Competition is intensifying between Tesla and the emerging Chinese electric vehicle manufacturer, XPeng, particularly regarding the future direction of self-driving technology. Recently, XPeng, which has received investment from companies like Xiaomi and Alibaba, declared its intention to integrate lidar sensors sourced from Livox, a company closely associated with the prominent Chinese drone manufacturer DJI.

This decision to utilize lidar technology and a Chinese-based supplier highlights the complexities arising from the ongoing technological competition between the United States and China. In 2019, Tesla initiated legal action against Dr. Cao Guangzhi, alleging the theft of confidential information pertaining to its Autopilot driver-assistance system, with claims that this information was subsequently transferred to Xiaopeng Motors, also known as Xmotors or XPeng. Although XPeng was not directly named in the lawsuit, Tesla suggested the company benefited from the misappropriated source code. XPeng has consistently refuted these allegations, and Guangzhi is no longer employed by the firm.

In a move that has surprised some observers in the automotive industry, XPeng announced plans to incorporate lidar into its production-level autonomous vehicles starting in 2021, a strategy that sets it apart from Tesla. Following XPeng’s announcement, Elon Musk expressed skepticism, asserting that XPeng does not possess the same level of technological sophistication as Tesla.

Musk has consistently downplayed the necessity of lidar for autonomous driving, characterizing it as a costly and superfluous technology. Tesla instead prioritizes the development of neural networks and camera-based visual recognition systems for its self-driving capabilities. Certain Chinese companies share this perspective; for example, Momenta, supported by Daimler, is focusing on more affordable millimeter-wave radars and high-definition cameras.

XPeng currently employs a variety of data collection methods, including cameras, millimeter-wave radar, and ultrasonic sensors. The company states that adding lidar will “enhance overall safety through redundancy,” enabling continued operation even if a primary system component experiences failure, “by providing more precise road mapping.” XPeng also contends that lidar will “improve object detection, measurement precision, and performance in low-light and other difficult driving conditions.”

The selection of Livox as a supplier is also noteworthy. While established international alternatives like Velodyne and Luminar exist, XPeng’s choice aligns with the Chinese government’s emphasis on achieving technological independence in crucial sectors. Within China, Livox competes with companies such as Hesai, backed by Bosch and Baidu, and Robosense, which receives funding from state-owned automotive manufacturers BAIC and SAIC.

Livox was established in 2016 as an “independent entity” through DJI’s internal business development program, as described by the company itself. A key advantage of Livox has been its ability to reduce the cost of lidar technology, which it attributes to its unique optoelectronic scanning methodology.

This move into autonomous driving is a natural progression for DJI, as the company has been expanding its focus towards business-to-business applications, such as agricultural drones. However, the precise nature of DJI’s relationship with the lidar startup remains unclear to the public. Livox’s official statement indicates it benefits from “DJI’s extensive experience in sensor innovation and hardware production,” and its products are sold through DJI’s official retail channels. Beyond this, the extent of DJI’s equity stake or managerial control over Livox has not been disclosed.

According to a source familiar with the matter who spoke with TechCrunch, Livox is essentially “a team within DJI that was later structured as a separate company,” while continuing to leverage DJI’s resources, including manufacturing and supply chain infrastructure, “similar to another product line.”

One potential reason for Livox’s deliberate separation from DJI is to mitigate potential scrutiny from the U.S. government, which views lidar as a critical area in the ongoing tech rivalry with China, the source explained. DJI was recently added to the U.S. government’s trade blacklist, joining other Chinese technology companies like Huawei and SenseTime in being restricted from accessing essential components from U.S. suppliers. Frank Wang, the founder and CEO of DJI, is also believed to prefer a lower public profile.

Representatives for Livox and DJI were unavailable for immediate comment.