Morgan Stanley believes Byd Company Limited is at a critical inflection point in its intelligent driving strategy, with a second wave of growth ready to launch. According to the report, Byd Company Limited recently announced three significant initiatives: a one-year "safety net" insurance policy for users of its city NOA (Navigate on Autopilot) system, an option for mass-market models to upgrade to the Tianyan Eye B version for 12,000 yuan, and the release of its self-developed Xuanji A3 chip. The "safety net" policy is expected to accelerate the adoption of city NOA across Byd Company Limited's base of over 3 million vehicles. Expanding hardware upgrade options will provide a powerful data flywheel effect for training its autonomous driving models, creating a scale advantage over mass-market competitors. Meanwhile, the aggressive layout of self-developed chips and platforms is seen as a highlight, helping Byd Company Limited keep pace with leading autonomous driving players amid Tesla's FSD entry into the Chinese market. These measures mark a crucial phase in Byd Company Limited's strategic transformation in intelligent driving, rather than just short-term sales stimuli. Morgan Stanley maintains its "Overweight" rating on Byd Company Limited's A-shares with a target price of 120 yuan, representing approximately 25% upside from the current level. Democratizing Intelligent Driving: City NOA Reaches the Mass Market Morgan Stanley views the significant reduction in the access threshold for city NOA as the core aspect of this strategic shift. Previously, city NOA functionality was largely limited to models priced above 200,000 yuan. The new 12,000-yuan upgrade option means mass-market consumers can also access this feature. This pricing is considered highly attractive to mass-market buyers and is expected to significantly boost city NOA activation rates. Concurrently, the introduction of the "safety net" insurance policy directly addresses consumer concerns about intelligent driving safety, helping to lower the psychological barrier for using NOA features. This policy will create a scale effect across Byd Company Limited's vast user base of over 3 million vehicles, accumulating massive amounts of real-world driving data for its autonomous driving models and building a competitive moat. Self-Developed Chips: Strategic Ambition and Long-Term Structural Shift The announced Xuanji A3 chip boasts a computing power exceeding 2,100 TOPS, capable of supporting its L3/L4 autonomous driving platform, signaling Byd Company Limited's commitment to maintaining autonomy in intelligent technology. Although the specific vehicle models slated to carry the Xuanji A3 chip have not been confirmed, the long-term structural shift from using Nvidia chips to self-developed ones is clearly underway. This trend mirrors the path of other Chinese EV startups, reflecting the industry's strategic intent to seek self-reliance in core computing platforms. The self-developed chip route not only helps Byd Company Limited control costs during scale expansion but also strengthens its technological voice in high-level intelligent driving, especially under competitive pressure from Tesla's accelerating FSD entry into China. Despite the proactive intelligent driving strategy, Morgan Stanley remains relatively cautious about Byd Company Limited's short-term sales outlook. A substantial recovery in domestic sales will still largely depend on the successful launch of new models priced under 150,000 yuan that support ultra-fast charging. However, supply bottlenecks for the second-generation Blade Battery are expected to constrain near-term sales volume growth. Supply Chain Landscape Faces Further Reshuffling Byd Company Limited's strategic adjustments are expected to have ripple effects on the upstream supply chain. The upgrade path from the Tianyan Eye C version to the B version implies increased demand for LiDAR (Light Detection and Ranging) integration, potentially benefiting both Byd Company Limited's in-house solutions and third-party suppliers. This trend will likely accelerate the penetration of LiDAR in mass-market models, presenting potential benefits for related suppliers.