LI released OTA 5.0 intelligent driving and intelligent space evolution.

  On December 10th, LI officially released OTA 5.0, and announced that it plans to start full user push on December 19th. Through three software upgrades: intelligent driving (AD Max 3.0), intelligent space (SS 3.0) and intelligent extended range (REV 3.0), OTA 5.0 has brought comprehensive evolution of product strength to the ideal L-series car, becoming the strongest OTA in LI history.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image001.

  Intelligent driving platform, the ideal L-series Max model is upgraded to AD Max 3.0, and the full scene intelligent driving (NOA), full scene assisted driving (LCC), intelligent parking and active safety capabilities are fully upgraded. On the intelligent space platform, Mind GPT big model opens the internal test in SS 3.0, making ideal students become car assistants, travel assistants, entertainment assistants and "encyclopedia teachers" of the whole family. At the same time, the sensing and control algorithm of the intelligent extended range platform ushered in key optimization. REV 3.0 helped the ideal L series to increase the pure electric cruising range by 15%-20% in winter, and the whole family could have a worry-free mileage in cold winter.

  At the same time, Li ONE’s OTA 3.4 is also scheduled to be launched on December 26th, adding functions such as traffic light countdown of Gaode map, mobile version of task master, co-pilot screensaver, parking photo overhead view and energy consumption distribution statistics.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image002.

  "Every OTA is an experience innovation that we bring to users. In the past 14 months, LI has experienced 20 OTA version upgrades, and launched heavy functions such as task master, tuning master, voiceprint recognition and small master mode, which brought surprises to users again and again. " Li Xiang, Chairman and CEO of LI, said, "OTA 5.0 is a big iteration of the ideal L-series model, and the technical ability and product experience brought by AD Max 3.0 will make a qualitative leap, bringing a safer, more comfortable and more convenient intelligent driving experience to the family. The new Mind GPT in SS 3.0 empowers ideal students, deeply integrates with vehicles, and truly becomes a member of the family, so that every family member can easily enjoy AI in the car. At the end of 2023, OTA 5.0 was the best New Year gift we brought to users. In the new year, we will bring more OTA upgrades and strive to become the first choice for families and grow together with users. "

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image003.

      Intelligent driving breaks the ceiling of the whole scene

  AD Max 3.0 simplifies the complexity, integrates the functions into four items: full-scene intelligent driving, full-scene assisted driving, intelligent parking and active safety, and has a wider open area and more applicable scenarios, providing users with a product experience that breaks the ceiling of the intelligent driving industry.

  Relying on excellent intelligent driving hardware and accumulated training mileage on a larger scale, LI intelligent driving platform began to switch to the end-to-end algorithm architecture based on large model. BEV model and Occupancy, which are leading in the visual field, occupy the network to make the perception more accurate; The planning algorithm is gradually switched to the spatio-temporal joint planning algorithm, and the optimal driving trajectory is planned in milliseconds; MPC model predictive control algorithm brings low time delay, high precision steering and acceleration and deceleration, and balances safety, comfort and traffic efficiency well.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image004.

      Full-scene intelligent driving can be opened nationwide.

  After upgrading OTA 5.0, full-scene intelligent driving will cover all highways and urban loops in China, as well as urban roads in 110 cities. Whether in urban areas or highways, the performance of intelligent driving in the whole scene is closer to that of "old drivers". In the congested urban roads, vehicles can fully perceive, accurately predict and skillfully deal with complex game scenes such as traffic jam, lane change and mixed traffic at intersections. At the same time, the safety of full-scene intelligent driving in high-speed scenes has also been upgraded. In the face of dangerous construction scenes, special-shaped work vehicles or extreme traffic jams, it can be bypassed or avoided in time to ensure driving safety.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image005.

      Full scene assisted driving can be opened all over the world.

  AD Max 3.0′ s full-scene assisted driving function has the ability to cope with all kinds of complex traffic conditions on a global scale, bringing more surprises to users. Without setting navigation, full-scene assisted driving can recognize hundreds of different types of traffic lights by means of TIN end-to-end traffic light network, and realize the start and stop at intersections, even at complex and long-distance intersections.

