Shenwan Hongyuan Group: The automotive industry will embrace the wave of technology in 2026, transforming through electrification and AI intelligence.

Shenwan Hongyuan Group released a research report stating that the automotive industry is entering a new stage of growth driven by mid-to-high-end replacement and overseas vehicle sales. There is no need to worry excessively about policy rollback next year. The industry's core transformation revolves around electrification and AI intelligence, with the AICar becoming a super terminal that integrates four major intelligent bodies. Component companies are expanding horizontally into new applications such as Siasun Robot&Automation and low-altitude economy through high-end manufacturing capabilities, and achieving secondary growth through overseas expansion (especially in the European market), with 2026 being a key year for new technologies to go from "expected" to realized. Key points from Shenwan Hongyuan Group are as follows: Vehicles: The demand for cars is minimally affected by policy changes, and they are optimistic about the unexpected recovery of mid-to-high-end demand. Changes in consumption habits, capabilities, population structure, and product competitiveness compared to 8 years ago have led the group to believe that there is no need to worry excessively about next year's subsidy reduction. Excellent B/C-level new products will significantly stimulate users' demand for new cars. Policy disruptions will structurally affect the A0/A00 market, but the penetration rate of new energy has become inevitable. Profit certainty of overseas vehicle sales comes from leveraging engineering dividends, with the group believing that the globalization of Chinese intelligent electric vehicles has already begun, with overseas sales expected to reach nearly 10 million units in 5 years. In terms of technology, keep an eye on Xiaopeng, NIO, and IDEAL; while BYD Company Limited, Great Wall, and Geely are the major players. Additionally, there may be more high-end cars from Huawei's chain by 2026. Components: Components are typical representatives of "high-end manufacturing" in China, possessing "economies of scale-cost advantages-technological advantages." Therefore, under the influence of technology, new applications such as Siasun Robot&Automation and low-altitude economy have become battlegrounds for such companies; additionally, excellent companies are achieving secondary growth through globalization paths. (1) "Siasun Robot&Automation" and "low-altitude economy" have become certain new directions for the industry. The industry chain driven mainly by companies like Tesla, Zhiyuan, and Yushu has become the focus of the industry. The industry is close to realizing its true potential, and 2026 is expected to be the golden time point for the tech growth to transition from "expected" to realized; Automotive component companies have strong capabilities in horizontal expansion, with liquid cooling, low-altitude industry, and automotive industry sharing highly common underlying technologies. The core support is leading high-end manufacturing capabilities, with the possibility of achieving customer resource sharing, cost synergy optimization, and core technology reuse. (2) Overseas expansion is a certain logic, with outstanding automotive component companies continuing on a long-term path toward globalization, with a focus on Europe in 2026. As overseas competitors exit, they leave behind supply gaps, the European carbon emissions regulations are near, new energy policies are implemented, driving the transformation of vehicle manufacturers; many companies have reached a relative bottleneck in domestic market share improvement and are accelerating their pace of overseas expansion, with an increase in European order acquisition. AI: The automotive industry is undergoing dual transformation around electrification and AI intelligence, with cars being the final piece of the electrification revolution puzzle and the first piece of AI to land in the physical world. AICar will be a super intelligent body that integrates the four major intelligent bodies of driving, cockpit, chassis, and power. At the same time, AI empowers the upgrade of the intelligent cockpit experience and integrates "intelligent driving + chassis" end-to-end, with Token becoming an important measure and forecasting indicator for enterprise valuation. In the future, the industry will see technology spillovers from intelligent vehicles to Siasun Robot&Automation, low-altitude economy, and deep-sea technology. Risk Factors: Subsidy reduction and unexpected impacts of new energy purchase taxes, slower-than-expected overseas growth speed.