Core Viewpoint - The delay of Nvidia's Thor chip has made the external chip supply chain uncertain and expensive, highlighting the importance of self-developed chips to reduce costs and enhance the technological narrative of companies [1][35]. Group 1: Industry Overview - The arms race for computing power in smart driving began in 2021 with the launch of Nvidia's Orin-X chip, which boasts 254 TOPS, outperforming Mobileye's Q5H and Tesla's HW3.0 [2]. - The narrative logic among car manufacturers emphasizes the importance of self-developed chips as a crucial aspect of their strategy [3]. Group 2: NIO's Chip Development - NIO was the first to propose self-developed chips, with founder Li Bin initiating the "chip-making" project in 2020 despite skepticism [6][7]. - NIO's chip team, led by architect Zhang Danyu, has grown to around 400 members, with significant investment in R&D, totaling approximately 41.9 billion RMB from 2021 to 2024 [10][11]. - NIO aims to control the R&D process and reduce supply chain risks by fully self-developing core technologies [11][12]. Group 3: XPeng's Chip Strategy - XPeng has been aggressive in its chip development, launching the self-developed Turing AI chip for its P7 model, but faced challenges with internal collaboration between the chip and algorithm teams [19][20]. - The company initially outsourced chip design but shifted to full self-development due to delays from partners [20][24]. - XPeng's second-generation chip is under development, targeting a 5nm process, with ambitions to integrate advanced AI models into its vehicles [27][28]. Group 4: Li Auto's Approach - Li Auto started its chip development later than its competitors but faces fewer internal obstacles due to a unified leadership vision [29][30]. - The company has begun developing its second-generation chip, focusing on integrating its operating system and chip development under a single department [31][34]. - Li Auto aims to leverage its organizational structure to enhance collaboration between its algorithm and chip teams, which could lead to improved efficiency [35].

Group 1 - The 28th Chengdu International Auto Show features XPeng Motors showcasing new models including the XPeng P7, G7, 2025 XPeng X9, MONA M03, and the humanoid robot IRON, emphasizing the theme "AI Changes the World" [1] - XPeng's self-developed Turing AI chip is now equipped in the G7 Ultra and the new P7 Ultra, with plans for all new Ultra models to include three Turing AI chips [1] - The humanoid robot IRON is expected to be utilized in production and service scenarios, expanding the AI ecosystem [1] Group 2 - For Q2, XPeng reported revenue of 18.27 billion yuan, a year-on-year increase of 125.3%, with vehicle deliveries reaching 103,200 units, up 241.6% [3] - The company’s gross margin improved to 17.3%, cash reserves increased to 47.57 billion yuan, and R&D expenditure reached 2.21 billion yuan [3] - In the first half of the year, XPeng launched five updated models, achieving record delivery numbers in Q2 [3] Group 3 - The new XPeng P7 was officially launched on August 27, with over 10,000 orders placed within 7 minutes of its release, and it features three Turing AI chips with a computing power of 2250 TOPS [3] - The P7 is equipped with the "858" high-performance battery pack, supporting 525 km of range in just 10 minutes of charging and a maximum range of 820 km [3] - The XPeng X9, the first model with the Kunpeng Super Electric (range extender), is set to launch in Q4, with expected monthly deliveries exceeding 40,000 units starting in September [4] Group 4 - From January to July, XPeng's overseas deliveries reached 21,700 units, a year-on-year increase of 174%, with operations now in 46 countries and regions [4] - The first locally produced XPeng X9 in Indonesia was delivered in July [4] Group 5 - In August, XPeng Motors and Volkswagen Group announced a collaboration to develop an electronic and electrical architecture to be integrated into Volkswagen's electric, fuel, and plug-in hybrid models in the Chinese market [5]

