1、EQUITY:AUTOS&AUTO PARTSChina Auto/EV/BatteriesGlobal Markets Research18 February 2025AI and smart vehicle to be the key topics in 2025A likely gradual recovery of sales post holidaysWith an early Lunar New Year holiday season,the entire China auto market took a break in the beginning of 2025.The mar

2、ket delivered 2.1mn unit wholesale shipments in Jan-25,+0.8%y-y and-31.6%m-m.PV retail sales excluding minivans were 1.8mn units in the same month,-12.1%y-y and-31.9%m-m.PV EV monthly retail sales were 680k units in Jan-25,+1.3%y-y and-47.8%m-m,while EV penetration dropped to 38%in Jan-25.With tempe

3、ratures starting to increase and EV OEMs now shifting more focus onto smart vehicle updates,we expect EV penetration will gradually recover and increase further in 2025F.With BYDs Dipilot smart driving system announced on 10 Feb,we see other OEMs reacting fast in showing their development plans and

4、capabilities on the same topic.As EV OEMs actively introduce L2+ADAS functions into their new cars,we expect China auto market L2+ADAS penetration to increase fast in 2025F and benefit active players within the entire smart driving supply chain.At the initial stage,we see key components vendors like

5、ly being the direct beneficiaries,such as local autonomous driving SoC(System on a Chip)vendors,e.g.,Horizon Robotics(9660 HK),Black Sesame(2533 HK)and LiDAR vendors,e.g.,RoboSense(2498 HK),Hesai Tech(HSAI US).With pressure from peers,we expect most OEMs will have to follow up and result in eventual

6、ly increased demand for Tier-1 solution providers in the market as well.From an OEMs angle,having taken the initiative to popularize smart driving functions in the China market and considering its potential Blade battery 2.0 update,BYD(1211 HK,Buy)continues to be our top pick in the OEM sector.And,w