How Will China Make Money With AI if Its Models are Open Source?
In 2014, Samsung’s Galaxy S5 launched in India at a hefty price of ₹51,000, closely following Apple’s iPhone 6, which was priced at ₹53,500. Though expensive, these prices were seen as justifiable for flagship-level technology. Yet, that same year brought an unexpected twist when Xiaomi made its entry with the Mi3, offering a premium build, powerful specifications, and a price tag below ₹15,000. Shortly after, the OnePlus One debuted at an impressive price of just ₹21,999. “2014 will be remembered as the year when the smartphone market in India witnessed one gamechanger after another,” The Indian Express said in a decade-old report. Behind this disruption was China, and now the country is poised to repeat history, this time in AI. On the surface, it appears that China is adopting an altruistic approach to frontier AI models. Most, if not all, of its powerful models are available for free. Models from DeepSeek, Alibaba, and Tencent, which often outperform their American counterparts, are all accessible as open-source. While China succeeded in impacting US tech companies by erasing over a trillion dollars in a single day, its strategy is still unlikely to generate any profit for itself. Balaji S. Srinivasan, a renowned American entrepreneur, took to X to share an intriguing observation. He stated that China will profit from selling affordable, high-quality AI-enabled hardware, such as self-driving cars, drones and humanoids, among others. “China is trying to do to AI what they always do: study, copy, optimise, and then bankrupt everyone with low prices and enormous scale,” Srinivasan said. Notably, designing, mass manufacturing, and large-scale exporting of hardware products have always been the country’s core competency and building high-quality software is just the icing on the cake. “China is getting better at software faster than the West is getting better at hardware,” he added. Perhaps the most significant evidence of Srinivasan’s thesis is the success of Chinese EV companies, especially BYD. Will China Adopt the BYD Playbook for AI-Enabled Devices? For the whole of last year in 2024, BYD reported an annual revenue of $107 billion, which outperformed the $97.7 billion figure reported by Tesla. Recently, it was also reported that BYD’s sales of EV cars increased by 39% in the first three months of this year in Europe. In contrast, Tesla seems to struggle, as the company’s first quarter deliveries declined by more than 10% in France and other European markets. BYD’s cars are also budget-friendly. The company’s newly launched Qin L model starts at 1,19,800 Chinese yuan in China, while the entry-level Tesla Model 3 is priced at 2,35,000 yuan. Moreover, BYD is also set to launch its’ cheapest EV, the Seagull, in Europe this year, which is expected to be priced under £20,000. The company is outperforming Tesla in terms of technology that supports these vehicles. For instance, BYD has introduced a battery technology that adds 250 miles of range in just five minutes—faster than Tesla’s Superchargers, which require 15 minutes to add 200 miles. Moreover, BYD also unveiled an advanced driver assistance system called God’s Eye, which is free of charge for most of its cars. The company is also planning to double its sales outside China, and to evade tariffs, it plans to assemble these vehicles in the local markets. The company is also currently building a factory in Brazil, which is the biggest market outside its home country. While BYD is achieving significant success on a global level, many Chinese EV makers are expanding locally. Recently, The New York Times shared insights from a professional at an EV maker called Arcfox in China. She revealed that people born in the 90s and 2000s are more willing to try more brands. “You could buy two of our cars for the price of one Tesla.” Unitree’s Go2 Costs 1/10th of Boston Dynamics’ Spot Robot A similar story is unfolding in products focused on AI, particularly in the humanoid and robotics industry. This trend began in 2021, when Unitree, a Chinese robotics company, launched the Go1 robot dog at a base price of $2,700. In comparison, Boston Dynamics’ Spot robot costs over $70,000. less than $300 difference between a turtlebot and unitree go2 seems comical pic.twitter.com/1dtnth9TDh— Vedant Nair (@vedantnair__) March 31, 2025 Unitree also released its second-generation robot Go2 at just $1,600. It includes features like a 360-degree LiDAR sensor, AI-based motion control, and can reach speeds of up to 17 kmph in the top models. Unitree’s portfolio also includes the G1 humanoid robot, which is ready for mass production with a $16,000 price tag. The company often entertains social media users with the impressive moves that the humanoid can execute. While Tesla CEO Elon Musk stated that the company aims to sell the Optimus humanoid for around $20,000, a report from Morgan Stanley suggests that its bill of materials costs between $50,000 and $60,000 per unit. All things considered, China’s strategy for building high-quality technology and exporting it at scale for low prices is likely to pay off with AI-enabled hardware devices as well. However, the path isn’t free from challenges. The country currently faces severe restrictions regarding its semiconductor or chip ecosystem. The United States halted shipments from Taiwan Semiconductor Manufacturing Company (TSMC) to Chinese customers in November last year. It is also reported that China’s advanced chip manufacturing capabilities lag behind TSMC by six years, according to Chris Miller, author of the bestselling book ‘The Chip War’. Moreover, US President Donald Trump has imposed several global tariffs, which are sure to affect both imports and exports from China.
It will likely follow the playbook it has used for years.
It will likely follow the playbook it has used for years.
["AI (Artificial Intelligence)", "china ai"]
["Go", "programming_languages:R", "AI", "RPA", "programming_languages:Go", "china ai", "Aim", "ai_applications:robotics", "disruption", "GAN", "R", "AI (Artificial Intelligence)"]
["AI", "Aim", "R", "Go", "GAN", "RPA", "disruption", "programming_languages:R", "programming_languages:Go", "ai_applications:robotics"]
Supreeth is an engineering graduate who is curious about the world of artificial intelligence and loves to write stories on how it is solving problems and shaping the future of humanity.