www.ubssecurities.comThisreporthasbeenpreparedbyUBSSecuritiesCo.Limited.ThisisatranslationofaChineseresearchnotepublishedbyUBSSecuritiesCoLtdon15March2021.ANALYSTCERTIFICATIONANDREQUIREDDISCLOSURES,includinginformationontheQuantitativeResearchReviewpublishedbyUBS,beginonpage31.UBSdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.GlobalResearch15March2021ChinaAutomotiveElectronicsSectorFutureofautoelectronics:smartcockpitsandautonomousdrivingPotentialRmb150bnmarketascockpitsgosmart;expectL2.5/L3AVstokick-offAutomotivecockpitsareridingthewaveofsmarttech,propelledbypolicy,marketandtechnologicalfactors.WeestimatetheseareputtingChina'scockpit-electronicsmarketontracktoreachnearlyRmb150bnby2025E(a15%CAGRin2020E-25E).Lastyearwasatippingpointforautonomousvehicles(AVs)inChinaasitunveiledanintelligentvehicleinnovationstrategyandautonomous-driving-levelscheme.Lookingahead,weexpectautonomousdrivingtotakeoffinChina,withL2(level2)andL2.5/L3AVsreaching56%penetrationby2025E(versusabout12%in2020E).Forauto-partsuppliers,wethinksmartcockpitsandautonomousdrivingarepositivesforpartsvalue-added.WeinitiatecoverageofDesayatBuyandupgradeJoysonfromNeutraltoBuy.Smartcockpits:FourmegatrendsinplaceWereviewedthecockpitconfigurationsof174models(1,281variantsintotal).Amongcockpitelectronicsproducts,weidentifyfourkeynear-termtrends:1)all-LCDdashboardpenetrationbadlylagsbothourandmarketforecasts,butadoptionissettojumponricherdisplaycontent,more-intuitiveformatsandmore-precisedatadisplay;2)head-updisplays(HUDs)areevolvingintoseconddashboards,withpenetrationat8%nowversusourpreviousestimateof5%(August2020);3)onin-vehicleinfotainment(IVI)systems,LCDtouchscreen-basedcentralcontrolpanelsarealreadywidespreadbutwenotetrendstowardsbigger/morescreens;and4)natural-languagevoiceinteraction.Autonomousdriving:MoresensorsopennewfrontiersforpartssuppliersPerourconversationswithexperts,L2-capablevehiclescomprised10-15%ofnewpassengervehiclesalesdomesticallyin2020.WithrelatedpolicieslaunchedandOEMsactivelyinvesting,thereishighvisibilityforacceleratedpenetrationofAVsinChina.Ofautonomousdriving'sthreebuildingblocks—sensing,decision-makingandaction—weareupbeatonsensing'spotentialtopowermarketgrowthforautosuppliers,whichlookwellplacedtobenefitthroughR&Dandproductionoftheextrahardware(cameras,radarsensors,etc)neededforsensing.WeforecastChina'smmWaveradar/lightdetectionandranging(LIDAR)marketsreachingRmb14bn/Rmb38bnby2025E.Valuation:InitiatingonDesayatBuy;upgradingJoysonfromNeutraltoBuyWethinkinvestorshavenotfullycaughtontothegrowthopportunityfortechnologicallystrongsmart-cockpitandAVpartssuppliers.WeinitiateonDesayatBuy(Rmb129.00PT,DCF)andupgradeJoysontoBuy(Rmb29.80PT,SOTP).WearepositiveonFuyaoGlass'sopportunitytogaincontentvalueamidrisingHUDadoption.Figure1:UBSS-coveredChina'sautoelectronicpartssuppliers—valuationsTickerCompanyPrice(Rmb)RatingPT(old)PT(new)PTchg2021EPE(x)2022EPE(x)Remarks002920.SZDesaySV81.92Buyna129.00na69.852.0"Gosmart"trendsupportsvolume/ASPgainsforDesay'ssmartcockpitbusiness;abletomassproducemanyautonomousdrivingproducts;oneofNVIDIA'sfourtier-1suppliersglobally.600699.SHJoyson19.53Buy21.5029.80+39%40.428.5NEVelectronicsbacklog>Rmb15bn;solidknowhowinhuman-vehicleinterfacesystems;suppliesnumerousmajorOEMsNote:Abovedatabasedonclosingpricesasof12March2021.Source:Wind,UBS-SestimatesEquitiesChinaAutoPartsNoraMinAnalystS1460518050001nora.min@ubssecurities.com+86-21-38668905ChinaAutomotiveElectronicsSector15March20212ChinaAutomotiveElectronicsSectorP2UBS-SResearchTHESISMAPaguidetoourthinkingandwhat'swhereinthisreportOURTHESISINPICTURESMOSTFAVOUREDLEASTFAVOUREDDesaySVPIVOTALQUESTIONSQ:HowmuchupsideforcockpitelectronicsexistsinChina?Whichproductsdoweprefer?Drivenbypolicy,marketandtechfactors,weestimateChina'scockpitelectronicsmarketcouldgrowtonearlyRmb150bnby2025E,a15%CAGRover2020E-25E.Acrossmanycockpitelectronicsproducts,weforeseefourkeytrendsinthenearterm:1)all-LCDdashboardsgainingpenetration;2)HUDsbecomingseconddashboards;3)centralcontrolpanelsupsizingandgoingmulti-screen;and4)natural-languagevoiceinteraction.moreQ:HowfaralongisautonomousdrivinginChina?Couldauto-partssuppliersbenefit?WeexpectpenetrationofL2andL2.5/L3AVstoreach56%by2025E(versusourestimateofaround12%for2020E).Amongautonomousdriving'sthreebuildingblocks—namelysensing,decision-makingandaction—webelieveauto-partssupplierscouldparticipateintensivelyatthesensingstage.moreUBS-SVIEWWithinautomotiveelectronicsthekeytrendsaresmartcockpitsandautonomousdriving,inourview.WeforecastChina'scockpitelectronicsmarkettoreacharoundRmb150bnby2025E(a15%CAGRin2020E-25E),anddomesticL2.5/L3AVpenetrationtorisefrom0.1%to22%over2020E-25E.WesenseinvestorshavecertainpreconceptionsaboutlocalautoelectronicsfirmsthatmainlysupplydomesticOEMs;wehopethisreportcanputsomeoftheseideastorest.OurviewisthatdomesticautoelectronicsnamesbenefitfromChineseOEMs'earlierlaunchofsmartcockpitR&D(comparedtooverseaspeers).And,inautonomousdriving,wenotethatselectdomesticpartsfirmshaveenoughknowhowtopartnerwithgloballeaderssuchasNVIDIAandwinordersfromXpeng,LiAuto,etc.WeinitiateonDesayatBuyandupgradeJoysontoBuyfromNeutral.EVIDENCEIntermsofdrivinginformationdisplays,all-LCDdashboardshavejust33%penetrationbuttheyhaveanedgeoverlegacyinstrumentclustersinthreerespects:richerdisplaycontent,more-intuitiveformatsandmore-precisedisplaydata.ThesizeofJV/domesticbrands'centralcontrolpanelsgrewby29%/14%inthe2021modelyearversusthe2019modelyear.AChinesegovernmentintelligentvehicleinnovationstrategyenvisionslarge-scaleproductionofL3AVsandmarket-baseduseofL4AVsinspecificcontextsby2025.HuayuandDesayaretheonlytwodomesticnamesabletomassproduce77GHzmmWaveradarsatthistime.WHAT'SPRICEDIN?Whileintelligent-vehicle-relatedfirms(includingsmartcockpitsandAVs)tradeatsteeppremiumstolegacypartssuppliersandOEMson2021E/22EPE,wethinkhighermultiplesarejustifiedasintelligentvehiclesarestillintheirearlystagesandtheverticalhasstronggrowthpotentialandbroadprospects.Companieswithexposuretointelligentvehicleshavesimilar2021E/22EPEtosuppliersofNEVbatteriesandbatterymaterials,thoughwethinktheformerareinamorenascentstage,suggestinggreaterheadroomforfirmswithstrongvalue-chainknowhow.moreDomesticcockpitelectronicsmarkettoreach~Rmb150bnby2025E:15%CAGRin2020E-25ESource:UBS-Sestimates0%5%10%15%20%25%30%35%-204060801001201401602019E2020E2021E2022E2023E2024E2025E(Rmbbn)DrivinginformationdisplaysystemsIVIOthercockpitelectronicsCockpitelectronicsYoY(RHS)ChinaAutomotiveElectronicsSector15March20213ChinaAutomotiveElectronicsSectorUBS-SResearchOURTHESISINPICTURESreturnUBSEvidenceLab'sconsumersurvey:47%ofChineserespondentsnamedtechnologyasakeyfactorinvehiclepurchasedecisions,wellaheadofthefiveothermajorcountries/regionssurveyedAll-LCDdashboardpenetrationwasjust33%overall,andonly19%forJVbrands,asofend-2020JV/domesticbrands'centralcontrolpanelsizegrew29%/14%inthe2021modelyearvsthe2019modelyearLiONE'sthreeIVIscreensillustratethemulti-screentrend0%10%20%30%40%50%ChinaKorea,RepublicofGermanyJapanUSUK%respondentsnamingtechaskeydecidingfactor(2020)0%20%40%60%80%100%DomesticJVLuxuryNEVstartupsAll-LCDdashboardpenetrationPenetrationbybrandtypeSalesvolumeweightedpenetration024681012141620192021201920212019202120202021DomesticJVLuxuryNEVstartups(inches)TouchLCD-basedcentralcontrolpanels-avgsizebybrandtype~+14%~+29%~+6%~+6%CentralcontrolpanelPassengerentertainmentscreenFunctioncontrolscreenChinaAutomotiveElectronicsSector15March20214ChinaAutomotiveElectronicsSectorUBS-SResearchP3OURTHESISINPICTURESreturnWeestimatemodelswithL2andL2.5/L3autonomousdrivingcapabilityshouldreach56%penetrationinChinaby2025E(vsourestimateofaround12%in2020E)WeestimateChina'smmWaveradarmarketcouldreachRmb14bnby2025EWeestimateChina'sLIDARmarketcouldreachRmb38bnby2025ECompanieswithintelligentvehicleexposurehavesimilar2021EPEtosuppliersofNEVbatteriesandbatterymaterials,thoughwethinktheformerremainatamorenascentstage;therefore,firmswithstrongervalue-chainknowhowcouldhavemoreheadroomtoimproveearnings/valuationsSource:Autohome,LiAuto,UBSEvidenceLab(>AccessDataset),UBSestimates,UBS-Sestimates0%10%20%30%40%50%60%2019E2020E2021E2022E2023E2024E2025EL1penetrationL2penetrationL2.5/3penetrationL4penetration-2468101214162019E2020E2021E2022E2023E2024E2025E(Rmbbn)DomesticmmWaveradarmarketsize24GHzmmWaveradarmarket77GHzmmWaveradarmarket-510152025303540452020E2021E2022E2023E2024E2025E(Rmbbn)DomesticLIDARmarketsize0%5%10%15%20%25%30%35%01020304050607080IntelligentvehiclepartssuppliersavgBattery&batterymaterialsuppliersavgIntelligentvehiclepartssuppliersavgBattery&batterymaterialsuppliersavg2021EPE2021E-23EEPSgrowth(x)ChinaAutomotiveElectronicsSector15March20215ChinaAutomotiveElectronicsSectorUBS-SResearchSectorQ1PIVOTALQUESTIONSreturnQ:HowmuchupsideforcockpitelectronicsexistsinChina?Whichproductsdoweprefer?UBS-SVIEWDrivenbypolicy,marketandtechfactors,weestimateChina'scockpitelectronicsmarketcouldgrowtonearlyRmb150bnby2025E,a15%CAGRover2020E-25E.Acrossmanycockpitelectronicsproducts,weforeseefourkeytrendsinthenearterm:1)all-LCDdashboardsgainingpenetration;2)HUDsbecomingseconddashboards;3)centralcontrolpanelsupsizingandgoingmulti-screen;and4)natural-languagevoiceinteraction.EVIDENCEChinahaslaunchedmultiplepoliciessince2016toencouragetheautosectorto'gointelligent'anddriveintelligent-vehicleinfrastructurebuildout.AccordingUBSEvidenceLab'sGlobalConsumerOutlookforElectricVehicleAdoptionSurvey(<AccessDataset)andDeloitte'sglobalautoconsumerstudy,Chinaconsumersarenotonlymoreinterestedinhigh-techautofeatures,theyarealsomorewillingtopayforthem.Wereviewedthecockpitconfigurationsof174models(oursamplewas1,281variantsintotal)andfound:1)Intermsofdrivinginformationdisplays,all-LCDdashboardshavejust33%penetrationbuthaveanedgeoverlegacyinstrumentclustersinthreerespects:richerdisplaycontent,moreintuitiveformatsandmoreprecisedisplaydata.HUDsareat8%penetrationcurrently,upfromourlastestimateof5%(August2020,whenfewmodelshad2021versions).2)InIVIsystems,LCDtouchscreen-basedcentralcontrolpanelsarealreadywidespreadbutwenotetrendstobigger/morescreens,particularlyamongJV/domesticbrands,whose2021modelsregistered29%/14%gainsinthesizeofcentralcontrolpanelsversusthe2019modelyear.3)Intermsofnovelhuman-vehicleinteraction,voiceiswidelyusedtocontrolmultimedia,phoneandnavigationfunctionsbuttypicallytheseonlyrespondtocertaincommands.WHAT'SPRICEDIN?Wenoteall-LCDdashboardpenetrationhasbadlylaggedmarketexpectationsanditsfullpotentialcouldhavebeenoverlooked;wealsothinkinvestorsdownplaythespeedatwhichcentralcontrolpanelsizesarerising.WeforecastChina'scockpitelectronicsmarkettorecord15%annualisedgrowthin2020E-25Ewhilethelegacypartsindustrycouldgrowinlockstepwithvehiclesales(UBSestimatesa4%domesticautosalesvolumeCAGRin2020E-25E).Wethinkcockpit-electronics-relatedsupplierscoulddelivergrowthsignificantlyoutstrippinglegacyautopartssuppliersascockpits'gosmart',andthusdeserveavaluationpremium.ChinaAutomotiveElectronicsSector15March20216China'scockpitelectronicsmarketcouldreach~Rmb150bnby2025EPropelledbypolicies,industrydevelopmentandtechnologicaladvances,weestimateChina'spotentiallyrichcockpitelectronicsmarketcouldreachnearlyRmb150bnby2025E,a15%CAGRover2020E-25E.Figure2:DomesticPVcockpitelectronicsmarketsize2019E2020E2021E2022E2023E2024E2025EDomesticPVsalesvolume(munits)24.723.626.226.727.327.928.4YoY-8.6%-4.5%11.0%2.1%2.1%2.1%2.0%Cockpitelectronicsmarketsize(Rmbm)69,16073,70295,322111,588126,762137,558148,595YoY7%29%17%14%9%8%Cockpitelectronicsunitprice(Rmb/set)2,8003,1243,6414,1744,6444,9365,228YoY12%17%15%11%6%6%Drivinginformationdisplaysystemmarketsize(Rmbm)20,25422,48330,80338,70945,06751,00857,159YoY11%37%26%16%13%12%Including:Nonall-LCDdashboardmarketsize3,4583,0983,1182,7682,5182,2672,014Unitprice(Rmb/set)200196192188184181177All-LCDdashboardmarketsize14,82015,25719,30623,10925,95429,12232,405All-LCDdashboardpenetration30%33%38%45%50%55%60%Unitprice(Rmb/set)2,0001,9601,9401,9211,9021,9001,900HUDmarketsize(Rmbm)1,9764,1288,37912,83216,59519,61922,740HUDpenetration2%5%10%15%19%22%25%Unitprice(Rmb/set)4,0003,5003,2003,2003,2003,2003,200IVIsystemmarketsize(Rmbm)46,73248,82861,53169,29277,57181,93186,355YoY4%26%13%12%6%5%Penetration86%90%94%96%98%98%98%Unitprice(Rmb/set)2,2002,3002,5002,7002,9003,0003,100Othercockpitelectronicsmarketsize(Rmbm)2,1742,3912,9893,5864,1244,6195,081YoY10%25%20%15%