Zhonghai Securities has released a research report stating that the low-altitude economy will bring about changes in transportation methods, including the transformation of transportation tools and supporting facilities. In terms of transportation tools, the transition to electrification has become the trend. The three major electrical components constitute the main part of the overall cost of the machine, in addition to on-board systems, flight control systems, anti-interference systems, other hardware and shells. The supporting aspects of the low-altitude economy mainly include infrastructure and operational services. Cost analysis of the entire machine of eVTOL: the three major electrical components, on-board and flight control systems, and key materials occupy a high value-added volume. Subdivided fields such as propulsion systems, flight control systems, and carbon fibers urgently need further breakthroughs, which will be the key beneficiaries of the industry. Analyzing the barriers and patterns of eVTOL at each link will create new demand. Domestic opportunities are greater than challenges, and we are bullish on domestic independent electric vehicle production to break through comprehensively.

The main views of Zhonghai Securities are as follows:

What is the low-altitude economy? It represents changes in transportation, exploring commercial paths worldwide, and has a total value of trillions.

The low-altitude economy is a comprehensive economic form created by the new quality of production forces. In the future, eVTOL is expected to become the main carrier of development. The low-altitude economy refers to economic activities with a flying altitude of less than 3 km, which can be applied to various industrial ecologies. The low-altitude economy has the characteristics of a long industrial chain, a wide radiation surface, strong growth and driving force, etc. As a strategic emerging industry, it is ushering in new opportunities for development. In the future facing a trillion-dollar market, eVTOL electric vertical take-off and landing flying vehicle, due to its relatively significant advantages, may become the main carrier of the future low-altitude economy.

Facing the change of transportation, the world is actively exploring and promoting the commercial landing of the low-altitude economy.

The development of the low-altitude economy has gone through three stages, and a new round of digital and electrification revolution is slowly unfolding in the aviation industry. In terms of regional development, the United States currently has an advantage in the development of general aviation, and China has performed well in the field of drones. Facing the future UAM urban air transportation, the world is actively exploring commercialization. Taking eVTOL development as an example, overseas, represented by Europe and the United States, relevant companies are actively promoting airworthiness certification and commercial operation; China's eVTOL development is booming and may become one of the markets with the fastest commercialization advancement in the world.

How will the development of the low-altitude economy evolve? The top-level design sets the tone, and the three-stage infiltration embraces vast growth space of trillions.

The top-level design sets the tone, providing multiple development opportunities for the industry under the background of advanced industrial foundations in the Chinese market. Since 2024, the low-altitude economy has been written into the Chinese government's work report for the first time. According to the implementation plan for the innovative application of general aviation equipment from 2024 to 2030 issued by four ministries, a trillion-level market scale will be formed by 2030. With the frequent policies, the advanced industrial foundation accumulated in the Chinese market in areas such as new energy vehicles and drones, and the multiple realistic meanings of the development of the low-altitude economy, China may become the main market for the development of the low-altitude economy.

Zhonghai Securities believes that taking the development of Chinese new energy vehicles as a reference, the low-altitude economy is in the start-up stage similar to the new energy vehicle industry around 2010, and the speed of its expansion will accelerate from point to surface. In quantitative terms, according to the Civil Aviation Administration, the scale of China's low-altitude economy is expected to reach 2 trillion yuan in 2030; according to the electronic version of the white paper on passenger eVTOL applications and markets, the scale of China's eVTOL market is expected to reach billions of yuan by 2030.

Grasping the growth path of low-altitude economy dominated by eVTOL, three-stage infiltration is expected to be staged.

As a new application format, the development pain points of the low-altitude economy lie in safety, efficiency, cost, and management. Around the key issues, policy-making enhances top-level design, improves management mechanisms, and activates the market's main energy. On the product side, overall performance improvement is promoted to meet commercial application requirements. At the same time, building a comprehensive and perfect supporting system construction is an important path to scale the low-altitude economy. Comprehensive consideration of multiple factors such as technology, market, and policies, eVTOL dominated UAM development may penetrate in three stages.

Investment advice: The new round of digital and electrification revolutions is slowly unfolding in the aviation industry. Under the background of the top-level design and the development of an advanced industrial foundation in the Chinese market, it may promote the global low-altitude economy to enter a new stage of development, bringing about changes in transportation methods and embracing a trillion-dollar market space for a long time. For the first time, coverage of the low-altitude economy industry gives it a "recommended" rating.

Key points to focus on: companies with product and technology accumulation related to low-altitude aircraft and actively promoting commercialization, it is recommended to pay attention to ehang(EH.US), zhejiang wanfeng auto wheel(002085.SZ), sunward intelligent equipment(002097.SZ), wolong electric group(600580.SH), shenzhen v&t technologies(300484.SZ), zhuhai enpower electric(300681.SZ), chongqing zonsen power machinery(001696.SZ), shandong shuangyi technology(300690.SZ), zhuzhou times new material technology(600458.SH), hunan sokan new materials(688157.SH), shanghai zijiang enterprise group(600210.SH), longhua technology group(300263.SZ), and other listed companies.

Risk warning: low-altitude economy policies are not implemented as expected, commercialization of low-altitude aircraft products such as eVTOL is not as expected, airworthiness certification of low-altitude aircraft is not as expected, promotion of low-altitude air transportation services and infrastructure is not as expected, and major flight accidents occur during the commercialization process.