  In addition, the large model brings a powerful "brain supplement" ability to the whole scene assisted driving function. Even on the road with fuzzy lane lines or even no lane lines, a stable virtual lane line can still be formed according to the road edge and the trajectory of the preceding vehicle, and the traffic can be successfully completed. In the face of more difficult bends and diverging and merging lanes, as well as various obstacles on urban and rural roads, the powerful ability of full-scene assisted driving can effectively cope with them.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image006.

      Smart parking is better than parking.

  AD Max 3.0 also brings users a comprehensive upgrade of smart parking, so that family travel is no longer worried about parking. After the BEV model and Occupancy network algorithm are introduced into the panoramic fisheye camera, the surrounding environment of the vehicle is accurately identified, and the whole vehicle is free of blind spots when driving at low speed. Heuristic planning search algorithm and MPC control algorithm also significantly improve parking efficiency.

  With the newly added parking function, users can operate the vehicle by their mobile phones after getting off the bus, and even if they park in a very narrow parking space, they don’t have to worry about the inconvenience of getting on and off. The more powerful parking service function can help users remember the designated parking spaces in the multi-storey underground parking lot and park them automatically, with the upper limit of the supported span reaching 10 floors. When driving to the parking space, it should deal with difficult scenes such as narrow right-angle bends and circling passages. Vehicles have the ability to flexibly choose routes, and even make room for smooth traffic by reversing.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image007.

      Actively and safely avoid high-frequency and high-risk traffic accidents

  In the safety field that home users attach the most importance to, LI takes avoiding high-frequency and high-risk traffic accidents as the active safety research and development goal, and develops the industry-leading AEB function to create an umbrella for the whole family. LI has established a perfect driving risk database based on the local road conditions in China, and classified it according to the frequency and risk level, focusing on solving the high-frequency and high-risk risks that users really encounter.

  Thanks to the BEV big model algorithm, the AEB capability of AD Max 3.0 has achieved a leap, and the remote sensing accuracy has been significantly enhanced. The working speed covers 4-135 km/h, providing full-speed domain guarantee for driving safety. Facing pedestrians and stationary vehicles, AD Max 3.0 can stop at 110 km/h and 120 km/h respectively. Even in the low-speed tricycle scene neglected by the industry, AD Max 3.0 can still stop at 80 kilometers per hour. Moreover, the AEB false trigger rate of AD Max 3.0 has been reduced to less than once every 300,000 kilometers, exceeding the industry standard, and taking into account traffic efficiency and comfort while protecting the safety of the whole family.

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      Intelligent space completely reshapes interactive experience.

  In the newly upgraded SS 3.0, Mind GPT, a multimodal cognitive model, started internal testing, which was truly tailored around the car scene and networked in real time, giving ideal students more new roles such as car assistant, travel assistant, entertainment assistant and encyclopedia teacher. Combined with the new full-time wakeup-free ability, command freedom, concise mode and re-evolved dialect freedom of ideal students, SS 3.0 completely reshapes the interactive experience of smart space and allows AI to enter more families.

  LI built the original base model of Mind GPT from 0 to 1, and its structure adopted the self-developed TaskFormer neural network architecture. Based on the scenes of car use, entertainment and travel, he used SFT, RLHF and other technologies to train, which enabled Mind GPT to have three abilities: understanding, generation, knowledge memory and reasoning. In the authoritative evaluation list of Chinese big language model C- EVAL and CMMLU, the powerful Mind GPT won the first place. Based on the key scenes of home users in cars, LI has also customized more than 1,000 exclusive abilities for Mind GPT, covering 111 fields, which is a dimensionality reduction blow to the traditional car voice assistant by the large model ability.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image009.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image010.

      Accompany the whole family with car assistants, travel assistants and entertainment assistants.

  The ideal student is first of all a professional car assistant, who can provide professional answers to any questions about vehicle operation, state inquiry or fault diagnosis. The new AI task master function allows ideal students to understand complex function combinations and automatically create tasks. Regardless of their elders or children, every family member can use the task master at zero threshold and become the product manager of LI.

