China's BYD will spend $14 billion developing EV smart car features that rival Tesla

• Chinese EV maker BYD has unveiled its new AI-powered Xuanji smart car system. 
• It's part of a $14 billion smart car bet that includes hands-free driving. 
• BYD passed Tesla as the world's biggest EV maker and is now chasing Elon Musk's company on AI.

BYD has overtaken Tesla as the world's largest EV maker. Now, it's eyeing Elon Musk's AI crown.

The Chinese EV maker unveiled its AI–powered Xuanji smart car system at its "Dream Day" event on Tuesday as it made a big bet on artificial intelligence.

BYD says that the new system will help make their cars safer and more comfortable, with Reuters reporting that the new tech will be used to improve voice recognition and automated parking features.

Speaking at the event in Shenzhen on Tuesday, BYD founder and CEO Wang Chuanfu said that the company would invest 100 billion yuan ($14 billion) in smart car features, without giving a timeline, in comments reported by the South China Morning Post.

"The first half [of the game] is about electrification, the second half is about intelligence," he said.

The Warren Buffett-backed automaker plans to integrate a host of smart features into its EVs in the coming years.

That includes "Navigate on Autopilot," which is already available on its Denza N7 EV. This feature, which is similar to Tesla's "Autopilot", will allow drivers to take their hands off the wheel and feet off the pedals in certain scenarios; it will come installed in cars that cost more than 300,000 yuan ($41,000), according to Bloomberg.

The company is also reportedly planning to add a vehicle-mounted drone to its Yangwang U8 luxury SUV, and has redesigned the steering wheel to make it detachable, allowing drivers to play video games using the wheel and the car's pedals, per Bloomberg.

BYD's smart-car push comes after the company overtook Tesla as the world's largest producer of electric vehicles.

Like its Chinese rival, Tesla is also betting heavily on AI and smart car features like full self-driving — though it has faced controversy over its own Autopilot feature and was forced to recall over two million cars last year after regulators raised safety concerns.

CEO Elon Musk has hinted that he may put the brakes on AI development at Tesla, however, posting on X that he was "uncomfortable" building AI products at the company without controlling at least 25% of the automaker.

BYD did not immediately respond to a request for comment from Business Insider, made outside normal working hours.