surrounding this week was about a Chinese startup that shocked the techies when it released an open-source artificial intelligence model, with very little funding for the US competitors. US tech stocks slid earlier this week due to DeepSeek’s success.
The result is a different one than the auto one, with a few echoes. The history of the Chinese auto industry demonstrates sophisticated research networks and firms’ abilities to build on the success of their predecessors, says Kyle Chan, a postdoctoral researcher at Princeton University who writes about Chinese industrial and climate policy. You can see that the company began in the late 1980’s as a refrigerator parts company and transitioned to autos in 1997. It didn’t have a license to operate in China for the first four years it was there, but since then it produces 3.3 million vehicles and sells internationally. Geely and other automakers that emerged in the same time frame—Chery, BYD, Great Wall Motor—have now produced a new wave of manufacturers. Domestic brands are selling in China.
In the case of automobiles, the Chinese government has supported electric-vehicle-makers for more than 20 years and gave tax breaks to electric vehicle customers, creating policies that made the entire country go electric. Chinese AI investment is much more recent, but growing bigger. The Chinese government has spent over $200 billion on artificial intelligence firms in the past decade, according to researchers. Just this month, it announced a new $8.2 billion AI investment fund.
If DeepSeek-R1’s performance surprised many people outside of China, researchers inside the country say the start-up’s success is to be expected and fits with the government’s ambition to be a global leader in artificial intelligence (AI).
On 20 January, the Hangzhou-based company released DeepSeek-R1, a partly open-source ‘reasoning’ model that can solve some scientific problems at a similar standard to o1, OpenAI’s most advanced LLM, which the company based in San Francisco, California, unveiled late last year. And earlier this week, DeepSeek launched another model called Janus-Pro-7B, which can generate images from text prompts much like OpenAI’s DALL-E 3 and Stable Diffusion, made by Stability AI in London.
There are. On 29 January, tech behemoth Alibaba released its most advanced LLM so far, Qwen2.5-Max, which the company says outperforms DeepSeek’s V3, another LLM the firm released in December. New reasoning models, Kimi 1.5 and 1.5 pro, released last week, were claimed to be better than o1 on some benchmark tests.
Developing a pipeline of ‘AI talent’ became a priority. By 2022, the Chinese ministry of education had approved 440 universities to offer undergraduate degrees specializing in AI, according to a report from the Center for Security and Emerging Technology (CSET) at Georgetown University in Washington DC. In that year, China provided almost half of the world’s leading Artificial Intelligence researchers while the United States accounted for 18%, according to a think tank.
A computer science graduate from the top university in the region, he is a young businessman. The hedge fund High-Flyer was founded by him almost a decade ago.
The policies that promote a model development environment for the use of artificial intelligence will have aided companies such as DeepSeek, according to Jacob Feldgoise, a researcher at the CSET.
It is not known how many students graduating with dedicated degrees in artificial intelligence are being taught the skills companies need, despite the rise in courses at universities. Chinese AI companies have complained in recent years that “graduates from these programmes were not up to the quality they were hoping for”, he says, leading some firms to partner with universities.