Orient: It is expected that from 2025, the equalization and upgrading of smart driving functions will become a trend.

Orient released a research report stating that, according to NE Times, the penetration rate of L2 and above level intelligent driving in January-November 2024 was 54.95%, an increase of 7.7 percentage points compared to 2023; among the L2 and above level intelligent driving models, the proportion of models capable of achieving high-speed/city NOA functions in January-November 2024 reached 21.4%. With the promotion of leading companies such as BYD Company Limited, it is expected that domestic vehicle companies will accelerate the promotion of high-level intelligent driving, promoting the continuous increase in the penetration rate of high-level intelligent driving by 2025. The penetration rate of intelligent driving-related hardware in the industrial chain such as sensors and domain controllers will also increase, benefiting companies related to the intelligent driving industrial chain including complete vehicles and components. Orient's main points are as follows: BYD Company Limited is about to hold a smart driving event to promote the penetration of high-level intelligent driving functions into mid-to-low-end models BYD Company Limited announced that it will hold an intelligentization strategic release event on the evening of February 10. According to the event invitation, the company hopes to enable everyone to enjoy high-level intelligent driving through the "Eye of the Sky". By the end of December 2024, the high-level intelligent driving assistance system "Eye of the Sky" of BYD Company Limited will officially launch the city navigating without visual aids (CNOA) function nationwide, and it is expected that BYD Company Limited will accelerate the penetration of high-level intelligent driving functions into mid-to-low-end models. Tesla's unsupervised FSD is expected to be launched within the year, promoting the rapid iteration of intelligent driving functions Tesla announced during its fourth quarter 2024 earnings call that it is expected to launch unsupervised FSD paid services in Texas Austin in June this year, followed by promotion in several cities in California, and gradually cover the entire United States next year; Musk said that several car companies have shown interest in obtaining Tesla FSD licenses, and Tesla will consider FSD licenses when demand is sufficient. It is expected that leading companies such as Tesla will accelerate the iterative development of high-level intelligent driving functions in China, promoting the accelerated development of the field of intelligent driving in China. It is expected that "intelligent driving equality" will become an important trend in the industry's development In 2024, the intelligent driving technology roadmap of China's leading companies gradually shifted towards end-to-end, successively releasing a new generation of intelligent driving systems based on end-to-end architecture; with the support of end-to-end technology, intelligent driving systems without high-precision maps and capable of being used nationwide will be widely implemented in 2024, leading to a rapid increase in the acceptance and penetration rate of high-level intelligent driving. Taking Huawei as an example, according to official data from Huawei, in 2024, Huawei's Qiankun intelligent driving users reached 506,900, with an intelligent driving mileage of 1.453 billion kilometers, among which the proportion of urban intelligent driving duration and mileage reached 30.1% and 45.2%, respectively. From the perspective of penetration rate, according to NE Times, the penetration rate of L2 and above level intelligent driving from January to November 2024 was 54.95%, an increase of 7.7 percentage points compared to 2023; among L2 and above level intelligent driving models, the proportion of models capable of achieving high-speed/city NOA functions from January to November 2024 reached 21.4%. With the promotion of leading companies such as BYD Company Limited, it is expected that domestic vehicle companies will accelerate the promotion of high-level intelligent driving, promoting the continuous increase in the penetration rate of high-level intelligent driving by 2025. "Intelligent driving equality" is expected to become an important trend in the development of the Chinese automotive industry. Investment recommendations It is expected that from 2025 onwards, intelligent driving equality and the upgrading of intelligent driving functions will become the trend, and the penetration rate of high-level intelligent driving will continue to increase. The penetration rate of intelligent driving-related hardware in the industrial chain such as sensors and domain controllers will also increase, benefiting companies related to the intelligent driving industrial chain including complete vehicles and components. For vehicle manufacturers, it is recommended to pay attention to: SAIC Motor Corporation (600104.SH), BYD Company Limited (002594.SZ), Anhui Jianghuai Automobile Group Corp., Ltd. (600418.SZ), Chongqing Changan Automobile (000625.SZ), XPENG-W (09868), GEELY AUTO (00175); for components, it is recommended to pay attention to: Beijing Jingwei Hirain Technologies (688326.SH), Bethel Automotive Safety Systems (603596.SH), Suzhou Sonavox Electronics Co., Ltd. (688533.SH), Huizhou Desay SV Automotive (002920.SZ), Foryou Corporation (002906.SZ), Keboda Technology (603786.SH). Risk warning The development of intelligent driving technology is slower than expected, the penetration rate of intelligent driving is lower than expected, and the risk of industry price wars.