Core Viewpoint - The company achieved record performance in Q2 2025, with significant growth in delivery volume, revenue, and gross margin, indicating a strong market position and operational efficiency [1][8][23]. Financial Performance - Q2 2025 total revenue reached RMB 182.7 billion (USD 25.5 billion), a 125.3% increase year-on-year from RMB 81.1 billion [8]. - Automotive sales revenue was RMB 168.8 billion (USD 23.6 billion), up 147.6% year-on-year from RMB 68.2 billion [8]. - Q2 2025 gross margin improved to 17.3%, compared to 14.0% in Q2 2024, driven by cost reductions and product mix optimization [23]. Product Development and Launches - The G7 model launched in July 2025, featuring the self-developed Turing AI chip, achieved the highest sales in its class within four weeks [2]. - The upcoming P7 model is expected to be a top seller in the 200,000 RMB segment, with pre-sale orders exceeding previous models [3][19]. - The Kunpeng super electric platform will begin mass production in Q4 2025, integrating advanced technologies for enhanced performance [4]. Strategic Focus - The company aims to strengthen its four core capabilities: technological leadership, organizational strength, commercialization, and globalization [4]. - Emphasis on AI technology and design innovation is expected to enhance brand positioning and profitability [13][26]. Market Outlook - For Q3 2025, the company anticipates vehicle deliveries between 113,000 and 118,000 units, representing a year-on-year increase of approximately 142.8% to 153.6% [6]. - Total revenue is projected to be between RMB 196 billion and RMB 210 billion, reflecting a year-on-year increase of about 94.0% to 107.9% [7]. Research and Development - R&D expenses for Q2 2025 were RMB 22.1 billion (USD 3.1 billion), a 50.4% increase year-on-year, driven by product expansion and new technology development [9]. - The company plans to maintain a strong focus on R&D investments in AI, autonomous driving, and robotics [25]. Cost Management - The company reported a significant reduction in net losses, with Q2 2025 net loss at RMB 4.8 billion (USD 0.7 billion), down from RMB 12.8 billion in the same period last year [11]. - The improvement in vehicle gross margin is attributed to product mix optimization and economies of scale [21].

Core Viewpoint - Xiaopeng Motors (XPEV.US) reported strong Q2 2025 financial results, achieving a record high gross margin of 14.3% for vehicle sales, significantly exceeding market expectations of 11.4% [1][4][20]. Financial Performance - Total revenue for Q2 2025 was 18.3 billion yuan, slightly below market expectations of 18.6 billion yuan, primarily due to a decline in other income [1][4][20]. - Vehicle sales revenue remained in line with expectations, while adjusted operating loss was 840 million yuan, better than the anticipated loss of 910 million yuan [1][27]. Gross Margin and Cost Structure - The increase in vehicle gross margin was attributed to a higher proportion of high-priced models and continued cost reductions in the supply chain [5][10][14]. - The average selling price of vehicles rose to 164,000 yuan, up from 153,000 yuan in the previous quarter, driven by an improved model mix [10][11]. - The average cost per vehicle was 140,000 yuan, benefiting from economies of scale and effective cost control measures [13]. R&D and Operational Efficiency - R&D expenses reached 2.2 billion yuan, slightly above market expectations, reflecting ongoing investments in smart technology [24]. - Selling and administrative expenses were 2.17 billion yuan, in line with expectations, influenced by the launch of new models and increased commissions [25]. Sales Guidance and Market Outlook - For Q3 2025, Xiaopeng's sales guidance is set at 113,000 to 118,000 vehicles, slightly below market expectations of 119,000 vehicles [6][17]. - The anticipated launch of the new P7 model in August is a key factor for future sales performance, with pricing being a critical determinant of its success [7][17]. Future Product Launches - The new P7 is expected to be priced between 250,000 to 300,000 yuan, focusing on high-end positioning rather than volume sales [7][19]. - Upcoming models, including the G9 and X9 with extended range capabilities, are anticipated to enhance Xiaopeng's market presence and profitability [8][19].

