China Securities Co., Ltd. released a research report stating that the automotive sector is currently experiencing weak performance during the off-season. However, structurally, expectations for reduced internal competition and improved overseas expansion are strengthening, autonomous driving policies are being catalyzed and implemented, and Tesla's V3 humanoid robot prototype demonstration was impressive. The firm maintains its previous view that the vehicle trade-in policy in 2026 will support domestic demand, with commercial vehicles likely benefiting more. Structurally, it is bullish on the valuation elasticity brought by the 0-to-1 breakthrough in commercialization of edge AI (autonomous driving and robotics), and recommends focusing on the cyclical bottom reversal of distributors amidst reduced internal competition. The main views of China Securities Co., Ltd. are as follows:
The passenger vehicle sector continues with "weak expectations and weak reality," while the push against internal competition persists and export expectations improve. Data from the CPCA for January 1-11, 2026, showed domestic passenger vehicle wholesale and retail sales fell by 40% and 32% year-on-year, respectively, with new energy vehicle sales down 30% and 38%. Off-season pressures are evident, but market expectations may have already dulled. On January 14, three ministries held a symposium with new energy vehicle companies, deploying work to standardize competition order and resolutely resist disorderly "price wars," which is positive for potential profit improvement in new car sales for aftermarket dealers. Furthermore, on January 12, the Ministry of Commerce reported progress in consultations on the EU electric vehicle case, planning to provide general guidance on price commitments for Chinese exporters of pure electric vehicles to the EU. On January 16, the visiting Canadian Prime Minister stated Canada would import 49,000 Chinese EVs at a preferential tariff rate (reduced from 100% to 6.1%).
2026 is expected to be the first year of commercialized unmanned driving, with Tesla's deployed FSD V14 potentially reaching quasi-L4 levels, and expectations for looser policies are strengthening. This week, the US House of Representatives held a hearing to discuss more lenient new autonomous vehicle legislation. Shanghai released the "Model Speed Intelligent Driving Action Plan" for its high-level autonomous driving pilot zone, aiming for large-scale implementation of high-level autonomous driving application scenarios by 2027. The firm is optimistic about OEMs and Tier 1 suppliers with integrated hardware-software solutions, mobility platforms and operators, domestically controllable chips, and incremental components like LiDAR and steer-by-wire chassis, suggesting the technological attributes of OEMs may be revalued.
The humanoid robot sector continued its strong performance this week, with Tesla's V3 prototype video boosting market expectations. Recent key communications with core suppliers in the Tesla supply chain are progressing, and the next 1-2 months will see a shakeout, moving into a phase of fundamental validation. The sector shows significant concentration, highlighting the importance of securing positions in the确定性 Tesla chain and beneficiaries of technological iteration. Potential future catalysts to monitor include: Tesla's annual report interpretation on January 28, the official V3 release and small-batch production in February-March, progress on overseas supply chain capacity preparation in Q2, mass production in the second half of the year, and the listing progress of Yushu.
In the commercial vehicle sector, Weichai Power's stock performed strongly this week. Domestic major manufacturers are gradually resuming AIDC construction tenders, with recent large orders from Company B being implemented. As the localization of computing cards accelerates, the scale of major manufacturers' tenders is expected to expand into 2027-2028, boosting market growth expectations for diesel generator sets and their core components, particularly large-bore engines. Combined with Weichai's scarce strategic position in SOFC, the firm is optimistic about the company's earnings delivery and valuation increase. Additionally, the report highlights a left-side layout opportunity for Yutong Bus, citing strong volume growth in new energy exports & solid earnings visibility. The medium-term trend of export-driven volume and profit growth is clear, and the recent pullback due to short-term factors like industry seasonality is seen as a buying opportunity, with the current 2026 PE at only 12x and a dividend yield close to 5%.
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