Chinese EV_ The impact of DeepSeek on Intelligent Driving

Summary of Conference Call on Chinese EV and DeepSeek Integration Industry Overview - Industry: Chinese Electric Vehicles (EV) - Key Players: BYD, Geely, Great Wall, SAIC IM, Dongfeng Nissan Core Insights 1. Integration of DeepSeek: Several OEMs are integrating DeepSeek into their intelligent driving systems, which is expected to enhance efficiency and reduce costs significantly [1][2] 2. Cost Reduction: The inference and training costs using DeepSeek's V3 R1 model can be reduced to just 10% of previous levels, indicating substantial savings for manufacturers [2] 3. Open-Source Advantage: DeepSeek's open-source nature provides a low-cost alternative for many OEMs, facilitating broader adoption [2] 4. Smart Cockpit Enhancement: The integration aims to create a multi-modal, AI-powered cockpit that improves user interaction through better voice commands, route planning, and personalized entertainment [3] 5. Local Context Handling: DeepSeek has advantages over foreign models in processing the Chinese language and making contextually relevant recommendations [3] Limitations 1. Limited Impact on ADAS and Autonomous Driving: DeepSeek's R1 model is primarily text-based and lacks robust visual capabilities, limiting its effectiveness in Advanced Driver-Assistance Systems (ADAS) and Autonomous Driving (AD) [4] 2. Need for Advanced Algorithms: While DeepSeek enhances computing power, OEMs with inferior algorithms may struggle to achieve significant improvements, highlighting the need for investment in multi-modal large models for data processing [5] Investment Implications 1. Ratings: - BYD and Li Auto rated as Outperform - XPeng and NIO rated as Market-Perform - Geely rated as Outperform, while Great Wall, GAC, and SAIC rated as Market-Perform [8] Financial Metrics - Market Capitalization and Valuation: - BYD: Market cap of $127.96 billion, P/E ratio of 24.0x - Li Auto: Market cap of $27.98 billion, P/E ratio of 22.6x - XPeng: Market cap of $15.82 billion, P/E ratio not available - NIO: Market cap of $9.04 billion, P/E ratio not available [10] Additional Considerations - Investment in Algorithmic Performance: Continuous investment in enhancing algorithmic capabilities is essential for OEMs to remain competitive in the evolving landscape of intelligent driving [5] - Future Developments: Anticipation of advancements in visual language modeling within DeepSeek, which could further enhance its applicability in intelligent driving systems [2] This summary encapsulates the key points discussed in the conference call regarding the integration of DeepSeek in the Chinese EV sector, highlighting both the opportunities and challenges faced by OEMs in this rapidly evolving industry.