CITIC Securities: Smart Automotive More technology companies are entering the game preparing for the era of software-defined cars

Zhitong Finance APP was informed that CITIC Securities released a smart car research report that as the next generation of intelligent hardware AI platform, the intelligent car industry has gradually passed the early market verification and customer cultivation stage, and began to enter the second stage of rapid development and hundreds of controversies, and new car-making forces, technology giants, consumer electronics manufacturers and so on have entered the market. Reviewing the development of the smartphone industry in the past 15 years, CITIC Securities judged that the smart car track in 2022-2025 will present a "highly decentralized" stage of continuous new entrants. With the decline in market growth, as well as the effect of industrial scale and the data accumulation effect brought about by automotive intelligence, manufacturers with outstanding comprehensive capabilities such as product definition, vehicle full-stack technology, algorithm & software services are expected to eventually win, optimistic about the continuous increase in the sales share of domestic leading enterprises, and gradually move from domestic to global possibilities. CITIC Securities Recommends Strategic Focus: Tesla (TSLA. US), Ideal (02015), Xiaopeng (09868), NIO .N. US) and other new car-making forces, as well as the active layout of Apple (AAPL. US), Baidu (09888), Xiaomi (01810) and other technology giants.

CITIC Securities' views are as follows:

Automobile intelligence: electric drive, industrial trend established.

In 2021, global and Chinese new energy passenger car sales will be 5.96 million and 3.32 million units, corresponding to the industry penetration rate of 9.9% and 15.5%, and we expect that by 2025, the penetration rate figure is expected to increase to 32% and 42%. Electrification as an ideal carrier of intelligence, superimposed on the joint efforts of OEMs, industrial supporting facilities, policies and other levels, the trend of automotive intelligence is established:

1) Automotive electronic and electrical architecture evolves from distributed to domain-centralized and central computing architecture, and software-defined vehicles have become a long-term inevitable trend;

2) Hardware technology maturity, scale effects, etc. to promote the core sensor cost continues to move down, ICVTank expects that the price of vehicle-mounted lidar and millimeter wave radar will still have 97% and 33% downward exploration space in the future.

3) Tesla as a typical representative, intelligence helps automakers to achieve product differentiation, business model reshaping, etc. According to the product planning of each car manufacturer, in 2022, the world's major first-line car manufacturers and new car manufacturing forces are expected to be equipped with L3 and above automatic driving systems.

The new forces of car-making have begun to take shape, and technology companies have accelerated their entry.

At present, the new forces of global car-making and technology giants are actively participating in the process of electrification and intelligence of the global automobile industry:

1) Tesla leads the world. Sales will be 936,000 units in 2021, and we expect sales to exceed 1.4 million units in 2022. At the same time, Tesla CEO Musk also said that he is confident of maintaining an annual delivery growth rate of at least 50% and achieving annual sales of 20 million vehicles by 2030.

2) Rapid follow-up of new car-making forces. In 2021, Lucid and Rivian, the new forces of overseas car manufacturing, have been listed one after another, becoming the world's top ten car companies by market capitalization. Lucid expects the company to sell 577/20,000 units in 2021-2022, respectively; Rivian expects the company to sell 920/6,000 units in 2021-2022, respectively. In 2021, the sales volume of WEILAI, Xiaopeng and Ideal will be 91,000, 98,000 and 90,000 units respectively, and we expect to grow to 180,000, 200,000 and 180,000 units in 2022, with a significant first-mover advantage;

3) Technology companies run into the field, at present, Apple, Sony, Baidu, Xiaomi, Hon Hai, Luxun Precision and other companies have begun to lay out the vehicle manufacturing business. As a product definer in the field of consumer electronics, Apple is expected to launch smart cars in 2025; Baidu, Xiaomi and other technology companies are expected to launch new models in 2023-2024, and intelligence will be its core selling point; Foundry & parts manufacturers such as Hon Hai & Luxshare Precision also announced that they will increase their layout in the vehicle field and prepare for the possibility of cooperation with giants such as Apple in the future.

Mobile phone industry review: In the past 15 years, from functional machines to smart machines, the competitive landscape, business models and other drastic changes.

1) In 2007, Apple launched the first generation of iPhones, sold 1 million units in 74 days on the market, and smartphones began to really go to the market;

2) In 2010, Apple iPhone 4 listed, excellent product design, rich content applications, superimposed 3G network in the developed markets of Europe and the United States on a large scale commercial, after the listing of nearly 40 million units, the global share of nearly 20%, the year the annual sales of global smartphones exceeded 300 million, the market penetration rate also increased rapidly from about 10% to 19%, the industry entered a period of rapid development;

3) In 2012, MediaTek, Qualcomm and other chip companies have successively launched smart phone Turnkey (integrated) solutions, significantly reducing the mobile phone research and development cycle & difficulty, superimposed Google Android ecosystem is perfect, a large number of emerging manufacturers, technology companies began to pour into the smartphone market, superimposed during the 4G network in major regions of the world, in 2015 the global smartphone sales of 1.44 billion units, industry penetration rate of 76%, tail manufacturers sales share of 40%;

4) Since 2016, the global smartphone market began to enter the stock market, sales no longer grow or even shrink, superimposed electronic parts in the smart phone BOM cost of more than 80% of the proportion, scale effect to promote the rapid increase in market concentration, 2020 tail manufacturer sales share of less than 20%, during this period, Huawei, OPPO/VIVO, millet and other local manufacturers rely on huge domestic demand (domestic smartphone sales account for about 30% of the global proportion), technology research and development, scale advantages and other expanding share And from China to the world, the global sales share of the four manufacturers will account for more than 50% in 2020 (less than 20% in 2015).

Auto industry outlook: With the active and rapid entry of all parties, the market concentration is expected to gradually move from short-term dispersion to long-term concentration.

1) Similar to the smart phone industry from 2010 to 2011, with the continuous idealization of core elements such as new energy vehicle technology and battery cost, as well as the acceleration of new forces, technology giants, consumer electronics manufacturers, etc., the global new energy vehicle industry is passing the early stage of product verification, market cultivation, and entering the second stage of rapid growth and controversy, during which we expect that the share of head manufacturers may face a certain squeeze, the share of tail manufacturers will be significantly improved, and the market concentration will tend to be scattered. This situation will last for 3 to 5 years;

2) With the slowdown of market growth, considering the increase in the proportion of electronic parts in the cost of the vehicle brought about by intelligence, the scale effect of production & customer service, etc., long-tail manufacturers are expected to be out of the market quickly, the industrial share is gradually moving closer to the head enterprises, and manufacturers with outstanding comprehensive capabilities such as product definition, vehicle full-stack technology, algorithm & software services are expected to eventually win. At the same time, taking into account the huge domestic demand (25% of global automobile sales in 2021), the improvement of the vehicle industry chain support, IT technology & software service talent reserves and other favorable factors, we are optimistic about the continuous increase in the sales share of domestic leading enterprises, and gradually from the domestic to the global possibility.

Risk Factors:

the risk of further exacerbation of the global pandemic; the risk of intensifying international trade conflicts; The risk of insufficient key supply in the industrial chain; The risk of valuation fluctuations due to serious safety accidents in autonomous vehicles; The risk of insufficient power battery capacity; Risk of insufficient load on the grid; Risks such as the development of artificial intelligence technology are lower than expected.

This article is excerpted from "CITIC Securities", authors: Chen Junyun, Xu Yingbo; Zhitong Finance Editor: Bear Worm.