By Om Malik
Sometimes, a car is not just a car.
Take the new Volvo ES90, as an example.
In its press release, Volvo touts computing power of 508 trillion operations per second (TOPS), thanks to dual NVIDIA Orin chips. The ES90 features lidar technology, five radars, seven cameras, and 12 ultrasonic sensors. Its neural network can process 200 million parameters. The electric vehicle’s range matches Tesla’s top models. This isn’t just a car — it’s more of a supercomputer on wheels.
Goodbye Torque. Hello TeraFLOPS!
The future of cars is code, not chrome. Volvo’s ES90 is the latest example of computing’s conquest of the automotive industry. Industry insiders might shrug and say “so what.” But Volvo’s announcement serves as a stark reminder: While Tesla may appear to dominate the electric vehicle market, it’s facing intense competition. Chinese automakers aren’t just coming – they’ve already arrived.
Volvo may be Swedish in name and heritage, but that’s where it ends. The automaker is a subsidiary of Zhejiang Geely Holding Group, a Chinese multinational automotive company. Geely purchased Volvo Cars from Ford Motor Co. in 2010 for $1.8 billion. The Chinese company also owns Polestar and holds minority stakes in Lotus and Aston Martin. Perhaps most significantly, Geely stands as China’s second-largest battery electric vehicle seller, trailing only its domestic rival BYD.
While Tesla remains the largest electric vehicle company by total sales and market capitalization, its dominance faces mounting pressure from Chinese automakers. In 2023, Tesla delivered 1.8 million cars, while BYD delivered 1.57 million. In 2024, Tesla delivered 1.79 million electric vehicles, while BYD sold 1.76 million. BYD is nipping on its heels, and poised to take a lead.
However, these numbers don’t tell the complete story. BYD reported higher revenues in the third quarter of 2024 and delivered more fully electric vehicles than Tesla in the fourth quarter. According to China Passenger Car Association data released March 4, Tesla’s wholesale sales in the Chinese market fell 49% in February compared to the same period last year, reaching 30,688 units. Even though Chinese data is notoriously unreliable, you can hear the bad news bears grumbling.
BYD, Geely, and Xiaomi, the latter until recently known only as a smartphone maker, are increasingly dominating global electric vehicle sales. This shift poses challenges not only for Western automakers but also for Silicon Valley, particularly as technology evolves beyond personal computers and phones. The automotive sector has become the spearhead threatening American technological dominance and its ability to shape the industry’s future.
China is about 40% of all vehicle manufacturing already, but it has the capacity to produce at least another 10 million vehicles a year, says Nathaniel Bullard, who publishes an annual report on clean technology. Even Japan at its peak was nowhere close to that. China’s focus is no longer on fossil fuel cars -- it is focused on battery electric vehicles and hybrid vehicles. “China has reset the global auto market full stop, not just electric vehicles,” Bullard said. “We’ve never seen a nation control this much of global auto manufacturing.”
What works for Chinese auto-industry is that Chinese manufacturers benefit from both a robust supplier network and vertically integrated companies like BYD, which, similar to Tesla, controls much of its production process. “The implications are big for Europe and profound for Asia-Pacific and the rest of the world,” Bullard said. “European, U.S. and Japanese automakers are already losing their share in China proper and are also seeing China compete with them elsewhere.”
BYD sold 4.27 million cars in 2024, approaching Ford's estimated sales for the year. China exports EVs in aggregate to the Global South rather than to the EU or US. No wonder Ford’s CEO is honest enough to admit that they are facing down the barrel of the gun.
“The way we compete with them is to get access to their IP just the way they needed ours 20 years ago, and then use our innovative ecosystem and American ingenuity and our great scale and our intimacy with the customer to beat them globally,” Ford CEO Jim Farley said in a conversation with New York Times columnist Thomas Friedman. “It will be one of the most important races to save our industrial economy.”
Ford essentially invented the modern automobile industry a century ago, forcing the world to copy its cutting edge manufacturing techniques. Now its CEO says its future depends on it copying the Chinese? It suggests Western automakers have lost their competitive edge. Motorola was once a dominant American company that lost its market leadership to Asian competitors. Is Ford next?
The rise of electric vehicles poses an existential threat to nations heavily dependent on traditional auto manufacturing. Germany and Japan, in particular, have been twiddling their thumbs. When mobile phones became “computers,” the Europeans and the Japanese did nothing, despite decades of leadership. They allowed Apple, Samsung, and the Chinese to take over and relegate their once-hallowed mobile phone brands to the bins of history. The computerization of the car industry isn’t going to be any different.
The Porsche CEO recently illustrated this mindset in comments to investors: “We currently anticipate a much longer transition phase.” This comes as the luxury automaker’s sales plummet in China. He acknowledged that he doesn’t “expect demand in China to recover in the foreseeable future and the transformation towards electric mobility remains behind previous expectations.” The auto industry’s leaders rarely mention terms like “teraflops,” “artificial intelligence,” and “self-driving,” suggesting they don’t grasp the scale of this transformation. Silicon Valley appears equally disconnected from the magnitude of change.
