BYD introduces China's inaugural 4nm driving chip and enhances God's Eye.

      TL;DR

      BYD has introduced the Xuanji A3, marking China’s first automotive-grade 4nm chip designed for self-driving cars, offering 700 TOPS per chip. The company is broadening its God’s Eye driver-assistance system to include mass-market electric vehicles like the $10,300 Seagull, as it faces eight months of declining sales and a 55% drop in profits, prompting a technology-led shift.

      BYD has launched the Xuanji A3, touted as China’s first automotive-grade 4-nanometre chip for self-driving automobiles. CEO Wang Chuanfu announced it at an event held at BYD’s Shenzhen headquarters on May 28, stating that the chip provides the lowest power consumption per compute unit in its class, consuming about 20% less than similar semiconductors. Mass production of the chip has already begun.

      Each Xuanji A3 chip offers 700 TOPS of computing power. A group of three chips reaches a total of 2,100 TOPS, sufficient for enabling Level 3 and Level 4 autonomous driving capabilities. This chip is central to a new laptop-sized computing platform that integrates three previously separate domains in vehicles: the smart cockpit, the driver-assistance system, and the core electric propulsion.

      The semiconductor approaches the performance level of Huawei Technologies, which currently produces automotive chips with a 7nm process but has committed to launching 1.4nm chips by 2031. The world’s most advanced chip is TSMC’s 2nm N2 node. BYD’s capability to design and mass-produce its own 4nm driving chip enhances its already established vertical integration strategy, which includes batteries, motors, and vehicle production.

      **God’s Eye Expands to Mass Market**

      In addition to the chip, BYD revealed plans to extend its God’s Eye driver-assistance system across all models in China, including budget vehicles such as the Seagull compact hatchback, priced at 69,800 yuan ($10,300). The Seagull was the first vehicle in its category to incorporate LiDAR technology when the 2026 model was launched on May 11, a feature previously found only in high-end cars.

      The enhanced God’s Eye system, which offers city and highway navigation, traffic light recognition, and automated parking, will be available for an additional cost of 12,000 yuan ($1,770). Wang described this pricing as cost-based. Additionally, BYD is providing one year of insurance covering damages from accidents occurring while the latest version of God’s Eye is in use, betting on the system's reliability.

      **A System with Performance Issues**

      This insurance commitment follows months of dissatisfaction concerning the effectiveness of the God’s Eye system. BYD made it a standard feature in most of its vehicles last year, but the initial rollout employed a tiered approach that limited advanced urban navigation to pricier models, while more affordable cars received only basic highway cruise control. Users have reported dangerous malfunctions, such as unintended acceleration, erratic lane changes, and steering inputs that nearly resulted in collisions.

      In contrast to Tesla’s optional Full Self-Driving package, BYD implemented God’s Eye across millions of vehicles, leading to the widespread discovery of any flaws. The company claims over 3.15 million vehicles are equipped with advanced driver-assistance hardware, generating around 200 million kilometres of driving data daily. BYD is utilizing this data to refine its algorithms through cloud-based world models and reinforcement learning, with updates occurring every three days.

      **Declining Sales for Eight Months**

      This technological effort comes at a challenging time for BYD’s business, as sales have decreased year-on-year for eight consecutive months, with volumes in April 2026 dropping approximately 16% compared to the previous year. The net profit for the first quarter plummeted 55% to 4.09 billion yuan ($599 million) amid a fierce price war in China and a rising yuan that squeezed profit margins.

      Revenue decreased by 12% to 150.2 billion yuan during the quarter. Operating costs increased as BYD invested in smart driving hardware while also lowering vehicle prices to stay competitive against rivals such as Xiaomi, which has entered the EV sector with high-performance models, and Huawei-backed brands, which are expanding their market presence. The only positive development has been exports, which surged over 70% year-on-year to reach a record 135,098 units in April.

      **The Competitive Landscape**

      Tesla has finally rolled out its Full Self-Driving system in China after numerous delays, but this technology still necessitates human intervention and will be marketed under a different label due to scrutiny from Chinese transportation authorities. Tesla employs a vision-only strategy using cameras and neural networks, omitting LiDAR and radar, which BYD and other Chinese manufacturers have criticized as less effective.

      China's Ministry of Industry and Information Technology issued its first Level 3 autonomous driving certifications in December