  When a family goes out, the Ideal Homecoming Association is an effective travel assistant, providing family members with travel inspiration, planning trips, searching for good places to eat, drink and have fun in the newly added Meituan application, and its recommended location and route can also be directly called in the navigation, making self-driving travel more arbitrary. On the way out, the ideal classmate is also a funny commentator who can patiently explain the historical and cultural stories of scenic spots along the way for his family.

  At the same time, the ideal classmate is also an interesting entertainment assistant, who can check the current news, star trends, popular movies and songs that family members want to know online and provide the latest information. The film and music works mentioned in the ideal students’ answers can also be directly played by calling related applications on the car side.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image011.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image012.

      Encyclopedia teachers and painting masters are practical and interesting.

  In addition, the knowledgeable ideal classmate is also a knowledgeable encyclopedia teacher. Mind GPT’s knowledge reserve covers all fields of natural science, history and culture, from children’s strange 100 thousand whys to the latest scientific and technological digital products that adults pay more attention to, and it is still growing.

  What’s even more surprising is that Mind GPT can not only answer questions, but also be creative. Write a poem, tell a story, and then draw the described scene. The requirements put forward by these children can be met by all-round ideal students.

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      The dialogue efficiency of ideal classmates will be upgraded again.

  In addition to adding more roles after being empowered by the big model, the bottom quality of the ideal students has been improved again, and their listening and execution abilities have evolved in an all-round way. SS 3.0 brings full-time wakeup-free ability to ideal students, and can directly send common voice commands to ideal students without saying wakeup words. Ideal students have also added the function of freely speaking instructions. If a sentence contains multiple instructions, ideal students can identify them one by one and execute them one after another. After upgrading SS 3.0, the ideal students’ voice response will also support the concise mode of "less words", and the scope of dialect free speaking will be expanded again, and a number of new functions will be combined to significantly improve the dialogue efficiency between users and ideal students.

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  More possibilities for car browser opening

  In addition, SS 3.0 also brings the car browser application, which makes richer music, videos and cloud games create more possibilities for the in-car entertainment experience. Thanks to the deep integration of the browser and the car system, the global media player, the ideal classmate voice interaction and the Bluetooth gamepad can all adapt to the browser, so that the powerful browser functions can be seamlessly integrated into the smart space.

  Intelligent extended range surprise upgrade winter battery life

  In winter, LI continuously iterates through the algorithm, and continuously improves the endurance of the ideal L-series vehicles from OTA 4.6.2. After upgrading OTA 5.0, REV 3.0 has brought a 15%-20% increase in pure electric cruising range for L-series models, making the family’s winter travel bid farewell to mileage anxiety.

  The ideal L series is equipped with a full-stack self-developed XCU vehicle central domain controller, which is the first to adopt an A-core intelligent chip in the field of vehicle control, and provides a solid foundation for the algorithm iteration of REV 3.0 with strong computing power. Innovative intelligent power prediction algorithm can accurately predict the discharge power of batteries and motors in milliseconds, and achieve more accurate discharge control, which can not only ensure the safety of vehicles, but also fully release the potential of batteries and improve the maximum discharge capacity by 4.1%. For vehicle-mounted electrical appliances with high power consumption, such as air conditioning and seat heating, the new algorithm optimizes the power consumption through smarter detection and control means, and greatly improves the power efficiency while ensuring comfort.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image015.

LI released OTA 5.0 intelligent driving and comprehensive evolution of intelligent space _fororder_image016.

  OTA 5.0 push plan

  OTA 5.0 is scheduled to be fully pushed to the ideal L-series vehicles from December 19th, 2023. In terms of intelligent driving, Max models will take the lead in upgrading AD Max 3.0, and Pro and Air models plan to upgrade AD Pro 3.0 in June 2024 to realize high-speed intelligent driving (NOA), full scene assisted driving (LCC) and more intelligent parking and active safety under BEV architecture. In terms of smart space and intelligent range extension, Max, Pro and Air models will upgrade SS 3.0 and REV 3.0 simultaneously.