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Peter Drucker, in his 1946 book “Concept of the Corporation,” referred to the auto industry as “the industry of industries.” Using General Motors as a case study, Drucker demonstrated the automotive sector’s far-reaching influence on the economy and society. His analysis showed that the industry not only drives manufacturing and technological advancements and shapes labor markets, consumer behavior, and urban development.
Drucker’s thesis has proven accurate repeatedly: The automobile industry created what could be called an echo-economy. While cars, their components, and fuel sources represent the direct economic impact, the industry’s reach extends far beyond manufacturing. From motels to drive-thru restaurants to satellite radio, these businesses emerged as derivatives of America’s car culture. Germany, Japan, and South Korea have also demonstrated the validity of Drucker’s thesis about the automotive sector’s broad economic influence.
China is the latest nation to embrace the automotive industry’s transformative power — but with a distinct focus on electric vehicles (EVs). This EV-centric “industry of industries” is reshaping everything from core vehicle components to software development, cloud infrastructure, semiconductors, and automation systems. The massive scale of China’s electric vehicle market positions its technological ecosystem, or “China Stack,” as a serious challenger to U.S. dominance in shaping future automotive technology.
Technology is fundamentally about setting standards and protocols, and those who establish them control the long-term agenda. Computing has evolved through two major phases: First came productivity computing, which began with mainframes and evolved to today’s smartphones, driven primarily by workplace needs. Second came internet computing, shaped by commerce and information sharing. These two developments allowed the United States to define global technology standards.
Productivity computing gave us relational databases, PowerPoint, and Slack. Because we created personal computers, minicomputers, and servers, we gained the understanding and ability to shape the evolution of corporate computing and productivity tools.
Internet computing spawned everything from search engines to online shopping to ride-hailing services. It enabled America to build web-scale technologies — from data repositories to machine learning chips to massive data centers. Even Silicon Valley’s newest artificial intelligence companies, Anthropic and OpenAI, benefit from that web-scale infrastructure. IBM, Microsoft, Apple, Google, Meta, Qualcomm, Intel, and countless others have prospered from the U.S.’s ability to predict, shape, and control technology’s agenda. This success stemmed largely from America’s extensive domestic market for technology products and services.
Electric vehicles and the emerging ecosystem of robots pose a unique challenge. They represent the point end of the spear. Rather than following America's blueprint, China has its playbook for technological dominance.
With electric vehicles and robotics, China has positioned itself to develop its own versions of cloud infrastructure, machine learning technology, artificial intelligence, and components specifically designed for vehicles, robots, and similar connected devices. By selling more vehicles, Chinese companies can collect extensive real-world data about roads and traffic conditions and use this information to train their autonomous driving models. This could enable them to create a mapping system that rivals Google Maps.
Tesla’s multibillion-dollar investment in battery facilities and its aggressive pursuit of rare earth metals stemmed from a clear strategic vision: Battery technology would determine the future of electric vehicles. When I was running GigaOM, we covered Tesla from its inception. We had numerous conversations with team members, and learned about the company's holistic understanding of everything from battery technology to in-vehicle computing systems. China has learned the vertical-integration lesson well. Today, the nation dominates battery technology and holds a commanding position in solar energy production, giving it significant leverage in shaping the emerging mobility market.
For the past decade, China has focused intently on its “Made in China 2025” initiative, aiming to narrow the technology gap with the West, particularly the United States. Of the nine targets China set for itself, three aimed for leadership or self-reliance in information technology, robotics, and energy-efficient vehicles, including new-energy cars. And you can see it playing out in the marketplace.
While Chinese companies might not rival Nvidia or Qualcomm, the nation now has about six global-scale companies helping to build a chip ecosystem. Huawei manufactures its own chips, which, though not better the best of the West, are good enough to be competitive. To challenge Western counterparts, Chinese manufacturers are producing older chips at lower costs. The strategy mirrors their approach to electric vehicles — BYD’s prices significantly undercut those of Tesla and German and Japanese automakers.
The tech world’s fascination with companies like OpenAI has overshadowed these developments, though warning signs are emerging. In artificial intelligence, China’s DeepSeek demonstrates the nation’s growing capabilities. The company has already integrated its technology throughout China’s economy and social infrastructure. The five largest Chinese phone manufacturers now use DeepSeek’s AI, as do the country’s home appliance makers and electric vehicle companies.
What has also changed is that China itself is a massive domestic market. “China is huge, and for them, it’s a great thing to both export and sell to their own internal market when they do these things,” Bullard said. “Not every country is capable of this.” Beyond cars and robots — whether industrial or humanoid personal robots — the demand will be generated by China’s internal market, an advantage in sustaining their position.
Borrow, steal, subsidize — it doesn’t matter as long as the Chinese companies get the global market share. Once you have the market share, you can prime the pump. They did it with Huawei, and now they are doing it with cars. For once, the US Stack has a competitor that threatens to zoom past it.
As I said earlier, sometimes a car is not just a car.