Group 1 - The core focus of Xiaopeng Motors for the next two years includes the mass production of the extended-range X9 in Q4, with a positioning of 400,000 RMB and a comprehensive range exceeding 1,500 km, aiming for domestic and international launches next year [1][9] - Xiaopeng Motors is entering a new product cycle with dual energy vehicles, confident in achieving scale leadership and entering a new phase of self-sustaining profitability [2][8] - The company reported a significant increase in revenue for the first half of 2025, reaching 34.08 billion RMB, a 132% year-on-year growth, with a daily average income of 189 million RMB [5][41] Group 2 - Xiaopeng's net loss for the first half of 2025 was 1.14 billion RMB, a reduction of 1.5 billion RMB compared to the same period in 2024, while cash reserves stood at 47.57 billion RMB [5][33] - The gross margin for Xiaopeng's electric vehicles reached a historic high of 17.3% in Q2 2025, surpassing Tesla's 17.2% [5][38] - The company aims to deliver over 40,000 vehicles monthly starting in September, with the new P7 model positioned at 300,000 RMB [6][15] Group 3 - Xiaopeng plans to launch L4 capable models next year, initiating Robotaxi pilot operations, with a focus on pre-installed L4 capabilities [18][20] - The company will equip its Ultra versions with three self-developed Turing AI chips, significantly enhancing computational power [22][25] - Xiaopeng's average vehicle price ranges from 100,000 to 500,000 RMB, with a focus on aesthetics and technology to attract consumers [28][30] Group 4 - The company has set ambitious sales targets for Q3 2025, expecting vehicle deliveries between 113,000 and 118,000 units, representing a year-on-year growth of approximately 142.8% to 153.6% [43][44] - Xiaopeng's revenue guidance for Q3 2025 is projected between 19.6 billion and 21 billion RMB, indicating a year-on-year growth of about 94% to 107.9% [44] - The company is focused on enhancing its foundational capabilities while balancing R&D investments with profitability [45]

Group 1: Li Auto - Li Auto's i8 features the VLA "driver model," marking a significant advancement in intelligent driving following the previous VLM introduction [1] - The VLA model includes a newly designed spatial encoder that utilizes language models and logical reasoning to provide driving decisions, predicting trajectories of other vehicles and pedestrians through a diffusion model [1] - The inference frame rate of the VLA is approximately 10 Hz, more than tripling the previous VLM's rate of 3 Hz [1] Group 2: XPeng Motors - XPeng G7 officially commenced deliveries on July 7, with a clear timeline for the Ultra version's VLA and VLM software updates [2] - The VLA software OTA update is scheduled for September 2025, with VLM software upgrades following in November 2025, and personalized recommendations by December 2025 [2] - The XPeng G7 Ultra version is equipped with three self-developed Turing AI chips, boasting a total computing power of 2250 TOPS, positioning it as a leader among mass-produced models [2] Group 3: Chery Automobile - Chery plans to introduce the VLA and world model technology into fuel vehicles by 2025 through its Falcon 900 intelligent driving system, aiming to set a new benchmark for "oil-electric intelligence" [3] - The Falcon 900 system utilizes a self-developed VLA model that integrates visual perception, language understanding, and action execution [3] - The model has been trained on 20 million kilometers of real-world data, capable of understanding over 5000 traffic scenarios, achieving a 92% accuracy rate in recognizing non-standard traffic signals in complex urban conditions, a 37% improvement over traditional systems [3] Group 4: Geely Automobile - Geely is actively developing VLA technology, integrating it with world models to create a comprehensive world model system [4] - The Qianli Haohan system features a "dual end-to-end model" design, enabling a multi-modal VLA general scene model and an end-to-end model to back each other up [4] - This system is powered by dual NVIDIA Thor chips, with a total computing power of 1400 TOPS and over 40 perception units capable of detecting objects 0.75 meters in size from 300 meters away [4] Group 5: Yuanrong Qihang - Yuanrong Qihang is also investing in the VLA model, with five models expected to feature it by the third quarter of this year [5] - The company was among the earliest to publicly announce its VLA development in June of last year [5] - The VLA model focuses on defensive driving with four core functions: spatial semantic understanding, recognition of irregular obstacles, comprehension of text-based guide signs, and voice control of the vehicle, which will be gradually released with mass production [5]

