When BYD equips its 70,000 yuan cars with intelligent driving

1. BYD is not the leader in this round of intelligent driving upgrades; domestic leading companies are all prepared to popularize intelligent driving among mainstream customer groups by 2025. Therefore, investors need to seriously consider how significant the business opportunity is for intelligent driving in the 6-10 million mid-range vehicle market each year.

2. Nio, XPeng, and Li Auto are under greater pressure. Five years ago, they all ordered next-generation intelligent driving chips Orin from NVIDIA, and now Orin has become a ubiquitous product in the domestic supply chain, rather than the high-end product that cost $1,500 per set back then. They need to prove that the billions they invested in chips are not waste products and must also avoid increasingly complex and detailed sanctions.

3. The domestic automotive electronics industry will continue to undergo reshuffling. Cameras and mmWave will emerge as a new peak as cost-reduction solutions, but domestic lidar manufacturers will play even bigger in the future. Pure vision or single lidar solutions based on single Orin or single J6E will enter the demand improvement group market, which currently has a certain software premium but will inevitably fall into fierce competition. (The demand improvement group in China is roughly in the range of 160,000 to 220,000, similar to the 120-143 square meter range when buying a house.)

4. It is uncertain whether BYD's fab will participate in this round of games, but it may present a new business opportunity for domestic mature process manufacturers. Companies like Hua Hong Semiconductor, Chipone, and the Electronics Science and Technology Group may have new opportunities. Additionally, the demand from storage manufacturers, whether for automotive-grade norflash or NAND, will show significant growth. The upgrade in system complexity due to equal rights in intelligent driving may be comparable to the previous upgrade from gasoline vehicles to electric vehicles, representing another industry expansion.

5. BYD's suppliers and solutions are quite scattered; the ones that will continue to benefit will not be tier 1 but rather tier 2+. Similar to BYD, OEMs will increasingly tend to act as tier 1 while also integrating at the system level. For example, BYD has done the vast majority of the work. The granularity of suppliers' businesses will be even more dispersed than now, and the endgame may inevitably involve continued pressure on vendors to lower prices...

6. In fact, many core supply chains are at tier 1, spending big money on DJI, purchasing Huawei's black box, and having algorithms developed by Moment. The mid-to-low-end chips are TDA4/j2/j3/j5, while the high-end ones are Orin/MDC. After reviewing, it seems that only a certain DPX in the Hong Kong stock market has been speculated in advance.

7. For overseas manufacturers in China, there may be greater pressure because their system response times are slower and are affected by industry characteristics, making them overall more sluggish. Therefore, they either choose domestic suppliers, including introducing companies like Yihang or Zhuoyue, or completely give up and wait for their Chinese joint venture partners to mature in technology before cooperating.

8. Continue to pay attention to several edge chip manufacturers; their new products' performance will double in 2025-2026, and these companies have already done the work to get on vehicles. Previously, I was very impressed by RunGuang's 2Tops computing power domestic cockpit chip with autonomous parking functions. Now, their upstream companies' new products have increased computing power to over a dozen tops; what they can achieve is hard to imagine

9. Returning to the performance of intelligent driving itself, quoting a guest from YRQX: "The high-speed performance is about the same price, which is sufficient for most of BYD's established positioning. The main focus will be on the urban effects of the self-developed solutions; if it can be implemented, it will exceed expectations."

10. Ultimately, the advantage of a scale of 10 million is indeed enormous. Perhaps the supply chain will still face challenges, but as the largest end-side application of AI, the commercial value brought by intelligent driving to BYD's revaluation may be a more valuable investment proposition. It's similar to how in Tesla's valuation, the car itself accounts for less than 15%, while the autonomous driving-focused starry sea business supports a trillion-dollar valuation. Moreover, overseas investors' aesthetic perception of BYD may be more solid than that of TSLA. This is truly a general revaluation of Chinese technology assets...

Source: Information Equality, Original Title: "10 Questions Arising from the Equality of Intelligent Driving"

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