Zhixin Finance APP learned that CICC released a research report stating that it maintained the "outperform the industry" rating of Li Auto-W (02015), and the non-deductible profit forecast for 2024/25 remained unchanged with a target price of HK$130. The company held a smart driving summer release conference and plans to push the full-automatic AES (automatic emergency steering) and the all-round low-speed AEB (automatic emergency braking) within July. At the same time, the new autonomous driving technology architecture based on the end-to-end model, VLM visual language model, and world model will officially launch the early bird plan.

CICC's main points are as follows:

The second-quarter delivery volume exceeded expectations, and the L6 model performed well.

In June, the company delivered 47,774 vehicles, a month-on-month increase of 36%; in the second quarter, the total delivery of 108,581 vehicles exceeded the central level of 0.105-0.11 million vehicles in the previous 1Q24 financial report guidance. Since the delivery of the L6 model, 2,381/12,965 vehicles were delivered in April/May respectively, and the single-month delivery in June exceeded 0.02 million vehicles. The bank believes that the L6 has demonstrated excellent product power. Looking ahead to the 2Q performance, the bank believes that the scale effect is expected to be reflected, but considering the increase in the proportion of L6 sales and the relatively pressure gross margin end, 2Q company personnel adjustments may generate related one-time cost expenditures, and conservative expectations are recommended. The strong repair of profit still needs to wait for further sales growth and improvement of operating efficiency in 2H24.

NOA testing has performed well, and the intelligent driving mileage has exceeded 1.9 billion kilometers.

The bank believes that the company has ranked among the leading groups in the intelligent driving field through continuous research and development iterations and investment. The company disclosed in the release conference that it opened the NOA thousand-person experience test on May 10th and expanded the test users to tens of thousands of people on June 17th. It officially opened the unlimited experience on June 28th, and the accumulated intelligent driving mileage exceeded 1.9 billion kilometers. At present, the company will officially push the national NOA to AD Max users (including L series and MEGA, covering 0.24 million users) in July. Looking ahead, the company plans to push the full-automatic AES (automatic emergency steering) and the all-round low-speed AEB (automatic emergency braking) functionalities within July to further ensure users' safe driving experience.

Dual systems are applied to autonomous driving to increase the ability to process complex scenarios.

The company plans to launch an end-to-end + VLM (visual language model) supervised autonomous driving system trained through 3 million clips (pre-training models) to early bird testers. Technically, end-to-end models are responsible for processing daily driving information, and VLM visual language models process complex scenarios to increase logic judgment ability. At the same time, the cloud reconstruction + generative world model is used for dual-system training and verification to accelerate iteration capabilities. The bank believes that the highlights of the model are: 1) The end-to-end model is used to process routine driving behavior, and only one model is used from sensor input to driving trajectory output, making information transmission, inference calculations, and model iteration more efficient and driving behavior more human-like. 2) VLM visual language model has strong logical thinking ability, can understand complex road conditions, navigation maps, and traffic rules, and can deal with high-difficulty unknown scenarios.

Risks: Pure electric vehicle models are lower than expected; intelligent driving is lower than expected; market competition is intensifying.