Investment Rating - The industry investment rating is "Hold" [2] Core Insights - The automotive sector experienced a slight decline of -0.10% in the past week, with the automotive services sub-sector performing the best at +3.73% [5] - In November, the retail sales of passenger vehicles decreased by 7% year-on-year, while Tesla launched a budget version of Model 3 in Europe [5] - The Ministry of Industry and Information Technology approved two L3 level autonomous driving models, indicating advancements in smart vehicle technology [6] - China FAW plans to mass-produce solid-state batteries by 2027, which will be used in high-end Red Flag models [6] - The automotive market is currently adjusting due to the expiration of several consumer stimulus policies, with a projected retail market of approximately 2.3 million units in December [6] - The EU has proposed to relax the 2035 ban on new fuel vehicle sales, allowing for a 90% reduction in emissions compared to 2021 levels [7] Summary by Sections Market Review - The automotive sector's performance was ranked 21st among 31 first-level industries, with notable companies like Zhejiang Shibao and Weidi Co. showing significant gains [5] - The overall market sentiment reflects a mixed performance, with some companies experiencing substantial growth while others faced declines [5] Sales Data - From December 1 to 14, retail sales of passenger vehicles reached 764,000 units, a year-on-year decrease of 24% [6] - The wholesale volume for the same period was 734,000 units, down 31% year-on-year [6] - The new energy vehicle market showed resilience with retail sales of 476,000 units, only a 4% decline year-on-year [6] Investment Recommendations - Focus on companies involved in smart vehicle technology and those with potential for overseas sales [7] - Consider component manufacturers that can benefit from domestic substitution effects [7]

Core Viewpoint - The approval of two L3-level autonomous driving vehicle models by the Ministry of Industry and Information Technology (MIIT) marks a significant step towards the commercialization of L3 autonomous driving in China [1][3]. Group 1: Approval and Significance - The MIIT granted conditional approval for two L3-level autonomous driving vehicles from Changan Automobile and BAIC Blue Valley Magna, indicating a shift from technology validation to mass production application in the autonomous driving industry [1][4]. - The approved models are the Changan SC7000AAARBEV and the BAIC Alpha S6, which are both pure electric vehicles [1]. Group 2: Technical Capabilities and Testing - Changan Automobile's L3-level autonomous driving system can operate in traffic congestion on highways and urban expressways within a single lane, leveraging its self-developed "Tianshu Intelligent" technology [2]. - Extensive testing has been conducted, including over 500,000 kilometers of road testing, with a focus on safety and compliance with traffic regulations [2]. Group 3: Industry Context and Future Outlook - The approval process for L3 commercial vehicles has been ongoing for over a year, with a pilot program initiated in June of the previous year involving multiple automotive companies [3]. - Industry experts anticipate that more models will receive approval as standards and policies continue to evolve, with a significant increase in demand for intelligent mobility expected by 2025 [4].