<p>The unmanned driving ride-hailing model operated in Wuhan has attracted social attention, and the Baidu search index for the keyword &#34;Luobo Kuai Pao&#34; has seen a nearly 10-fold increase in popularity.</p>
<h2>Profit in 2025</h2>
<p>Luobo Kuai Pao is an autonomous driving travel service platform under Baidu. It is currently open for passenger testing and operation services in 11 cities in China. As of April 19, 2024, Baidu Luobo Kuai Pao has provided ride services to the public over 6 million times, with a total order volume exceeding 6 million and a test mileage of over 100 million kilometers.</p>
<p><strong>By early 2024, with a significant improvement in spatial coverage and operational efficiency, Luobo Kuai Pao's revenue has grown 9 times, approaching breakeven. Baidu expects Luobo Kuai Pao to achieve a balance between income and expenses in Wuhan by the end of 2024, and to start making profits in 2025.</strong> At that time, Luobo Kuai Pao will become the world's first autonomous driving travel service platform to achieve commercial profitability.</p>
<p>The sixth generation unmanned vehicle of Luobo Kuai Pao has been released, with a significant decrease in cost and a leap in technological capabilities. On May 15, 2024, at Apollo Day 2024, Baidu unveiled the sixth generation unmanned vehicle of Luobo Kuai Pao equipped with the Apollo sixth-generation intelligent system solution. The overall cost of the vehicle has decreased by 60% compared to the fifth generation, with a price of only 200,000 yuan. It is expected that over a thousand units will be deployed in Wuhan by 2024. Additionally, Baidu introduced the world's first large-scale model Apollo ADFM that supports L4 level autonomous driving, achieving 10 times the safety of human drivers and city-wide coverage of complex scenarios, marking a leap in unmanned driving technology capabilities.</p>
<h2>Continued Policy Support for Commercial Pilot Operation of Unmanned Driving in Multiple Locations</h2>
<p>Cities such as Wuhan, Chongqing, and Beijing have successively launched commercial unmanned driving services in 2022 and 2023. At the 2024 WAIC conference in Shanghai in July, Shanghai issued the first batch of &#34;fully unmanned passenger vehicle licenses&#34;. Four certified companies can apply unmanned driving vehicles on certain roads in Pudong, and citizens can book rides on these unmanned vehicles through corresponding software. Qingdao and Jinan have also successively released support policies for the testing and application of intelligent connected vehicles, as unmanned driving enters the &#34;road test&#34; phase.</p>
<p>The integration of vehicle-road-cloud construction provides infrastructure support for unmanned driving. Since June, Beijing, Wuhan, and other places have successively launched vehicle-road-cloud integration demonstration projects. On July 3, the Ministry of Industry and Information Technology and four other ministries announced the list of pilot cities for the application of &#34;vehicle-road-cloud integration&#34; for intelligent connected vehicles, confirming 20 cities (unions) as pilot cities for the application of &#34;vehicle-road-cloud integration&#34; for intelligent connected vehicles. The successive introduction of vehicle-road-cloud related policies proves that China's vehicle-road-cloud integration planning is comprehensive and continuous. Based on the high-level autonomous driving coordinated with vehicle-road, it is a direction strongly supported and key development focus of the Chinese government. Unmanned driving has high requirements for vehicle-road-cloud infrastructure. With the strong support and construction efforts of the country, unmanned driving is expected to usher in a period of rapid development.</p>
<h2>Investment Recommendations and Investment Targets</h2>
<p>Oriental Securities believes that the rapid development of commercial unmanned driving operations is expected to benefit companies in the automotive intelligent driving sector and vehicle-road-cloud infrastructure-related enterprises.</p>
<p>Intelligent Driving: It is recommended to pay attention to Baidu Group-SW (09888, BIDU, Buy), Zhongke Chuangda (300496, Buy), Horizon Robotics (688088, Not Rated), Guangtai Information (301221, Buy), Siwei Tuxin (002405, Not Rated), etc
CheLuyun: Suggested to pay attention to Qianfang Technology (002373, not rated), Tongxingbao (301339, not rated), Gaoxinxing (300098, not rated), Wanji Technology (300552, not rated), Jinyi Technology (002869, not rated), Tunnelling Shares (600820, not rated), Zhongyuanhaike (002401, not rated), Laisi Information (688631, not rated), Jiadu Technology (600728, not rated), Guangdian Yuntong (002152, Buy), Shenchengjiao (301091, not rated), Yihualu (300212, not rated), etc.</p>
<h2>Risk Warning</h2>
<p>Unmanned driving policy implementation falls short of expectations; Unmanned driving promotion falls short of expectations; Major safety accident risks</p>

<p>In early 2024, Carrot Run's revenue increased by 9 times, approaching breakeven. Baidu expects Carrot Run to achieve breakeven in Wuhan by the end of 2024 and turn profitable in 2025</p>

- The autonomous ride-hailing model in operation in Wuhan has sparked social attention, with Baidu's search index for the keyword "Luobo Kuai Pao" seeing nearly a 10-fold increase in popularity. Baidu's autonomous driving service platform, Luobo Kuai Pao, aims to achieve profitability by 2025, currently operating passenger testing services in 11 Chinese cities, with significant revenue growth and nearing breakeven by early 2024.
- Baidu anticipates Luobo Kuai Pao to achieve financial balance in Wuhan by the end of 2024 and turn profitable in 2025, becoming the world's first commercially profitable autonomous driving service platform. The release of the sixth-generation unmanned vehicle with significantly reduced costs and enhanced technological capabilities marks a substantial advancement in autonomous driving technology. Multiple cities, including Wuhan, Chongqing, and Beijing, have initiated commercial autonomous driving services, supported by ongoing policies and infrastructure development for autonomous driving.

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