Incident: On November 1, the company released the October production and sales report. The total production of new energy vehicles was 536,134 units, up 74.63% year on year, up 21.56% month on month, and total sales of new energy vehicles were 0.5027 million units, up 66.5% year on year and 19.8% month on month. Among them, pure electric passenger car sales were 0.1896 million units, up 14.57% year on year, up 14.95% month on month; plug-in hybrid passenger car sales were 0.311 million units, up 129.3% year on year, up 23.1% month on month.

Take advantage of policy, empower with technology, and boost sales by multiple factors. BYD's monthly sales volume exceeded 0.5 million, benefiting from many factors. From an industry perspective, up to now, all provinces in the country have introduced and implemented automobile replacement subsidy policies, and at the same time introduced certain policies to buy cars to promote consumption, vigorously boosting the growth of the car market. During the “Eleventh” National Day, the popularity of the passenger car market increased significantly. Although there was a decline after the holiday, the overall car market continued to improve. In October, NEV market terminal sales showed a strong sales trend of “gold nine silver ten”, contributing greatly to the increase in NEV consumption. As of October 24, the number of automobile scrapping and renewal subsidy applications nationwide exceeded 1.57 million, and the number of applications for automobile replacement and renewal subsidies exceeded 1.26 million. According to research, NEVs accounted for more than 60% of new vehicle replacements, particularly driving strong growth in entry-level pure electric vehicles and the mixed market in the narrow sense.

From the company's perspective, BYD continued to maintain a strong growth trend in NEV sales in October 2024. In the October NEV sales rankings published by the Passenger Federation, BYD once again held the top spot, with sales reaching 502,657 units in the same month. Compared with 301,833 units in the same period last year, there was a significant increase of 66.53% over the previous year. The cumulative sales volume in 2024 reached 3,250,532 units, continuing to consolidate its leading position in the NEV market. BYD's sales growth was driven by multiple factors. In the first three quarters of this year, BYD invested 33.32 billion in R&D and launched a series of innovative technologies, such as E-Sifang, E-Platform 3.0 Evo, and fifth-generation DM, which provided a solid foundation for rapid sales growth. In particular, the intensive launch of new cars equipped with fifth-generation DM (DM5.0) technology and the rapid rise in production capacity have significantly boosted BYD's sales. Judging from the brand models equipped with new technology, all models of the BYD Dynasty Network showed a positive growth trend in October. In particular, the Song series increased by more than 30% month-on-month. The Song Pro DM-i was equipped with DM5.0 and sold 31,780 units in the first month of its launch, accounting for 50.19% of the Song series's sales, which is outstanding. The Qin series continues to maintain its leading position in Dynasty Online sales. The Qin L DM-i, which uses fifth-generation DM technology, continues to sell 50,087 units, accounting for 57.84% of the total sales volume of the Qin series, with impressive performance. Ocean Network's performance was not as strong as that of Dynasty Network, but with the exception of the frigate 07, which fell 40.72% month-on-month, all other models showed an increasing trend. Among them, Seagull/Song Plus sold 54,081 units/51,615 vehicles per month, up 24.54%/20.01% month-on-month, and the growth trend was relatively good. There are two models in the Sea Lion series. The Sea Lion 07EV is equipped with the E-platform 3.0evo, and the Sea Lion 05DM-i is equipped with DM 5.0, with monthly sales of 19,232 units, an increase of 64.9% over the previous month. The performance is impressive, and the development trend is strong.

The company adapted to local conditions and made steady progress in overseas travel. Since October, BYD has made progress overseas, actively exploring the market, adapting to local conditions, and promoting localized development.

(1) Market development: BYD is always looking for new markets and improving overseas layout. On October 4, BYD held a brand conference at the Tajikistan International Exhibition Center to officially enter the country's passenger car market. On November 2, BYD's high-end brand DENZA (DENZA) officially announced its entry into the Thai market.

Following Hong Kong, Cambodia, and Singapore, Thailand became Tension's fourth market in the Asia-Pacific region, marking an important step in the brand's strategic layout in Southeast Asia's largest automotive market.

(2) Adapt to local conditions: BYD understands the needs of different regions, tailors the BYD SHARK 6 pickup truck model equipped with DMO super hybrid technology to meet complex road conditions and off-road challenges, and is launched in Australia and Cambodia. BYD brought a variety of models to the Paris Auto Show. The Sea Lion 07EV was launched in Europe. The rich configuration and dynamic design of the Sea Lion 07EV perfectly matches the European market's dual pursuit of practicality and environmental friendliness for sports family cars.

Two lines run in parallel, and intelligence accelerates development. The company's intelligent driving self-research+cooperation is progressing steadily at the same time. Li Yunfei, general manager of the Brand and PR Office of the BYD Group, said, “In terms of the overall plan for intelligent driving, BYD is both open for cooperation and independent self-research. It can be said that the two lines run parallel.” In the field of intelligent driving, BYD has more than 4,000 engineers, and has achieved a series of impressive results: L2 intelligent driving capacity ranks first in China, the “Eye of Tenjin” advanced intelligent driving assistance system was mass-produced and delivered, and it also became the first automobile company in the country to obtain an L3 test license. BYD also unveiled the vehicle intelligence strategy and Xuanji architecture, the industry's first intelligent architecture integrating intelligence and electricity. It also launched the industry's first dual-cycle multi-modal AI - Xuanji AI large model. For the first time, artificial intelligence was applied to all fields of vehicles, and continued R&D and innovation in vehicle intelligence

This year, BYD is also cooperating with Huawei in the field of smart driving. On August 27, both Huawei and Fangchengbao Auto announced via WeChat that BYD and Huawei signed an intelligent driving cooperation agreement in Shenzhen.

This cooperation is based on the strategic cooperation between the two groups to carry out in-depth joint research and development of intelligent driving for Formula Bao Auto, a subsidiary of BYD. The first product focuses on the upcoming Equation Panther 8 model, equipped with the Huawei Qiankun Smart Driving ADS3.0, to jointly create the world's first hardcore exclusive smart driving solution. On October 23, OPPO and BYD reached a strategic cooperation to jointly explore a new era of mutual integration between mobile phones and automobiles, which will promote the deep integration of mobile phones and vehicles in various vehicle usage scenarios. The two sides will work on joint research and development in the fields of hardware modules, software systems, and intelligent algorithms for smart cockpit platforms to jointly create an intelligent vehicle experience and lead the development of the industry into a new stage.

Investment advice: The monthly sales volume of 0.5 million is a milestone in the company's development, proving its excellent manufacturing management level. As an industry leader, the company attaches importance to R&D investment and overseas layout. Intelligent development goes hand in hand. In the future, it is expected to further reduce costs and increase efficiency through scale effects and take the lead in seizing the intelligent market. We predict that the company's net profit for 2024-2026 will be 35.23 billion yuan, 42.59 billion yuan, and 51.76 billion yuan, respectively, corresponding to PE of 21 times, 18 times, and 15 times, respectively, maintaining the “increase” rating.

Risk warning: Competition in the industry is becoming increasingly intense, sales of high-end brand models falling short of expectations, sales of new models falling short of expectations, and the risk of fluctuating prices of upstream raw materials.