Investment Highlights - This week, the performance of the automotive sector lagged behind the broader market, with the best-performing sub-sector being commercial passenger vehicles, which declined by 1.0% [4][12][13] - The top five stocks covered this week included Daimay Co., GAC Group, Weichai Power, Changan Automobile, and Suzhou Axis, which showed positive growth [4][12][32] Industry Core Changes - Xiaopeng's new generation robot, IRON, is set to introduce the VLT system, which will enable direct output of tasks from visual and language inputs, potentially evolving into a thinking system in the future [6][12][14] - Leapmotor's flagship D platform technology was unveiled, showcasing the D19 model [6][12][14] - Yutong delivered 400 units of new energy buses to Pakistan in bulk [6][12][14] - Fuyao Glass reported Q3 2025 revenue of 11.855 billion yuan, a 2.75% increase quarter-on-quarter, while net profit attributable to shareholders decreased by 18.59% to 2.259 billion yuan [6][12][14] Investment Opportunities - The automotive industry is entering a new crossroads, with the end of the electric vehicle (EV) dividend and the dawn of automotive intelligence, while robotics innovation is in the 0-1 stage [8][14] - Three main investment themes are emerging: - **AI Intelligent Vehicles**: Focus on Robotaxi and Robovan, with key players including Tesla, Xiaopeng, and Horizon Robotics [8][14] - **AI Robotics**: Emphasis on component selection, with companies like Top Group and Junsheng Electronics highlighted [8][14] - **Dividend & Good Pattern**: Focus on commercial vehicles (Yutong), heavy trucks (China National Heavy Duty Truck Group), and two-wheelers (Chunfeng Power) [9][14] Market Performance - The automotive sector's valuation metrics, such as PE (TTM), have shown a decline this week, with the SW commercial passenger vehicle sector being the best performer [39][48] - The overall market sentiment for the automotive sector remains cautious, with a notable decrease in stock prices across various segments [12][18][25]

Group 1 - The report highlights the introduction of the VLT system by Xiaopeng's new generation robot, indicating a positive outlook for the automotive sector [2][4][63] - The report notes that the automotive industry is at a crossroads, with the end of the electric vehicle (EV) boom and the dawn of automotive intelligence, presenting three main investment opportunities: AI smart vehicles, AI robots, and traditional vehicle segments [4][56] - The report emphasizes the importance of AI smart vehicle investments, particularly in Robotaxi and Robovan segments, with key players identified in both downstream applications and upstream supply chains [4][56] Group 2 - The report provides a performance overview of the automotive sector, indicating that A-H shares underperformed the market, with commercial passenger vehicles showing the best performance among sub-sectors [2][8] - The report forecasts a 4.1% year-on-year increase in domestic retail sales of passenger vehicles in 2025, estimating a total of 23.7 million units sold [52][56] - The report predicts that L3 autonomous driving technology will see a penetration rate of 20% in 2025, driven by major players like Tesla and Huawei [54][56] Group 3 - The report mentions that Yutong Bus delivered 400 units of new energy buses to Pakistan, highlighting the export potential of the domestic bus industry [4][56] - The report indicates that the overall price-to-earnings (PE) ratio for the automotive sector has decreased, suggesting a potential valuation opportunity [35][46] - The report outlines the expected growth in heavy truck sales, projecting a 16.9% year-on-year increase in wholesale sales for 2025 [56][57]

Group 1 - The core viewpoint is that in the era of physical AI, large models serve as a new operating system, with data becoming the primary fuel for innovation [2] - The evolution of technology over the past thirty years has highlighted the importance of operating systems, computing power, and data, particularly with the rise of AI and large models [2] - The new generation of AI model companies recognizes that data, operating systems, and computing power all create value, with data often relying on models and operating systems [2] Group 2 - The choice for in-house development is driven by the coupling of the new manufacturing and digital worlds, leading to two forms: full self-research and complete division of labor [3] - Major tech companies, including the "seven giants" in the US and China's BAT and ByteDance, opt for self-research to maximize value [3] - Xiaopeng Motors is testing a new generation of VLA autonomous driving large models and has introduced a new AI system called VLT (Vision-Language-Task/Thinking) for its latest robot [3] Group 3 - The VLT system integrates visual and language inputs to generate task systems, with the potential to evolve into cognitive capabilities [4] - The company is developing a combination of over five operating systems to enhance the capabilities of autonomous robots, transitioning from remote-controlled to autonomous systems [4] - Looking ahead 5 to 10 years, the vision includes autonomous vehicles in cities, flying vehicles between cities, and robots in residential and industrial settings, emphasizing the importance of management and service [4]