Apple Partners with Alibaba for Apple Intelligence, God's Eye Tech announced in EV Race

DeepSeek is changing China's AI scene, and it shows. BYD's God's Eye tech makes Tesla look like a loser.

Good morning,

Apple partnering with Alibaba is a big deal for its Apple Intelligence efforts in China. Since DeepSeek’s moment in early 2025, China’s AI scene has been accelerated considerably. With BYD equipping its God’s Eye technology even into its lower priced vehicles Tesla is under pressure like never before.

The Alibaba and BYD news strikes a different chord in 2025 and how China is asserting itself. Of course Apple had to partner with someone in China to develop Apple Intelligence, as Huawei and others have had a head-start with AI phone capabilities there.

Apple initially selected Baidu as its partner in bringing Apple Intelligence to its customers in China, but issues adapting the Chinese search giant’s models were apparently too great to overcome and it even recently explored if DeepSeek could fill that role, but it seems Alibaba with its Cloud computing and Qwen team were too good to pass up.

CEO Tim Cook cited the lack of Apple Intelligence as a driving force behind a recent 11% iPhone sales decline in China. I’m not sure if that’s even true, as trade tensions make Chinese consumer more favorable to made in China brands. China is a significant part of Apple’s revenue base, accounting for in the area of 15-20% of revenue.

Apple Intelligence in China coming from integrations with an unexpected winner

The development could clear months of uncertainty over Apple's AI strategy for China, where it has been losing market share to domestic rivals, including a resurgent Huawei whose smartphones have included AI tools since last year. So this is also good for Alibaba’s stock which has been flat or down for the last number of years BABA 0.00%↑ Alibaba’s stock is up 40% in the past month alone.

Alibaba’s Cloud team called Qwen have among the most capable models in China, and while not as flashy as DeepSeek’s product, now have 01.AI talent to help give them a further boost. Alibaba Cloud announced on Thursday it had reached a deal with Beijing-based 01.AI, founded by former Google China head Lee Kai-fu, to set up an “industrial large model laboratory”. The lab will combine the research and development capabilities of the two teams to explore technology and services related to AI models, with the aim to create “strong and comprehensive large model solutions” for business clients, according to a statement from Alibaba Cloud. My understanding is this is an acquisition type situation. At the very least there’s been some talent transfer and access to models.

Whatever is the actual case, Alibaba’s position in AI has been strengthened in 2025, even if DeepSeek and its young founder got much of the credit in global app stores. Certainly DeepSeek is now worth more than $20 Billion and moreover CCP leadership is working with him to accelerate China’s position in machine learning innovation.

As analysts like

Grace Shao

and

Tony Peng

have noticed, this is a rather significant event for China’s AI scene. When Apple partnered with OpenAI it gave them added credibility as a startup and Alibaba here proves its in a fairly good position as far as Generative AI IP, talent and models go. Alibaba’s relatively new CEO, Eddie Wu, is himself part of a new younger guard as well.

DeepSeek Accelerates China’s AI Capabilities in 2025

We cannot count out Baidu, Tencent and especially ByteDance and the other major Chinese AI startups still active. DeepSeek’s CEO is forward looking and not necessarily commercially minded (he already owns a very high percentage of both High-Flyer and DeepSeek), and his advice can really stimulate China’s AI scene to greatness in my opinion.

As usual western media and analysts analyze American companies, but don’t pay enough attention to China’s BigTech or AI startup scene to read the tea leaves. Apple considered models developed by Tencent, TikTok-parent ByteDance, Alibaba and Deepseek, but it passed on Deepseek as the startup's team lacked the manpower and experience needed to support a large customer, the report said. Given that ByteDance is a consumer-AI leader, you’d expect its models to eventually lead in China. But that might not occur yet in 2025 as Qwen and DeepSeek have shown a very fast rate of iteration not found in BAT&B companies due to their size.

This could be a lucrative deal for Alibaba that while doing great research in AI, hasn’t been able to translate that into its core businesses very much yet. The core objective of this partnership is to leverage Alibaba's AI expertise to enhance the functionality of iPhones in China. This strategic collaboration comes in response to the challenges Apple has faced in maintaining its market share in a competitive environment where local smartphone manufacturers are increasingly populating the market with advanced AI capabilities. Apple Intelligence has not been a great roll-out in the West, even with the (limited) partnership with OpenAI.

BYD’s God’s Eye Announcement is Huge for future of AVs

The BYD announcement for God’s Eye technology in its cheaper vehicles is a huge blow to Tesla. According to the company’s representatives, this update will allow every BYD car to be equipped with high-end intelligent driving technology, including a BYD Seagull hatchback with a price tag of 69,800 yuan (9,550 USD). Tesla has been slow to roll-out decent “self-driving” or robo-taxi capabilities which has allowed many Chinese EV makers to catch up or at least make decent attempts.

Previously, BYD vehicles were criticized in China for their intelligent driving system as they lagged behind some advanced startups. On February 10, BYD released the latest “God’s Eye” intelligent driving system, available in three core variants. These two events in February, 2025 - Alibaba’s partnership with Apple and BYD’s God’s Eye tech announcement are major developments in AI in big technologies.

China is a huge market still for the likes of Apple and Nvidia and much of their stock performance and shareholder value depends on doing well there. This is becoming increasingly difficult in the trade and new cold war. Not only are BYD cars much cheaper, Tesla charges approximately $8,200 for its Full Self-Driving (FSD) package on pricier models. The move pressures rivals like Tesla and China-based Xpeng. Xpeng is itself Alibaba backed and one of my favorite Chinese EV stocks XPEV 0.00%↑. Their R&D is really good, their branding not so much.

Among other things, ‘God’s Eye’ enables automated driving on the motorway under the driver’s supervision and fully automated parking and reversing. In the next two to three years, intelligent driving functions will be as essential as seat belts and airbags, said Wang Chuanfu, Chairman and President of BYD, at a company event.

BYD has also linked up with DeepSeek. It appears DeepSeek to will partner and help co-develop new autonomous technology of God’s Eye. The God’s Eye system comes in three different offerings based on functionality, all of which use BYD’s Xuanji architecture to power its self-driving technology. The Xuanji setup will be connected to DeepSeek’s R1 AI model to improve the vehicle's AI capabilities, as well as those in the cloud. This means DeepSeek is worth way more than we thought even last month. Western analysts were asked and came up with figures from $1 Billion to $150 billion valuations. It’s mostly likely somewhere in the middle and on the lower end.

BYD’s strategic advantage lies in feeding the R1 model a continual stream of real-world driving data from every DiPilot-equipped vehicle. Cameras, radar, and sensors capture a range of driving situations while preserving driver anonymity. This large dataset fuels an iterative “flywheel” cycle: more vehicles generate more training data, refining the AI and attracting more buyers.

BYD’s Three Tier Architecture

BYD currently offers its DiPilot ADAS in three main hardware tiers—DiPilot 100, 300, and 600:

• DiPilot 100 (Entry Tier): Relies on a camera-based approach supplemented by radar and 12 ultrasonic sensors. BYD has disclosed a total of 12 cameras, 5 millimeter-wave radars, and 12 ultrasonic units for this tier. Although it omits LiDAR, DiPilot 100 supports Level-2 features like highway NOA (Navigate-on-Autopilot), lane changes, and remote self-parking. BYD aims to expand city NOA to this tier via OTA updates.

• DiPilot 300 (Mid Tier): Adds a single LiDAR unit for more robust 3D mapping and object detection. This enables advanced city navigation, improved obstacle detection in poor visibility, and potentially more sophisticated parking maneuvers. The camera, radar, and ultrasonic setup is similar, but the LiDAR integration and software calibration allow for expanded autonomy features.

• DiPilot 600 (Premium Tier): Incorporates multiple LiDAR sensors (in some models, three LiDAR units) to provide panoramic coverage of the vehicle’s surroundings. Designed for flagship models like the Yangwang U9, DiPilot 600 can reportedly handle complex urban scenarios and high-speed highways with greater redundancy and 360° scanning.

China continues to win on price stimulated by aggressive Government subsidies. For instance, the biggest obstacle to the widespread adoption (of Self-driving tech in consumer vehicles) of smart driving is the high price, which means that most consumers do not have access to these functions, he said. BYD will accelerate the spread of smart driving by making these functions accessible to everyone. This prices out Tesla almost completely.

Tesla’s stock still trades at an absurd valuation, a P/E ratio for example of 161. Most car companies trade closer to a P/E ratio of 11. For comparisons, the P/E ratio of GM is below 8. P/E ratios are one of the fundamental ways which you can determine the fundamental value of a company grounded in real world data. Many savvy Western investors have been piling into Chinese Tech stocks because their valuations as so attractive relative to historical norms. If they “catch up” in AI as many of the open-weight models seem to indicate, things could be turning around for China’s woeful Tech stock ecosystem since the Government crackdown many years ago.

Baidu is already a leader in self-driving technology along with Google’s Waymo. To see BYD partnering with DeepSeek is fascinating considering DeepSeek is a very small team of very young AI talents. This will likely change the dynamics of DeepSeek’s trajectory altogether from a commercial standpoint. The DeepSeek CEO has well over 80% ownership of both High-Flyer and DeepSeek and is thus due to his youth going to become a very powerful person in China AI, as if he wasn’t already. Remember how fast this is moving, DeepSeek was founded in just 2023!

This article isn’t a deep dive, just wanted to give some of my readers a gist for what’s going on. I’m not sure we should have counted out China’s BigTech from the AI race quite yet. There’s been faster iteration of models from ByteDance, Tencent, Moonshot, Zhipu, Minimax, Baichuan and various other Chinese academic labs just in the first few weeks of 2025 alone than there was in 2024.