Since the unveiling of BYD's "Eye of the God" on February 19, the conversation around intelligent driving has intensified remarkably. The latest performance updates from companies within the automotive supply chain reflect, to some degree, the skyrocketing demand in the smart driving arena. Now, as we navigate through 2024, Black Sesame Intelligence (stock code: 02533.HK) has recently announced a positive profit forecast, projecting revenues ranging from 450 million to 500 million yuan. This marks an increase of 44% to 60% year-on-year, alongside an anticipated net profit of no less than 100 million yuan — a remarkable turnaround from a staggering loss of approximately 4.855 billion yuan in the same period last year. Such statistics paint a sobering yet encouraging picture of a company transforming losses into potential profits.
The Black Sesame board attributes this projected growth to two main factors. Firstly, its automatic driving products and solutions have become a crucial engine for boosting performance. The company has been consistently supplying leading automotive manufacturers and suppliers such as BYD, Dongfeng, and Geely. The volume of chips and solutions integrated into mass production vehicles has steadily risen. Further, in the commercial vehicle domain, expansion of its product line has notably heightened market penetration. Supported by relevant industry policies, revenue in sectors such as vehicle-to-everything (V2X) integration has also seen an uptick.
The second reason involves financial instruments issued to investors, which have generated favorable capital gains. Indeed, since the beginning of this year, Black Sesame has made several commercial strides in its chip products. On February 10, for instance, the company reported that its Huashan® A1000 family of chips had been selected for various platforms from First Automobile Works (FAW), covering a wide range of both fuel and new energy vehicles set to begin mass production by 2025. The A1000 family is already in full-scale production and has been adopted by multiple Chinese automakers, including FAW Group, Dongfeng, Geely, and Jianghuai Automobile Group. Models incorporating these chips include the Lynk & Co 08EM-P, Lynk & Co 07EM-P, and Dongfeng Yipai eπ008, marking significant commercial adoption.
In further developments, it has come to light that Dongfeng is set to utilize Black Sesame’s Wudang series of chips, aimed for production in 2025. This series is expected to become the industry's first mass-produced chip platform that integrates cabin and driving functionalities. Black Sesame has indicated that the Wudang C1200 family has already secured partnerships with various customers, including high-profile players like FAW Hongqi, Wind River, Junlian Zhi and Zhima Zhixing.
Previously, Black Sesame had established an open ecosystem through its "Hanhai Platform + Shanhai Toolchain", designed to assist automotive companies in reducing both development barriers and costs while addressing challenges related to product customization and ending the necessity for self-developed terminals. By collaborating with ecosystem partners such as FAW, Dongfeng, and Geely, the company envisions a future filled with intelligent driving opportunities, creating a solid feedback loop between “products” and “data.” Dongwu Securities has predicted that under the backdrop of domestic capabilities enhancement, combined with the company's open eco-structure, penetration rate for its System-on-Chip (SoC) products and solutions could see a rapid rise.
The era of advanced smart driving is poised to mirror an "iPhone moment." Analysts are optimistic regarding the upcoming opportunities in the chip sector. The push towards "smart driving equality" is being championed by various automakers led by BYD, XPeng, and Huawei, making strides in the iteration and promotion of smart driving technologies. Advanced intelligent driving technologies are quietly expanding their reach from mid- to high-end markets towards mass-market applications.
On February 10, BYD officially launched its "Eye of the God" advanced intelligent driving system, which will equip 21 different vehicle models, pushing for a future where intelligent driving is a universal feature. Xiaopeng Motors' chairman, He Xiaopeng, has stated aspirations to create a high-end intelligent driving product priced around 20,000 dollars. Likewise, Lantu Motors’ CEO, Lu Fang, mentioned during a live stream with Huawei’s Intelligent Automotive Solutions BU CEO, Jin Yuzhi, that L3 level autonomous driving is expected to see mass commercial deployment over the coming two years. Lantu Motors is also eager to collaborate with Huawei to swiftly introduce L3-equipped vehicles to the market.
Simultaneously, the iterative development of AI large models is pushing down costs and enhancing the user experience of intelligent driving technologies. The emergence of DeepSeek has transformed the playing field. By leveraging techniques such as algorithm optimization, model compression, and distillation, the requirement for computational power has been significantly reduced, positioning it as a new engine for intelligent driving progress. Minsheng Securities anticipates that manufacturers are proactively steering towards the democratization and promotion of smart driving, signaling that the era of standard intelligent driving is upon us. By 2025, advancements in intelligent driving technologies are expected to lower the hardware entry thresholds, making intelligent driving feasible in the mainstream market below 200,000 yuan.
“2025 will be the landmark year for the adoption of intelligent driving technology within the Chinese automotive industry,” claimed Wang Chuanfu, Chairman and President of BYD, during the February 10 conference. As preparations escalate for fierce competition in the automotive sector, intelligent driving hardware emerges as a formidable weapon in the arsenal of automotive intelligence.
CITIC Securities has asserted by 2025, the realm of high-level intelligent driving in China is about to undergo its "iPhone moment." Following three years of an arms race on the hardware front, the current driving force for the industry lies in the combined realms of data and computing power. The trajectory of cost reduction within hardware is becoming a continuous trend in the development of intelligent driving systems, with chips being the only component within these systems capable of sustaining a logic of simultaneous long-term price and volume increase.
Further estimations by analysts suggest that the demand for intelligent driving chip computing power could escalate from the current 200-500 TOPS to over 1000 TOPS as end-to-end large models are deployed in vehicles. By 2025, an extensive upgrade of intelligent driving chips is anticipated. It has been projected that the chip's cost structure as part of the intelligent driving Bill of Materials (BOM) could rise from 30% in 2024 to nearly 50% by 2026, showcasing its elasticity amid increasing patterns of penetration. China's intelligent driving chip industry market size might reach 22 billion yuan by 2025, marking a 121% year-on-year increase, with prospects of surpassing 53 billion yuan by 2028.