Investment Rating - Industry Investment Rating: Overweight [1] Core Insights - The report highlights that the photovoltaic industry is experiencing a price increase across the supply chain, with silicon wafer, battery, and module prices rising, indicating a continued cost transmission from upstream to downstream [3][15][16] - The report emphasizes the ongoing development of large offshore wind projects across multiple regions, indicating a robust pipeline for future growth in the wind energy sector [4][21][25] - The implementation of mandatory national standards for energy storage is expected to enhance safety and market confidence, leading to significant growth in the energy storage sector [5][26][34] - The hydrogen energy sector is gaining momentum with new projects and government support, indicating a positive outlook for hydrogen production and application [6][35][40] - Increased capital expenditure forecasts from major tech companies like Microsoft and Meta are expected to drive demand for power equipment, presenting investment opportunities in the AIDC power equipment sector [7][41][44] Summary by Sections Photovoltaic - The report notes that the photovoltaic sector has seen a 2.08% decline in performance recently, underperforming the market [14] - Prices for silicon materials have stabilized with slight increases, while silicon wafers and battery prices continue to rise, indicating a positive trend in cost transmission [15][16] - The report suggests a cautious outlook for the third quarter of 2025, with expectations of demand decline due to market policy changes and potential impacts from U.S. tariffs [16][20] Wind Power - The report details ongoing large-scale offshore wind projects, including a 280MW project by China General Nuclear Power Group and an 800MW project in Dalian, indicating strong growth in the sector [4][21][22][23] - Investment opportunities are highlighted in companies with low valuations and those benefiting from offshore wind developments [25] Energy Storage - The introduction of the GB 44240-2024 standard is expected to enhance safety and market growth, with significant increases in installed capacity reported [26][27][34] - The energy storage market is experiencing rapid growth, particularly in commercial applications, with a notable increase in installations in Henan province [33][34] Hydrogen Energy - The report discusses the construction of a large-scale green hydrogen project in Saudi Arabia, indicating international collaboration and investment in hydrogen technology [35][39] - The hydrogen sector is included in the central bank's green finance support directory, which is expected to facilitate funding and development [38][40] Power Equipment - Microsoft and Meta's increased capital expenditure forecasts are expected to positively impact the AIDC power equipment sector, with specific companies highlighted for investment opportunities [41][44] - The report suggests that power equipment remains a critical component for economic growth, with various segments identified for potential investment [44]

Delivery Performance - In July, XPeng Motors delivered 36,717 vehicles, marking a year-on-year increase of 229% and a month-on-month increase of 6%, achieving a historical monthly delivery record [2] - From January to July 2025, XPeng Motors accumulated a total of 233,906 vehicle deliveries, representing a year-on-year growth of 270% [2] - The total carbon reduction from the delivered electric vehicles is estimated to exceed 3.53 million tons, equivalent to the carbon absorption of 58.48 million medium-sized trees over ten years [2] Model Highlights - The XPeng MONA M03 delivered over 15,000 units in July, maintaining over 10,000 monthly deliveries for 11 consecutive months, with total deliveries exceeding 150,000 units [2] - The 2025 XPeng X9 has evolved across multiple dimensions focusing on user comfort, intelligent experience, range, driving quality, and noise reduction, becoming the sales champion in the MPV category in Hong Kong [2] - The XPeng P7+ has delivered over 67,000 units, leading the sales in the 150,000 to 200,000 price range for eight consecutive months [2] New Model Launches - The 2025 XPeng G6 has been well-received in the 200,000-level mid-size pure electric SUV market since its launch [3] - The XPeng G7, the world's first L3-level AI car, was launched on July 3, with a starting price of 195,800 yuan, achieving over 10,000 pre-orders within 9 minutes of its release [3] - XPeng Motors announced the entry of the 2025 XPeng G6 and G9 into the European market, showcasing significant advancements in intelligent technology and user comfort [3] Financing and Production - XPeng Huaitian completed a $250 million Series B financing round to support the development and commercialization of flying cars, with plans for mass production by 2026 [4] - XPeng Motors showcased multiple products at the third Chain Expo, emphasizing its leadership in smart manufacturing and AI technology [4] - Indonesia has become the first country for XPeng Motors' localized production strategy, with the first locally produced XPeng X9 delivered to an Indonesian customer [4] AI and User Experience - In July, the monthly active user penetration rate for XNGP urban intelligent driving reached 86% [5] - The AI Tianji XOS system received an upgrade, adding features such as human-machine co-driving mode and enhanced AEB performance [5] - New functionalities in the AI smart cockpit include AI Xiaop's deep thinking and pet mode, aimed at enhancing user experience [5]