  From now on, all the exhibition cars and test cars in 405 retail centers in LI have been fully upgraded to the internal test version of OTA 5.0 to welcome users to the store. (Source: LI)

Worried! Hong Kong A auto stocks collectively weaken, and brokers’ medium-term strategy bet on these two points!

  On July 6th, in the afternoon, the auto sector of Hong Kong stocks fell. As of press time, shares of Dongfeng Group, () fell more than 5%, () fell more than 4%, Geely Automobile fell more than 3% and () fell more than 2%.

  At the same time, the A-share auto sector is also falling, Hanma Technology has fallen, and Guangzhou Automobile Group, () and () have weakened.

  Year-to-date, the share price of () has risen by over 388%, and the share price of Xiaokang has also risen by over 250%.

  On January 12th this year, Zotye Motor announced the progress of public recruitment of investors, saying that two prospective investors had paid the corresponding confidentiality deposit and intention deposit, and started to carry out specific due diligence work after paying the deposit. Since then, Zotye Auto’s share price has been rising all the way.

  However, up to now, two prospective investors have terminated their investment and one has suspended their investment. This also means that the pre-reorganization plan started by Zotye Automobile last year may fail.

  It is worth mentioning that Zotye Motor has a huge loss. According to the data of Zotye Auto’s annual report, the company lost 10.801 billion yuan in 2020, and its net assets at the end of 2020 were-4.423 billion yuan. At the same time, the company’s main business vehicle business is in a state of suspension or semi-suspension.

  Xiaokang Co., Ltd. is an entity manufacturing enterprise with engines and new energy vehicles as its core business and complete vehicles as its main business. Now it has formed a complete industrial chain integrating independent research and development, manufacturing, sales and service of complete vehicles, engines and auto parts. In addition, Xiaokang’s stock business also involves car rental and Internet consumer finance.

  The previous rise seems to have exhausted the market enthusiasm. What will happen to the market structure of the automobile industry in the second half of the year? What should investors focus on?

  It is worth noting that many brokers frequently mention two points in the strategy of automobile industry: intelligence and independent brands.

  Northeast Securities: Automotive Intelligentization Welcomes Turning Point, Huawei Leads the Wave.

  We believe that intelligent transformation is a clear trend in the automobile industry, and it has already reached an inflection point. Intelligent automobile is the main investment logic in the next few years. At present, both OEMs and Tier1 manufacturers are actively increasing the intelligent layout. We are most concerned about Huawei. Huawei entered the automotive field and positioned itself as a Tier1 manufacturer. We judge that Huawei will lead the wave of automobile intelligence. We believe that intelligent driving and intelligent cockpit are the core solutions of Huawei, and these two segments are also the core of the wave of automobile intelligence.

  Investment advice:

  Great Wall Motor

  Among domestic vehicle manufacturers, Great Wall Motor has a prominent strategic layout in the field of intelligent driving, and cooperates with Qualcomm and Huawei. Great Wall Motor will be the first to launch a coffee intelligent driving system based on the SnapdragonRide platform in the high-end models launched in 2022. Great Wall Motor and Huawei also cooperate in the fields of intelligent networking and intelligent driving. Huawei will provide Great Wall Motor with a high computing power intelligent driving computing platform based on MDC, and cooperate with Great Wall Motor to complete various evaluations and tests of the sensing components required for intelligent driving.

  Changan automobile

  () Join hands with Huawei and () to cooperate in the field of automotive intelligence. Changan Automobile has a strong ability to build cars, and it also has the accumulation of intelligent driving schemes. Combined with Huawei’s technical modules, it is expected to launch excellent intelligent cars.

  Baolong technology

  ADAS is still a good landing point for intelligent driving, and we continue to firmly recommend it (). Baolong Technology’s ADAS business made great efforts, and in 2021, it became the leading commercial vehicle ADAS in China, and subsequent passenger cars continued to follow up. At the same time, the company’s multi-category sensor business has developed rapidly and has broad application space in the field of autonomous driving.

