Morgan Stanley expects 800V EV technology to migrate to AIDC, with Recodeal double-upgraded to Overweight

Overview

This report discusses the opportunity for China's 800V EV supply chain to migrate to the 800V direct-current AI data center architecture. Morgan Stanley believes that during the rise in 800V EV penetration in China, high-voltage capabilities in connectors, power semiconductors, DC-DC, OBC, relays, fuses and related components have been built, and these capabilities overlap with AIDC high-voltage power systems. The report focuses on upgrading Recodeal and argues that after expanding from EV connectors to AEC and power whip, a profitability and revenue inflection driven by AI may emerge from 2026.

Core views

Core views include: first, both 800V EV and 800V AIDC lower current, cable size, thermal losses, and conversion losses by raising voltage; second, generic high-voltage parts such as power semiconductors and connectors are more likely to migrate first; third, automotive suppliers cannot reuse automotive-grade products directly and need to requalify for data-center requirements for continuous operation, redundancy, hot-swappability, and certification; fourth, Recodeal's AEC joint venture began mass production in Q1 2026, and power whip has revenue contribution potential after 2027; fifth, even though the stock has risen, the market may not yet fully reflect the AIDC interconnect opportunity.

Analysis framework

The report combines supply-chain mapping, technology architecture comparison, business decomposition, revenue forecasting, and DCF valuation. The analysis first compares commonalities in high-voltage architecture between 800V EV and 800V AIDC, then screens Chinese and global suppliers with capabilities in high-voltage connectors, power devices, DC-DC, OBC, and eFuse, and finally performs line-item forecasts of Recodeal's AEC, power whip, and EV connector revenues to adjust profit forecasts and target price.

Methodology notes

• industry migration analysis800V EV to 800V AIDC technology migration framework

  Map high-voltage EV supply-chain capabilities to a high-voltage DC architecture for AI data centers.

  The report compares 800V EV and 800V AIDC on the shared logic of increasing voltage to reduce current, reduce copper usage, and improve efficiency, and identifies which components have migration potential.

• company valuationDCF valuation

  Derive Recodeal's target price from a base-case DCF scenario.

  The report uses 12% WACC, 14.5% cost of equity, 6.0% after-tax debt cost, and 3% terminal growth rate to raise Recodeal's target price to Rmb121.

• scenario analysisBull/Base/Bear case

  Assess valuation range through bull, base, and bear cases.

  The report presents a risk-reward framework with bull at Rmb207, base at Rmb121, and bear at Rmb38, corresponding to different revenue growth, power whip ramp-up, and gross margin assumptions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Suzhou Recodeal Interconnect System (688800.SS)

  core beneficiary

  Strengths

  It has 800V EV high-voltage connector experience and entered AEC through the Ruichuang joint venture; power whip and AIDC high-voltage connectors have incremental revenue potential.

  Weaknesses

  In 2025, EV and ESS still account for 91% of revenue, and EV connector gross margins are affected by price competition and customer cost-cutting pressure.

  Comparison

  Bizlink remains a leading global AEC supplier; Recodeal is in catch-up mode but has incremental opportunities.

  Risks

  AIDC certification cycles, mass-production yield, customer onboarding, copper and silver price volatility, global interconnect vendor competition, and IP disputes.

• Yangjie (300373.SZ)

  potential beneficiary

  Strengths

  A Chinese power semiconductor supplier that could benefit from automotive localization and rising power semiconductor prices.

  Weaknesses

  The report does not provide detailed financial forecasts or clear AIDC orders.

  Comparison

  Included in the power-device supply chain comparison set alongside Infineon, STM, On Semi, Rohm, Renesas, Wolfspeed, StarPower, Silan, and others.

  Risks

  Uncertainty around power semiconductor pricing, competitive landscape, actual AIDC onboarding pace, and customer certification.

• Joyson (600699.SS)

  watchlist

  Strengths

  Supplies Porsche Taycan 800V automotive electronics, including high-voltage booster, multifunction DC-DC, and OBC, and has Rmb22bn in 800V order backlog.

  Weaknesses

  Automotive-grade products need redesign and customer verification before entering AIDC.

  Comparison

  Similar to global Tier-1 peers such as Aptiv, BorgWarner, Magna, and Lear, it has engineering and manufacturing capability but requires time to migrate.

  Risks

  AIDC customer qualification cycles, redesign costs, data-center reliability requirements, and commercialization pace.

