Guolian Minsheng Securities: Line control steering can be called the core executive level hardware of future intelligent driving. Recommended supplier with leading market share and product progress.

Guolian Minsheng Securities released a research report stating that as the next generation of products, steer-by-wire (SBW) systems have advantages of faster response speed and higher safety. As the final piece of the puzzle in steer-by-wire chassis, steer-by-wire systems are expected to play a synergistic role. Improved regulations and standards combined with increasing intelligence are expected to accelerate the adoption of steer-by-wire systems. The steer-by-wire market is expected to maintain high growth, with the market size projected to expand from 2.3 billion yuan in 2025 to over 30 billion yuan by 2030, with a compound annual growth rate of 67.1%. Domestic suppliers with leading market share and faster product implementation are expected to benefit, with recommended core Tier1 companies including Huayu Automotive Systems (600741.SH), NEXTEER (01316), Bethel Automotive Safety Systems (603596.SH). Guolian Minsheng Securities' main points are as follows: Technology: Benefiting from advanced intelligent driving, entering an accelerated phase Steering systems, as another core part of the chassis, have gone through various stages of development such as mechanical steering systems, hydraulic power steering (HPS), electric power steering (EPS), redundant steering systems (RSS), and steer-by-wire systems. Currently, EPS is still the mainstream steering system in automobiles. Steer-by-wire technology is still in the development stage. From a technological development trend perspective, steer-by-wire systems have many advantages, optimizing steering space and significantly enhancing safety and compatibility with intelligent driving. As a key component of steer-by-wire chassis, the maturity of steer-by-wire systems indicates the maturity of steer-by-wire chassis. Vehicles will be able to achieve advanced intelligent driving functions, making steer-by-wire systems the core hardware for future intelligent driving execution. Market Size: Policy support, with a 30%+ penetration rate outlook for 2030 On one hand, steering policies are gradually being unbundled, allowing for functional links for signal transmission and/or energy transfer, and policies for the application and testing of steer-by-wire systems are gradually improving. On the other hand, the penetration rate of advanced intelligent driving is catalyzing, with the accelerated implementation of L2+ and higher-level functions. In 2024, the proportion of L2-level sales was 37.0%, an increase of 4.3% year-on-year, and the proportion of L2+ sales was 11.7%, an increase of 5.7% year-on-year. Market size wise, in 2023/2024, EPS will dominate in steering systems, with a penetration rate of 98.9%/99.2%, corresponding to a domestic market size of 36.73/40.14 billion yuan. From 2025 to 2030, DP-EPS/R-EPS/steer-by-wire systems will enter an accelerated upgrade/replacement phase, with the domestic market size of steer-by-wire products expected to increase from 2.31 billion yuan to 30.15 billion yuan, with a compound annual growth rate of 67.1%. The steering system market size will maintain steady growth, increasing from 434.1 billion yuan in 2025 to 637.3 billion yuan in 2030. Market Landscape: EPS leading companies benefit, core component self-sufficiency rate increases Steer-by-wire systems have high safety requirements and are ASIL-D level automotive components. High research and development investment, precise product design, and longer verification cycles create high barriers to entry in the segmented market. As an upgrade to EPS products, the current market share of EPS and the progress of steer-by-wire products are key factors. EPS market share The top five EPS suppliers in China are ZF, Bosch Huayu, NEXTEER, Bosch, and NSK. In 2023/2024, the sales volume of CR5-matched models of the top five suppliers was 13.713/13.776 million units, with CR5 accounting for 64.9%/60.1%. The market share of domestic suppliers has significantly increased, with Bosch Huayu, NEXTEER, Yubei Steering, and other domestic Tier1 suppliers seeing significant growth in sales and market share. In 2024, the sales volume of EPS increased by 2.741/1.258/490 thousand units, with the market share increasing by 11.8/4.8/2.1 percentage points. Other domestic suppliers, such as Bethel Automotive Safety Systems and Zhejiang Shibao, have seen significant growth. Progress of steer-by-wire products The progress of products and customer matching is a key factor in industry competitiveness. Foreign companies such as Bosch, ZF, and Tesla completed mass production in 2023, while NEXTEER and Bosch Huayu have entered the mass production stage. Bethel Automotive Safety Systems and Zhejiang Shibao continue with research and development efforts and are expected to enter mass production within 1-2 years. Risk Warning: The pace of iteration in intelligent driving is not as expected; unexpected changes in the price of steer-by-wire products; wholesale sales of automobiles are not as expected, affecting risk assessments based on changes in sales volume.