  Fuyao glass

  Under the wave of intelligence, the permeability of skylight glass and HUD glass has increased, and the automotive glass business has ushered in a new space. As a new kind of automobile glass, skylight glass is widely used in electric vehicles. In recent years, HUD glass has gradually sunk from high-end cars to low-end models, accelerating market penetration and leading the trend of automobile intelligence. As a leader in the automotive glass industry, the company is expected to take the lead in benefiting from the growth space.

  China Merchants Securities: "Intelligent Control, Electric Future" Accelerate Development

  Automobile industry: the chip problem is expected to be solved in the third quarter, and the economy will pick up in the fourth quarter.

  Passenger cars: It increased by 38.1% year-on-year from January to May, and it is estimated that the industry will be 7.5% in 2021.

  New energy vehicles: From January to May, it increased by 2.5 times year-on-year, the C-end increased by 263%, and the supply of high-quality products increased. In May, the monthly penetration rate of new energy passenger cars was 11.5%, and the curtain of marketization opened, which will usher in a decade of high growth.

  Commercial vehicles: It is estimated that the sales volume of heavy trucks will be under pressure with the strict implementation of the national six emission standards in the second half of 2021, and the national six emission upgrade will activate the 100 billion post-processing market.

  "Intelligent control, electric future", the industry is advancing at full speed.

  1. The whole vehicle: electrified and intelligent. The launch of new models in the electric vehicle industry will be accelerated, and the C-end consumption will rise and enter an accelerated penetration period. It is estimated that the industry sales will reach 2.2 million units in 2021, and electrification will change the cost structure of the industry for a long time; The accelerated investment in the direction of intelligence will change the industry ecology and change the business model. New elements will drive hardware intelligence and software-defined cars.

  2. Parts and components: high-end, modular and international. High-end products enhance the value of products, modularity and then enhance the supporting value. The large domestic market and low cost determine the inevitable trend of the internationalization of parts and components.

  Investment strategy: pay equal attention to structure and trend, and comprehensively lay out the automobile industry.

  From top to bottom, we are optimistic about the systematic opportunities in the automobile industry. In terms of structural performance, new energy, parts and intelligence are the sub-sectors with high prosperity in 2021.

  Passenger car: Great Wall Motor and Geely Automobile with strong product cycle are recommended; Guangzhou Automobile Group and () whose current valuation is still at a relatively low level in history are recommended.

  Parts and components: Grasp "high-end, modular and international", and recommend (), (), (), (), () and so on.

  Intelligence: Intelligent driving is the general trend, and many links have investment value. We recommend (), () and (), and pay attention to Shunyu Optics (electronic group coverage), () (electronic group coverage), () (electronic group coverage), () (electronic group coverage) and () (computer group coverage). The new forces represented by Tesla are growing fast and making high profits, and the relevant targets of the industrial chain are recommended.

  New energy vehicles: electrification ushered in a blowout of good products and the rise of market-oriented C-end consumption, recommended BYD, paid attention to the formation of Huawei’s automobile industry ecology, and paid attention to Changan Automobile, () and Xiaokang shares; Short-term policies for fuel cells are frequent, focusing on Yihuatong, () and ().

  China galaxy: Electric power has arrived, and intelligent driving is escorting.

  After the epidemic, the demand picked up, and the long-term space was huge. Due to the epidemic and extreme weather, the global supply of automobile chips was in short supply, and the terminal production was reduced, which made the industry enter a tight balance state where demand exceeded supply. It is expected that the supply pressure of 21Q3 chip will be gradually eliminated.

  We estimate that the sales volume of passenger cars in 2021 is expected to reach 21.7 million, Yoy+7.7%;

  There is still room for doubling the total automobile sales for a long time. At present, the average number of cars per thousand people in China is less than 200. In the long run, there is still much room in absolute terms. Referring to the development history of the United States, Japan and South Korea, we predict that by 2030, the domestic car ownership is expected to be close to 400 vehicles per thousand people, and the CAGR is expected to reach 8% in 9 years;

  It is estimated that 2.5 million new energy passenger cars will be sold in 21 years. The electrification penetration rate will exceed 10% from January to April in 21 years, and the year-on-year growth rate will exceed expectations. The annual sales volume is expected to increase by nearly 100% year-on-year. The products of traditional car companies have been accelerated, and the technology giants have successively entered the market. The trend of electrification is a foregone conclusion.

