In recent years, we have witnessed a significant transformation in the automotive industry, characterized by rapid advancements in intelligent driving technologiesYet, despite being in its nascent stage, the prospects for the intelligent connected vehicle market continue to flourishA range of favorable policies is being introduced, synergistic collaboration among participating firms is strengthening, and a growing acceptance among the public is accelerating the commercialization of this industryAs we look to the future, it’s clear that these developments will not only benefit the key players in the sector but will also cause a marked increase in the penetration of advanced autonomous driving features.

The Ministry of Transport has taken significant steps, as outlined in its "Intelligent Connected Vehicle Technology Roadmap 2.0," which sets ambitious targets for the industry

By 2025, the goal is for more than 50% of all vehicle sales in China to be made up of intelligent connected cars, with a similar target of 50% for new vehicles equipped with CV2X technologyThis sets a strong foundation for the anticipated growth of the sector.

Recent announcements from the Ministry of Industry and Information Technology further bolster this visionA total of nine automotive producers, including well-known companies like BYD, GAC, NIO, SAIC, and FAW, have received approval to enter pilot programs for intelligent connected vehiclesThese firms represent the first wave of automobile manufacturers in the country to test Level 3 automated driving capabilities on public roads, marking a pivotal shift in the industry's trajectory.

As of March 2024, an impressive 51 cities within the nation have set forth policies for autonomous driving pilot demonstrations

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Major urban centers such as Beijing, Shanghai, Guangzhou, Shenzhen, and Wuhan have already initiated trials featuring driverless vehicles on public roadsThese developments are shaping the landscape of urban transportation and providing valuable insights into the operational capabilities of autonomous technology.

Market leader Baidu has made headlines with its performance in this competitive domainAccording to the company's first-quarter financial report for 2024, their "Roborace" platform has surpassed 6 million total orders, achieving 826,000 new orders in the latest quarter alone—a substantial 25% year-on-year increaseDuring the APOLLO DAY 2024 conference, Baidu stated its goal to reach a financial balance by the end of 2024 and aim for profitability in 2025, positioning itself as the world’s first profitable driverless platform.

The encouraging trend towards the commercialization of autonomous driving technologies translates into lowered vehicle operational costs, thus accelerating broader deployment within the market

For instance, Baidu’s sixth-generation vehicles have a production cost of just 204,600 RMB, which is approximately a 60% reduction compared to their fifth-generation modelsAs the supply chain matures and innovations in technology roll forward, there is every expectation that costs will remain on a downward trajectoryOn top of this, once the operational network for Roborace is fully completed, operational costs are projected to decrease by around 30%, and continuous refinements in automated technology could reduce service costs by a staggering 80%.

However, there are still significant hurdles to overcomeAccording to Debang Securities, autonomous driving remains primarily confined to low-speed operations within defined areas and requires precise navigation of vehicle driving environmentsThe future looks promising as advancements in intelligent driving systems suggest a gradual easing of these constraints, paving the way for reliable operations in complex metropolitan settings

Additionally, as regulatory frameworks evolve and the consumer acceptance quotient rises, it is anticipated that by 2030, the penetration rate of autonomous driving in ride-hailing and taxi services may reach an impressive 55%. The market scale could balloon to 350 billion RMB, highlighting the vast potential that remains untapped and the importance of keeping an eye on high-quality companies within the industry value chain.

Meanwhile, Minsheng Securities observes that the push for intelligent driving technology is becoming increasingly vital with three key factors contributing to this momentumFirstly, the introduction of Level 3 road-testing policies is fostering the creation of supportive frameworks for fully autonomous commercial operationsSecondly, the supply side is witnessing rapid advancement, exemplified by the aggressive commercialization efforts of Roborace, alongside major players like Huawei, Xiaopeng, Li Auto, and Xiaomi, who are all set to accelerate the rollout of their city navigation assistance systems by 2024. This is compounded by the fast-tracked innovations from industry leaders like BYD and the further testing of Tesla's FSD V12 system

Lastly, consumer attitudes towards fully automated vehicles continue to evolve positively, establishing intelligent driving features as significant factors in vehicle purchasing decisions.

As we head into 2024, industry experts anticipate a landmark year for the acceleration of the automation revolutionThe expansion rate for high-tier intelligent driving functionalities, such as Navigation on Automated (NOA) systems, is projected to trend upwards steadilyIt is essential to recognize and analyze the entire ecosystem of the intelligent driving market to truly understand its depth and complexityAnalysts from Guojin Securities delineate that the upstream segments of the intelligent driving industry are composed of complex control systems—featuring essential components like chips, algorithms, sensors, maps, and vehicle communication systems