China Securities Co., Ltd.: Tesla's Optimus is expected to be mass-produced this summer, focusing on the structural alpha market after the bottoming out of the overall car expectations.

China Securities Co., Ltd. released a research report stating that this week's February passenger car sales data and the annual reports of NIO (09866) and XPeng (02015) will be released. In addition to last week's Xpeng second-generation VLA intelligent driving release conference, the overall outlook for the entire vehicle sector is expected to stabilize and rebound after hitting a structural -driven market bottom. Heavy-duty trucks and buses are performing better than expected, with the commercial vehicle sector (especially exports) showing relatively favorable economic and performance expectations. Intelligent driving and Siasun Robot & Automation sectors focusing on events related to Tesla's progress, with catalyzing events expected to intensify around April, including: FSD fully entering the Chinese market, Optimus V3 formal release, Cybercab mass production, etc. Key viewpoints from China Securities Co., Ltd.: Passenger Car Sector: In February, wholesale sales of passenger cars were 1.523 million units, a year-on-year decrease of 15%, including: domestic retail sales of 103,000 units, a year-on-year decrease of 25.9%, and exports of 560,000 units, a year-on-year increase of 55.8%. Retail sales expectations may have bottomed out, with exports (especially new energy vehicles) exceeding expectations. The outlook for March is expected to gradually warm up, focusing on new car releases and improvements in terminal demand, as well as marginal changes such as physical AI narratives. From a structural perspective, high-end and export-oriented segments continue to be the strongest performance support. NIO's annual report released this week and the Q1 performance guidance exceeded expectations, with a significant increase in stock price. Pay attention to Geely's annual report next week. In addition, as the intelligent driving AI base model advances to L4, Tesla is expected to lead new commercialization turning points such as Robotaxi. Xpeng's newly released second-generation VLA intelligent driving system performance has exceeded expectations, with strong stock price performance. Keep an eye on the annual reports next week. Commercial Vehicles: Since the beginning of the year, heavy-duty trucks and buses have continued to be supported by high export growth, and it is optimistic that overall Q1 performance will achieve a "good start." The two major sectors of heavy-duty trucks and buses could benefit from the continuation of policy support for domestic demand and overseas operations. It is recommended to focus on undervalued leading companies with strong performance. Physical AI: This week, Musk clarified once again that Optimus will begin mass production in the summer of 2026, with supply chain capacity preparations potentially reaching 1,000 units per week. 2026 is set to be the first year of commercialization for unmanned driving (robotaxi) and the mass production of humanoid Siasun Robot & Automation, with Tesla's progress and supply chain being the market focus. In the short term, the release of Gen3 models is imminent, followed by overseas production capacity construction and mass production stages in the second half of the year; in addition, Yushu's listing application may also become an important event catalyst. The sector's outlook is already expected to have bottomed out, with good value allocation for three types of targets, including high probability in the Tesla chain, incremental links in the direction of technological iteration and upgrades, and undervalued leading companies with expected differences in performance. Risk Warning: 1. Industry outlook falls short of expectations. The pace of China's economic recovery in 2026 is uncertain, with fluctuations expected in the automotive industry demand; a slowdown in consumer income growth or expected volatility will affect trade-in promotions, and inadequate demand in the passenger and freight markets may also constrain the replacement ratio of commercial vehicles, ultimately affecting the recovery process of automotive industry demand. 2. The effectiveness of policy implementation falls short of expectations. It will take time for the full implementation of policies promoting trade-ins and equipment updates, with policy promotion and information dissemination also requiring a certain amount of time. Continued observation is needed to see if subsidy funds will continue to be distributed properly and if replacement demand can be smoothly released. 3. Export sales fall short of expectations. Exports are affected by multiple factors such as international situations, national policies, and exchange rates, posing risks to fluctuations in overseas sales. 4. Deterioration in industry competition. Under the trend of automotive electrification and intelligence, domestic vehicle manufacturers and parts suppliers are actively expanding. With technological advancements and new production capacity deployments, future industry competition may intensify, leading to fluctuations in market share and profitability for both vehicle manufacturers and parts companies. 5. Slow progress in customer expansion and new project production. Under the trend of automotive electrification and intelligence, the existing vehicle and parts supply chain structure is undergoing reshaping, with parts companies that gain new customers and new project increments expected to benefit. Meanwhile, market share of some parts companies may be affected.