China Securities Co., Ltd.: Promoting the rapid popularization of advanced intelligent driving technology to drive the rapid growth of hardware.

China Securities Co., Ltd. released a research report stating that BYD Company Limited (002594.SZ, 01211) had showcased the development and commercial achievements of its intelligent driving system at its smart driving conference. By 2025, the high-level intelligent driving system will be lowered to vehicles priced at 100,000 yuan or even 70,000 yuan, a strategy that will prompt other companies in the industry to follow suit and lead to the widespread adoption of intelligent driving across the industry. According to EO Intelligence, the penetration rate of L2+ (highway NOA) is expected to reach 8% by 2024, with L2+ (urban NOA) at 0%. It is projected that by 2030, the penetration rate of L2+ (highway NOA) and L2+ (urban NOA) will reach 55% and 25% respectively. With the backdrop of intelligent driving equality, the penetration rate of intelligent driving will rapidly increase, leading to an increase in shipments of components such as LiDAR, cameras, computing chips, and domain controllers, presenting an opportunity for CKH HOLDINGS configuration upgrades and an explosion in demand for in-vehicle electronic components. Key points from China Securities Co., Ltd.: The accelerated popularization of high-level intelligent driving, aided by AI large models and hardware cost reduction, is driving the promotion of intelligent driving equality. By the first half of 2024, the penetration rate of L2 intelligent driving in the automotive market in Shanxi Guoxin Energy Corporation had reached 50%, and while the penetration rate is high, the functionality is continuously being upgraded to L2+/L3. On February 10, 2025, BYD Company Limited held a smart strategy conference, introducing its self-developed "Eye of Heaven" technology matrix to promote the penetration of high-level intelligent driving into the 70,000-yuan market, aiming to increase the proportion of L2+ models from less than 10% to 30% by 2025. In addition to cost reduction throughout the supply chain resulting in "increased quantity without increased price", BYD Company Limited is also enhancing data mining and algorithm iteration through the use of DeepSeek large models, bridging the gap in software capabilities by simplifying hardware, such as achieving the effect of dense point clouds similar to LiDAR with the C-level system of Eye of Heaven through an end-to-end model, reducing the dependency on high-cost sensors. According to EO Intelligence, the penetration rate of L2+ (highway NOA) is expected to reach 8% by 2024, with L2+ (urban NOA) at 0%. It is projected that by 2030, the penetration rates of L2+ (highway NOA) and L2+ (urban NOA) will reach 55% and 25% respectively. Perception: High-level intelligent driving leads to the integration of multiple sensors, and the cost reduction of sensors drives a rapid increase in demand. Upgrades in intelligent driving systems are demanding greater richness in perception system features, leading to a trend of sensor integration solutions. Currently, LiDAR technology is being integrated into vehicles priced at 100,000 yuan, with prices dropping to the level of around one thousand yuan. As the level of autonomous driving increases, the number of vehicles equipped with LiDAR is expected to increase to three or more, and domestic companies such as Hesai and Surestar already have a market share of 83% in the LiDAR domain, putting them in a leading position. In terms of cameras, the upgrade of intelligent driving systems is driving an increase in the number of cameras per vehicle, with upgrades in pixel resolution, leading to increased demand for surround-view, in-car, ADAS, and other cameras. The promotion of intelligent driving equality is pushing for an increase in the number of in-vehicle cameras from an average of 4-6 to 11-12, with front-view pixels increasing from 2M to 5M, 8M, or even higher resolutions. Furthermore, the number of millimeter-wave radars and ultrasonic radars is also increasing. Decision-making: In-car computing power becomes a strategic competition, rapid development of domestic intelligent driving chips. Intelligent driving and intelligent cockpit domains are the main innovations in smart vehicles, with cockpit-driving integration being an important direction of evolution in the future that requires high computing power main control chips to support more complex autonomous driving models and cockpit-driving integration. Domain control chips for intelligent driving are showing significant leadership effects, with domestic chip manufacturers actively vying for market share. In terms of smart driving, in 2024, NVIDIA's Orin-X holds a 39.8% market share in China with 2.1 million installed units, while Tesla's self-developed chips hold 25.1% of the market share with 1.32 million installed units. Huawei and Horizon Robotics also have a certain market share. In terms of cockpits, Qualcomm dominates with a 70% share, while other players include AMD, Renesas, Xilinx, Huawei, and Horizon Robotics. Domestic chips are rapidly rising, and under the trend of domestic substitution, they are expected to gain a higher market share in the future. Execution/Transmission: Vehicle data volume increases significantly, PCB and connector demand expand. (1) PCB: As the penetration rate of advanced autonomous driving increases, the number of sensors per vehicle is expected to grow significantly, leading to an increase in the use of PCB space. On one hand, this will drive up the value of PCB usage as autonomous driving systems increasingly adopt HDI boards. Smart cabins, including all-LCD instrument panels, large central control systems, in-car entertainment systems, head-up display systems, and streaming rearview mirrors, will see a substantial increase in PCB usage. (2) Connectors: Due to the restructuring of the vehicle's electronic and electrical architecture, connectors need to meet higher performance standards in diverse application scenarios. With a significant increase in vehicle communication data, the demand for high-speed connectors is expected to increase sharply to meet the growing demand for real-time transmission. Risk Warning: Pressure on supply chain cost optimization, challenges in chip supply coordination, adaptive needs for rapidly evolving technology, compliance management of data applications, and localization adaptations with differentiated standards.