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Analysts say outsourcing production makes it easier and cheaper for startups to produce cars and allow established carmakers to make better use of their factories. After all, building a car plant takes years and costs billions of yuan.

Andy Lees

And, sandstorms from there even polluted Beijing, which is 1,200 kilometers away.

Analysts believe the move could help lower borrowing costs for businesses and individuals, and is also seen as an effort to loosen monetary policies and underpin economic growth.

Andrew Downe, Asia regional head of commodities and global markets at Macquarie Group, said, "Megvii is a global AI technology leader and innovator with cutting-edge technologies, a scalable business model and a proven track record of monetization. We believe the commercialization of artificial intelligence is a long-term focus and is of great importance."