  Intelligent components accelerate the penetration of new forces to build cars. At present, intelligent driving and cockpit equipment are stronger than traditional OEMs. We judge that traditional OEMs will accelerate the transformation to comprehensive intelligence, and the market for automatic driving and intelligent cockpit components will be the main increase in the future;

  A new generation of hardware paves the way for intelligent driving. Driving assistance and intelligent cockpit have given birth to the application of a new generation of electronic and electrical architecture, which has stronger computing power. The increase in the types and quantity of bicycle driving assistance sensors is a general trend, and the difference in bicycle value between high/low-level driving assistance systems is about 10 times. Independent component suppliers have the advantage of being a latecomer and are expected to emerge suddenly.

  Investment suggestion: For the whole vehicle, we suggest paying attention to Changan Automobile with strong cycle products, Great Wall Motor, the leader in segmentation, and SAIC Motor, whose relative valuation is at a low level. The parts industry suggests paying attention to 1) intelligent targets: (), (); 2) Internationalized and high-end modular leaders: Huayu Automobile and Chineydy; 3) Increase in bicycle value: (), Fuyao Glass;

  Shanxi Securities: With the rise of independent brands, the new energy vehicle market has broad prospects.

  Industry Review & Prediction: In the first half of 2021, the overall automobile consumption remained stable, the overall profitability of enterprises was restored, and the cumulative sales volume and cumulative retail sales of automobile products increased at a high speed year-on-year. In the short term, due to the chip supply problem and the sharp rise in raw material prices, the automobile industry is still facing downward pressure on performance, but the economy continues to recover steadily, the production and operation of enterprises continue to expand steadily, and the industry still has room for growth. The overall trend of the industry in the second half of 2021 remains unchanged.

  1) The overall positive trend of passenger cars in the second half of the year remains unchanged, and self-owned brand passenger cars and electric vehicles are expected to maintain rapid growth. 2) The overall demand for buses is declining. With the gradual advancement of new energy technologies and the gradual growth of the RV market, the new energy and emerging markets of road buses are expected to provide an increase for the bus market. 3) Heavy trucks are expected to continue to operate at a high level throughout the year. However, due to the emission regulations, the demand for heavy trucks is mainly released in the first half of the year, and the sales volume may narrow to some extent in the second half of the year.

  The share of SUV continues to increase, and the self-owned brand passenger cars are gradually laid out in a high-end way. Since the beginning of 2021, the cumulative production and sales of passenger cars have continued to grow at a high speed year-on-year, but the growth rate has narrowed. In terms of vehicle types, SUV is the model that contributes to the main increment of passenger car sales, and its year-on-year performance is better than other models as a whole, and its sales share has been continuously improved since 2010. In terms of car system, the cumulative sales growth rate of self-owned brand passenger cars is ahead of the industry, and the trend of high-end is obvious. Self-owned brand vehicle manufacturers with high-quality brands and active layout of high-quality tracks are expected to continue to seize market share by relying on their own high-quality models. In addition, luxury cars are still outstanding, with diversified products, obvious characteristics of consumption upgrading in the automobile market, and the threshold for overlapping car purchases has dropped, and luxury cars are expected to maintain their leading position. On the whole, we are optimistic about the market segments of self-owned brand passenger cars under the trend of luxury cars and high-end, as well as the structural opportunities of cars, SUVs and other market segments. It is suggested to pay attention to vehicle manufacturers with high-quality brands, novel designs and perfect vehicle matrix, and actively lay out the fields of automobile intelligence and electrification.