• BYD Fudi / BYD (1211.HK)

  potential chain extender

  Strengths

  Vertically integrates 800V EV drivetrain, electric control, onboard power electronics, high-voltage distribution, and harness-related components, and can package energy-storage batteries with 800V technology.

  Weaknesses

  The report does not provide specific AIDC orders or standalone financial operating leverage.

  Comparison

  Compared with single-component companies, BYD has system-level and energy-storage packaging capabilities.

  Risks

  AIDC customer onboarding, product adaptation, external customer acceptance, and business priority.

• Keboda (603786.SS)

  potential beneficiary in high-voltage protective devices

  Strengths

  Supplies eFuse to Volkswagen, Mercedes-Benz, Li Auto, and others; eFuse can detect and isolate faults faster than traditional fuses.

  Weaknesses

  AIDC application remains a potential opportunity, and the report does not prove scaled commercial deployment.

  Comparison

  In high-voltage protective devices, it has a technical substitution relationship with traditional fuses and global protective-device suppliers.

  Risks

  AIDC certification requirements, reliability verification, and the pace of high-voltage data center adoption.

Key data

• China 800V EV penetration rate5% in 2023, 11% in 2025The higher penetration rate supports the maturation of the domestic high-voltage automotive supply chain.
• Recodeal rating changeUnderweight to OverweightThe target price was raised from Rmb42.14 to Rmb121.00.
• Recodeal AEC revenue forecast2026E Rmb1.1bn, 2027E Rmb2.6bn, 2028E Rmb3.6bnBased on ramping capacity from 15k units per month in Q1 2026 to 120-150k units per month by Q4, with ASP of about USD150-250.
• Recodeal power whip revenue forecast2027E Rmb0.5bn, 2028E Rmb1.0bnThe base-case assumes no contribution in 2026 and revenue contribution starting in 2027.
• Recodeal total AI interconnect revenue forecast2026E Rmb1.1bn, 2027E Rmb3.1bn, 2028E Rmb4.6bnThe report expects AI interconnect businesses to contribute more than 40% of revenue in 2027.
• Recodeal financial forecast2026E revenue Rmb5.049bn, 2027E revenue Rmb7.655bn, 2028E revenue Rmb9.674bnNet profit is forecast at 2026E Rmb455mn, 2027E Rmb717mn, and 2028E Rmb956mn.
• DCF key assumptionsWACC 12%, cost of equity 14.5%, terminal growth rate 3%Cost of equity is derived from beta 1.6, equity risk premium 7.0%, and risk-free rate 3.3%.
• Joyson 800V order backlogRmb22bnIncludes Rmb9bn of orders in 2022 and Rmb13bn of new orders in 2023.

Impact & implications

If adoption of 800V AIDC architecture accelerates, Chinese suppliers with experience in high-voltage EV connectors, power semiconductors, power electronics, and protective components may gain a second growth curve. For Recodeal, AIDC interconnect business is expected to reduce reliance on EV and ESS connector concentration and lift mid-term growth rates. This thesis, however, still depends on customer certification, mass-production ramp-up, patent competition, and cost control.

Risks

• Recodeal remains highly dependent on EV and ESS connectors, and if EV demand or pricing pressure worsens, AIDC interconnect may not be sufficient to fully offset near-term impacts.
• AIDC is still in the ramp-up stage, and revenue conversion, customer certification, yield, and cost decline may be slower than market expectations.
• AEC and power whip markets are highly competitive, with global interconnect suppliers having advantages in scale, customers, and patents.
• Copper, silver, and other metal price volatility could increase costs for connectors, cables, and high-speed copper interconnect products.
• 800V AIDC requires 24/7 operation, low downtime, hot-swappability, and high power density, and automotive parts suppliers need redesign and requalification.

What to watch

• Whether Recodeal's AEC monthly capacity ramp from 15k to 120-150k units proceeds smoothly.
• Whether power whip enters mass production or secures clear customer orders in H2 2026.
• Progress in AIDC customer qualification, overseas CSP supply-chain onboarding, and 1.6T-plus high-speed interconnects.
• Whether EV connector pricing pressure eases, and whether 2026 new-energy vehicle connector revenue can achieve 26% year-over-year growth.
• How changes in copper and silver prices transmit to gross margins, and whether the company can pass costs through to customers.
• The adoption speed of 800V AIDC architecture in Nvidia Blackwell GPU racks and subsequent AI factories.