Alibaba, BMW Expand AI Collaboration as Tesla Faces Growing Local Competition

• An extended partnership between BMW and Alibaba aims to put artificial intelligence agents into the cockpit of vehicles.
• The company said its in-car AI will provide personalized experiences for drivers.
• As Tesla’s sales fall globally, the company faces growing competition in China.

German luxury vehicle giant BMW and Chinese tech giant Alibaba have announced an extended partnership in China to boost the power of in-car artificial intelligence.

The announcement further highlights Tesla’s growing competition in the country after recently being taken over in revenue by electric vehicle (EV) giant BYD.

Alibaba and BMW AI Partnership

The partnership will see Alibaba’s large language model, Qwen, implemented into BMW’s driver assistance system to give drivers in-car AI agents, the companies said in a joint statement.

Alibaba said the AI companions will provide human-like interaction to enhance in-car infotainment and ease travel.

The two new agents initially integrated for Chinese car users include ‘Car Genius’ and ‘Travel Companion.’

The Car Genius provides real-time assistance and expertise over vehicle functions, while the Travel Companion will provide lifestyle and entertainment services.

According to the companies, the AI model will provide services based on user preferences, allowing for a personally customized experience.

The AI-enhanced driving system will debut in the BMW Neue Klasse models produced in China in 2026.

Tesla’s Growing Competition

The announcement of BMW’s extended partnership with Alibaba has highlighted Tesla’s growing competition to stand out in the Chinese market.

Tesla’s AI primarily focuses on automation, whereas BMW’s approach focuses on fostering a relationship between driver and vehicle.

This user-centric approach will likely resonate with Chinese consumers who expect seamless digital interactivity in their daily lives.

Despite Musk telling investors that Tesla was going “ballistic” on AI over the next few years, the EV manufacturer has yet to profit from the technology.

So far, Tesla has faced a long road of legal and regulatory challenges to fully autonomous driving, including multiple crashes and scrutiny from regulatory bodies.

BYD Beats Tesla

As Tesla’s car sales and share price plummet and protests against the company intensify in the U.S., its biggest rival has taken the lead in China.

In 2024, Chinese EV giant BYD recorded revenues of 777 billion yuan ($107 billion), beating Tesla’s $97.7 billion.

In terms of sales, BYD delivered 4.27 million cars , while Tesla sold 1.79 million. BYD CEO Wang Chuanfu described the company’s dominance of “foreign brands” in BYD’s latest annual report.

“BYD has become an industry leader in every sector from batteries, electronics to new energy vehicles, breaking the dominance of foreign brands and reshaping the new landscape of the global market,” Wang said.

BYD announced an advanced driver-assistance system in February free of charge for car owners.

This was a significant move undercutting Tesla, which offers its Full Self-Driving (FSD) service in the U.S. for $8,000 or a $99 subscription.