  The penetration rate of new energy vehicles has gradually increased, focusing on core components and battery industry chain. From January to May in 2021, the production and sales of new energy vehicles reached 967,000 and 950,000 respectively, up 2.2 times year-on-year, and the penetration rate of new energy vehicles was 9.4%, which became the core driving force to support the demand and performance growth of passenger car and parts enterprises. In the long run, the policies of "peak carbon dioxide emissions", "carbon neutrality" and "fuel vehicle license restriction" make it clear that new energy vehicles will gradually replace fuel vehicles in the future, and the intelligent networking, automatic driving and quick response of products will inject more advantages into new energy vehicles. In the past, battery life and safety problems have been improved with the improvement of battery and fast charging technology. At present, the cost performance of domestic new energy vehicles is gradually equal to that of fuel vehicles, and the market prospect is broader. It is expected that battery core components with high barriers, such as high nickel anode, cathode and membrane faucet, will gain rapid development opportunities by virtue of scale effect and local advantages.

  Investment suggestion: the consumption structure of passenger car market is continuously optimized, independent brands are gradually rising, luxury cars continue to lead the market, the penetration rate of new energy vehicles is steadily increasing, and there are many structural investment opportunities to maintain the industry’s "optimistic" rating. Industry stock selection suggestions focus on two main lines: first, the vehicle leader with high-quality brand and high-quality track layout; The second is to focus on new energy vehicles and automobile intelligence, focusing on core components and battery industry chain. Suggested attention: Guangzhou Automobile Group, Great Wall Motor, BYD, (), (), ().

  Guosen Securities (Hong Kong) Financial Holdings: Embracing the Advantages of Independent Brands.

  The market share of independent brands continues to rise.

  According to the data of China Automobile Association, in the first five months of 2021, the market share of self-owned brand passenger cars recorded 41.6%, up 3.2 percentage points from 2020. If we look at the monthly data, the market share of independent brands fell to a multi-year low of 33.5% in June 2020, and then it continued to rise significantly, and the trend of continuous decline in share in recent years was obviously reversed.

  By analyzing the sales data of specific vehicle manufacturers, we can see that the share of independent brands continues to rise, which is not driven by the high sales of a few car companies, but that most car companies have achieved good performance beyond the industry. For example, the sales growth rate of Great Wall Motor, Changan Automobile, Chery Automobile, BYD and other car companies in the first five months of 2021 far exceeded the industry average.

  The overall competitiveness of mainstream independent brands has improved significantly.

  The share of self-owned brand car companies continues to increase. We think one of the main reasons is that the overall competitiveness of mainstream self-owned brands has improved significantly, and this improvement has certain universality. The obvious improvement of competitiveness is first reflected in product competitiveness. In the past, self-owned brand models often attracted consumers through rich configurations and relatively low prices. In recent years, with the overall progress of self-owned brand car companies in vehicle interior and exterior design, dynamic performance, driving quality and other aspects, product competitiveness has been significantly improved. Especially since the second half of last year, Geely, Great Wall and other self-owned brand head car companies have successively launched models whose performance and quality have not lost or even surpassed those of joint venture brands, driving the competitiveness of self-owned brand models to a new level.

  The promotion of product competitiveness is driven by the continuous improvement of research and development and technical strength. In addition, in the past two years, independent brands have made considerable progress in vehicle planning and design, market positioning, market promotion and other soft power. Some car companies have achieved quite good results in the youth and trend strategy of vehicle design and promotion.

  Generally speaking, the overall competitiveness of independent brands has improved significantly, which is the result of years of accumulation by car companies. At present, the gap between the product strength of self-owned brand models and joint venture brands is shrinking, and even some models have surpassed it. Moreover, from the aspects of new product launch frequency, iterative speed of vehicle renewal, intelligence, vehicle design route, marketing promotion strategy, etc., some head independent brands have begun to surpass the traditional joint venture brands. We believe that the overall competitiveness of independent brands is expected to continue to improve in the future, thus further promoting the continuous expansion of market share.

  We believe that in terms of short-term and medium-term sales growth in the industry, the growth rate of passenger car sales in the third quarter may be lower, and it may pick up in the fourth quarter. In the medium and long term, the market share of independent brands will continue to expand or will become a general trend, while the share of mid-end joint venture car companies may be squeezed. In the future, we think it will focus on two aspects: 1. Independent brand advantage car companies; 2. Subdivision of new energy vehicles. Maintain the industry rating of outperforming the market. In terms of specific targets, we suggest focusing on Great Wall Motor, BYD, Geely Automobile and Guangzhou Automobile Group.