Domestic News - Inner Mongolia has issued new regulations for the testing of intelligent connected vehicles, emphasizing safety and a gradual approach to testing and commercialization [2] - By the end of 2024, the loan balance for new energy vehicles is expected to reach 204.1 billion RMB, reflecting a year-on-year growth of 23.44% [3] - Seres Group has signed a cooperation agreement with Harbin Institute of Technology to establish a joint innovation research institute for smart vehicles, aiming to enhance collaboration in technology and talent development [4] - Avita plans to launch 17 new products by 2030, with an annual production capacity of 280,000 vehicles at its smart factory [6] - GAC Group has initiated the second phase of its IPD and digital transformation project, focusing on improving operational efficiency and collaboration [7] - Chery Automobile has announced a patent for a folding wing mechanism for flying cars, enhancing space efficiency for road use [8] - Li Auto has surpassed 3,000 supercharging stations, with a robust financial reserve of 110.7 billion RMB to support further expansion [9] - XPeng's self-developed Turing AI chip has received stringent automotive-grade certification, showcasing its advanced processing capabilities [10] International News - Thailand's new car sales slightly decreased by nearly 2% in the first half of the year, with a total of 302,694 vehicles sold [11] - General Motors is shifting its in-car entertainment system to a Google-based platform, phasing out Apple CarPlay and Android Auto, despite some consumer dissatisfaction [13] - Nissan plans to consolidate its production operations in Mexico into a single facility to enhance efficiency and support sustainable growth [14] - Waymo is expanding its ride-hailing services to Dallas, Texas, in collaboration with Avis Budget Group for fleet management [16] Commercial Vehicles - The Ministry of Transport is promoting fair distribution of interests among platform drivers and cargo owners, focusing on risk-sharing and timely payment of freight [17] - Foton has launched several new electric commercial vehicles, aiming to lead the green logistics sector [18] - Linyi City has announced a subsidy program for the scrapping and updating of old operational trucks, with a maximum subsidy of 140,000 RMB [19] - Foton's mid-year business meeting highlighted strategies for becoming a leading brand in the light commercial vehicle sector [21]

Core Conclusions - The report advocates for a strong investment in automotive intelligence, highlighting that automotive intelligence represents a revolution in transportation. The three key aspects are: L3 intelligence aiding car manufacturers in sales, Robotaxi enabling software monetization for manufacturers, and the rise of domestic brands on a global scale [2][4]. - The year 2025 is projected to be a pivotal year for automotive intelligence, with urban NOA (the core experience of L3 intelligence) becoming a top consideration for consumers when purchasing vehicles. The report anticipates a significant increase in L3 intelligence penetration rates from 10% in 2025 to over 80% by 2027 [2][4]. - The automotive intelligence sector is characterized by a competitive elimination model, where companies will be categorized into three types: B-end Robotaxi operators, C-end personalized brands, and high-end vehicle manufacturers. Component suppliers will be divided into modular suppliers and single-category suppliers [2][4]. Market Overview - In June, the urban NOA penetration rate reached 22.3%, a month-on-month increase of 0.3 percentage points, indicating a stable level of adoption. The overall urban NOA penetration rate for the Li Auto 2025 model reached 61.5%, with a month-on-month increase of 6.6 percentage points, marking a significant growth trend [3][19]. - The report notes that the new generation of underlying architectures is being gradually implemented, with several key models launching with advanced driving architectures and AI capabilities [3][4]. Investment Recommendations - The report continues to favor investments in intelligent vehicles, emphasizing that intelligence is the core of the new vehicle cycle, with monthly sales tracking being crucial. The report suggests focusing on Hong Kong-listed companies such as Xpeng Motors, Li Auto, and Xiaomi Group, as well as A-share companies like BYD and SAIC Motor [2][4]. - There is a positive outlook for intelligent incremental components, including AI chips, domain controllers, and automotive electronics, with specific companies highlighted for their potential in these areas [2][4]. Consumer Willingness - The report explores whether consumers are willing to pay for intelligent features, indicating a growing acceptance and demand for advanced driving capabilities among consumers, as evidenced by the increasing penetration rates of urban NOA across various brands [9][19]. Supply Chain Tracking - The report provides a detailed analysis of the automotive intelligence supply chain, categorizing key hardware and software companies involved in the development of intelligent vehicles, including perception, decision-making, and execution components [6][8].