BYD Intelligent Driving Reaches Strategic Inflection Point, Self-developed Chips and Safety Insurance Accelerate City NOA Penetration

Overview

BYD recently announced three important initiatives, marking its intelligent driving entering Phase 2: Launching 1-year "Safety Guarantee" policy to support City NOA user activation, allowing mass-market models to upgrade to God's Eye B high-end intelligent driving system for 80,000 CNY, and officially launching self-developed Xuanji A3 chip. These measures constitute a strategic inflection point, agencies believe will accelerate intelligent driving penetration in mass-produced vehicles, while forming data flywheel advantages through hardware expansion, helping BYD maintain leading position in competition environment where Tesla FSD enters China.

Core views

The core value of BYD's current initiatives lies in breaking price and user base limitations for intelligent driving features. The Safety Guarantee policy eliminates user risk concerns by eliminating risk worries, expected to significantly accelerate City NOA activation rate on its 3 million user base; while the 80,000 CNY upgrade solution brings high-end functions originally exclusive to models above 200,000 CNY down to mass-market models, crucial for attracting wide consumer groups. The launch of self-developed Xuanji A3 chip is the most critical link in the strategic layout. This chip reaches over 2100 TOPS computing power under 3-chip configuration, capable of supporting L3/L4 level autonomous driving platforms, meaning BYD no longer relies on external chip suppliers like NVIDIA,掌握 cost and technical discourse rights. As hardware options expand to entire vehicle lineup, BYD will accumulate larger scale actual road data used to train its own autonomous driving models, this "data flywheel" effect will strengthen its competitive advantage relative to peers. Report also points out domestic sales recovery still mainly depends on new model launches below 150,000 CNY supporting ultra-fast charging. Supply bottleneck of 2nd Gen Blade Battery may constrain short-term sales growth, an execution risk worth monitoring. In addition, migration from NVIDIA to autonomous/chips domestic substitutes has become long-term strategic direction for Chinese EV startups and leaders, BYD's initiatives are exactly a microcosm of this trend.

Analysis framework

Agency analysis framework revolves around three dimensions: (1) User acquisition and activation - evaluating pull effect of safety guarantee policy and price sinking on City NOA user activation rate; (2) Supply chain and cost - analyzing cost advantage and supply chain independence brought by self-developed chip, and constraint of 2nd Gen Blade Battery bottleneck; (3) Competitiveness construction - assessing BYD's long-term competitive position relative to competitors like Tesla FSD via data flywheel and platform autonomy. Report emphasizes this is "strategic inflection point rather than short-term sales push", reflecting agency focus is on structural progress in BYD's intelligent driving ecosystem construction, not merely functional marketing.

Methodology notes

• Industry/Industrial Analysis FrameworkPenetration Rate S-Curve

  BYD accelerates intelligent driving function market penetration rate rise by lowering price threshold and eliminating user risk

  Intelligent driving transition process from high-end to mass-market follows S-curve law. BYD's initiatives through safety guarantee policy and price sinking accelerated the turn point time from gentle rise to steep growth, expanded reachable user base

• Competition and Strategy FrameworkMoat / competitive advantage

  Establish sustainable competitive advantage through data flywheel, supply chain independence and self-developed capabilities

  BYD expands hardware coverage → accumulates more real-road data → strengthens autonomous driving model training → improves user experience → attracts more users and data; meanwhile self-developed chip reduces cost and gets rid of external dependency, both form mutually reinforcing competitive barriers

• Industry/Industrial Analysis FrameworkSupply-demand framework

  2nd Gen Blade Battery supply side becomes bottleneck for current sales growth

  Demand side expanded due to price sinking, but supply side battery capacity limits may constrain short-term sales conversion, indicating industry has phased supply constraints

Key data

• Xuanji A3 Chip Performance2100+ TOPS (3-chip configuration)Supports L3/L4 autonomous driving platform, key metric for self-developed chip
• God's Eye B Upgrade Cost12,000 CNYAllows mass-market models to upgrade, originally exclusive function for models above 200,000 CNY
• City NOA User Base3 Million UnitsSafety guarantee policy expected to accelerate activation rate of this base user group
• Target Price and Implied Upside120 CNY / 25%Based on hybrid weighted method (25% bull case / 50% base case / 25% bear case)
• Current Share Price (May 28, 2026)95.88 CNY52-week High/Low: 124.32-85.88 CNY

Impact & implications

BYD's round of initiatives holds profound implications for industry and company development. Short term, safety guarantee policy and price sinking strategy will expand user base for intelligent driving functions, accelerate activation of existing users, supporting company's market share in autonomous driving track. Medium to long term, competitive advantages formed by self-developed chip, data flywheel and supply chain independence will become core assets for BYD to fight against international competitors like Tesla FSD. Agency believes this is "strategic inflection point rather than rapid sales sprint", reflecting BYD's strategic shift from "product feature marketing" to "ecosystem competitive capability construction". However, realization of domestic sales recovery still highly depends on launch schedule of new models below 150,000 CNY, and speed of resolving 2nd Gen Blade Battery bottlenecks.

Risks

• New model launch pace not meeting expectations, impacting low-price segment market coverage
• 2nd Gen Blade Battery supply bottleneck may constrain sales growth
• Overseas expansion faces trade protectionism risks, overseas market demand may be weaker than expected
• Global New Energy Vehicle demand lower than expected
• Gross margin deterioration risk

What to watch

• Launch timing and sales performance of new models below 150,000 CNY
• Progress of 2nd Gen Blade Battery capacity release
• City NOA user activation rate and safety guarantee policy implementation status
• Xuanji A3 chip penetration progress in models and cost realization
• Pace of overseas expansion and strategies to deal with trade barriers