The Zhitong Finance App learned that Fangzheng Securities released a research report saying that the city's NOA is currently in a stage of rapid progress. The penetration rates of advanced autonomous driving are expected to be 2.7%, 8.9%, and 14.1% respectively from 2023 to 2025, and the industry is still in the early stages of penetration. Huawei's smart driving function opens up NCA in unmapped cities across the country, leading the smart driving capability industry. It is expected to drive a rapid increase in the penetration rate of advanced autonomous driving after models are launched. Under Huawei's smart selection model, models from major partner car companies are expected to continue to be launched, and Huawei's autonomous driving capabilities are expected to rely on a multi-model matrix and increase dramatically over time. Key companies: Cyrus (601127.SH), BAIC Blue Valley (600733.SH), JAC (600418.SH).

Fangzheng Securities's views are as follows:

Hongmeng Zhixing models are positioned differently and are expected to form misplaced competition:

Huawei participates in the three models of smart cars. According to the degree of independent development of different car companies, there are three main types of cooperation models provided by Huawei, namely the Smart Choice Model (Hongmeng Zhixing), the Huawei Inside Model (HI Model), and the Supplier Model. The model matrix positioning of the Huawei brand is different. The JAC and Huawei partner models are positioned as luxury MPVs, and are expected to enter the more than 500,000 luxury passenger car market. The first BAIC Blue Valley model is positioned as a high-end pure electric sedan. Currently, the HuaweiHongmeng Zhixing series focuses on the 200,000-350,000 yuan price range, forming misplaced competition in the matrices of major brands. With the penetration rate of domestic high-end autonomous driving models starting, there is a broad incremental market space.

Huawei is in full bloom in all four worlds, and the brand models are expected to be released one after another:

Among the current smart models selected by Huawei, in February 2024, the QQ series delivered a total of 21,000 new cars, and delivered a total of 54,000 units in January-February, ranking first in sales of the new power brands in the Chinese market. AITO Q M9 began large-scale delivery on February 26, and the brand's sales are expected to contribute to stable sales volume after continuing to climb upward in March-6 months. The first model of the Zhijie brand, the S7, was officially launched on 2023/11, and subsequent brand production and sales are expected to increase. In terms of new models, the BAIC Blue Valley/JAC Smart Select and Chery Smart World brands are both expected to launch new models in 2024, and the Huawei Smart Choice brand model layout is gradually becoming clear. Looking ahead, the MOU on investment cooperation between Huawei and Changan was signed on November 25, 2023. It is planned to sign the final transaction documents within 6 months, and the car BU is expected to be implemented soon.

The penetration rate of advanced autonomous driving is on the rise, and Huawei smart driving is leading the industry:

Currently, urban NOA is progressing rapidly. The penetration rates of advanced autonomous driving are expected to be 2.7%, 8.9%, and 14.1% respectively from 2023 to 2025, and the industry is still in the early stages of penetration. Huawei's smart driving function opens up NCA in unmapped cities across the country, leading the smart driving capability industry. It is expected to drive a rapid increase in the penetration rate of advanced autonomous driving after models are launched. Under Huawei's smart selection model, models from major partner car companies are expected to continue to be launched, and Huawei's autonomous driving capabilities are expected to rely on a multi-model matrix and increase dramatically over time. In terms of cost, the Huawei ADS 2.0 hardware reduces multiple sensor configurations to reduce hardware costs. As subsequent Huawei hardware costs continue to decline, Huawei smart car solutions are expected to be installed in mid-range and low-end models.

Key companies:

Cyrus: The company's main business can be divided into two major aspects: vehicle business and supply chain business. The annual production capacity of the Cyrus Gigafactory is planned to reach 700,000 vehicles, which is expected to support monthly production capacity exceeding 50,000 vehicles and provide a solid guarantee for subsequent product delivery.

BAIC Blue Valley: BAIC is currently making every effort to build the two major brands, Jihu and BAIC. By cooperating with Huawei to build smart models, using Huawei's power, it is expected to further enhance product insight, definition and sales capabilities, and create a brand technical benchmark and luxury image.

JAC: Through deep cooperation with Volkswagen and NIO, the company has nurtured JAC's own brands in many ways and accumulated rich experience in high-end passenger car manufacturing. In recent years, the company focused on the core model Ruifeng series and the sub-brand Sihao series, and built the pure electric brand Yitai as a series to accelerate the transformation of new energy vehicles.

Risk warning: The release of models of various brands fell short of expectations, the penetration rate of the high-end new energy market fell short of expectations, and the release of multi-brand models led to increased competition in the industry.