12%10%Source:UBSestimates,UBS-SestimatesFigure3:DomesticPVcockpitelectronicsmarketsizeandYoYgrowthSource:UBS-Sestimates0%5%10%15%20%25%30%35%-204060801001201401602019E2020E2021E2022E2023E2024E2025E(Rmbbn)DrivinginformationdisplaysystemsIVIOthercockpitelectronicsCockpitelectronicsYoY(RHS)ChinaAutomotiveElectronicsSector15March20217Whyweseesomuchgrowthpotentialforcockpitelectronics1.PolicyChinahasunveiledmultiplepoliciessince2016toencouragetheautosectorto'gointelligent'anddriveintelligent-vehicleinfrastructurebuildout.Figure4:PoliciesoncockpitelectronicsinrecentyearsSource:Governmentagencywebsites2.IndustryA)OEMs:KeentobuildcompetivenessviasmartcockpitsIntheviewofUBS'sEuropeanautosteam,theprevalenceofNEVs(whichreplaceengineswithelectricmotors)meansengineswillincreasinglylosetheirimportanceasawayforautomakerstoshowcasetechnicalknowhowanddifferentiatebetweenproducts.Cockpitelectronicsofferahostofdesignandfunctionalpossibilities,andmeanwhilearekeyinterioritemsnotimpactedbytheNEVtrend.Automakerscouldthereforeincreasinglyrelyoncockpitelectronicstodifferentiatebetweentheirproducts.UBS’srecentVWID3teardown(EVsShiftingintoOverdrive:VWID.3teardown–Howwillelectriccarsre-shapetheautoindustry?)indicateslegacyOEMsareactivelyparticipatingininfotainment-systemdevelopment-eg,VWID.3hasaverycapableinfotainmentsystem,asthehardwareisfullyOTAenabled,anditisequippedwithonline-basednavigationsystemandHUD.Oursampledatashowsdomestic-brandOEMsbegandevelopingsmartcockpitsearlierthanJVsandarekeenertoleveragesmartcockpitsforproductappeal.InitiatedkeynationalprojectonLTE-VcommunicationstandardizationforInternetofVehicles(IoV)-2016.0213thFYPforDevelopmentoftheAutoIndustry-setdevelopmentgoalsforsmartconnectedvehicles-2016.03ResearchlargelycompletedforIntelligentConnectedVehicleDevelopmentTechnologyRoadmap-2016.07ImplementationPlanforPromoting"Internet+"ConvenientTransportandSmartTransportDevelopment-2016.08ConsultationpaperonGuidelinesforBuildingNationalIoVIndustryStandardSystem(IntelligentConnectedVehicles)(2017)-2017.06ApplicationLayer&DataInteractionStandardforVehicleCommunicationSysteminCooperativeIntelligentTransportSystem-2017.09NDRCissuesIntelligentAutoInnovation&DevelopmentStrategy-2018.01MIITEquipmentIndustryDivision:KeyPointsforIntelligentConnectedVehicleStandardizationWorkin2018-2018.03IntelligentConnectedVehicleAutonomousDrivingFunctionalityTestProcedure(Provisional)-2018.08LaunchofIoV(IntelligentConnectedVehicles)IndustryDevelopmentActionPlan-2018.12KeyPointsforIntelligentConnectedVehicleStandardizationin2019-2019.05StateCouncilissuesTransportationPowerhouseConstructionPlan-2019.09NEVIndustryDevelopmentPlan(2021-2035)-2019.12IntelligentvehicleInnovation&DevelopmentStrategy-2020.02Mid/long-termPlanforAutoIndustryDevelopment-2017.04Next-generationArtificialIntelligenceDevelopmentPlan-2017.07GuidelinesforBuildingNationalIoVIndustryStandardSystem(IntelligentConnectedVehicles)-2017.12ChinaAutomotiveElectronicsSector15March20218Figure5:VWID.3infotainmentsystemFigure6:VWID.3HUDSource:UBSEvidenceLab,P3Source:VWB)Consumers:ChinaconsumerswelcomediverseinfotainmentcontentInUBSEvidenceLab'sconsumersurvey,47%ofChineserespondentsnamedtechnologyasakeyfactorinvehiclepurchasedecisions,wellaheadofthefiveothermajorcountries/regionssurveyed.InDeloitte's2020GlobalAutomotiveConsumerStudy,nearlyhalfofChineseconsumerswerewillingtopayanextraUS$500ormoreforricherinfotainmentcontent,rankingtopamongthesixcountries/regionsstudied.Figure7:%ofconsumersnamingtechnologyasakeyfactorintheirvehiclepurchasedecision(2020)Figure8:%ofconsumerswillingtopayextraUS$500+formorediverseinfotainmentsystems,bycountrySource:UBSEvidenceLab(>AccessDataset)Source:Deloitte2020GlobalAutomotiveConsumerStudyC)Parts/techcompanies:Autoscouldbecomenextsmart-devicefrontierTech-companyfootprintsandcompetitionarefairlymatureinsmartphones.Autosarenowpoisedtobecomethenextsmart-devicefrontieraftercomputers,phonesandtablets.Becauseautoshouselargeamountsoftripdata,techcompaniesalsohaveanopportunitytoharvestbigdataforotherbusinesses.Forpartssuppliersfacedwithaglobalauto-marketslowdown,legacyhardware-manufacturingdrivesonlylimitedincrementalvolume,butdevelopingandproducingcockpitelectronicshasthepotentialtoboostvalue-addedandraisetheindustrygrowthceiling(usingcentralcontrolpanelsasanexample,alarge12-inch0%10%20%30%40%50%ChinaKorea,RepublicofGermanyJapanUSUK0%10%20%30%40%50%60%ChinaIndiaKorea,RepublicofUSJapanGermanyChinaAutomotiveElectronicsSector15March20219panelhasnearly3xthescreenareaofan8-inchpanel).Hence,firmsarequitekeentodeveloptheseproducts.Figure9:SmartcockpitSource:Joyson3.Technology—IncreasinglysolidfootingA)MatureOSarchitecturemakesmorecockpitfeaturespossibleTraditionalIVIsystemsenhanceavehicle'sinfotainmentfeatureswithsmartphonemirroring/connectivity,butduetonotlinkingwiththecar'sunderlyingsystems,thisapproachcanonlystackbasicentertainmentfunctionswithnowaytoboostdrivingsafetyordatasecurity.QNX,LinuxandAndroidhaveemergedasthreemajorarchitecturesbehindautomotiveoperatingsystems,usedbytechcompaniesasabaselinefortheirownin-vehicleoperatingsystems—eg,AlibabaandHuaweirespectivelydevelopedAliOSandHarmonyOS(customisingtheunderlyingLinuxarchitecture),whileAudi,NIOandXpeng,etcdevelopedcustomisedversionsoftheopen-sourcedAndroid.Basedonourcommunicationwithanindustryexpert,somesmart-cockpit-relatedsoftwareismuchmorechallengingtodevelopthanothers.Forexample,HMI-relatedsoftwaredevelopmentissimpleandgenerallydoneindependentlybycockpitproductsupplierssuchasJoysonorDesay.Whereaudiovisualentertainmentisconcerned,however,thingsgetmorecomplexanddevelopmentislargelydonebyinternetcompaniessuchasZebraTechnologiesandBeanTech.Figure10:Underlyingarchitectureformajorin-vehicleoperatingsystemsSystemDescriptionProsConsMainpartnerOEMs/partssuppliersQNXGloballythefirstin-vehicleoperatingsystemtopassISO26262ASILlevelDcertificationHighlysecureandstable;suitedtovehicletrajectoryrequirements,canbeusedininstrumentclustersClosedsource,licenceneededGM,Chrysler,Cadillac,Chevrolet,Lexus,LandRover,Porsche,Audi,VW,Buick,Toyota,Jaguar,BMW,Hyundai,Ford,Nissan,Mercedes-Benz,Harman,Visteon,Continental,Bosch,etcLinuxOSbasedonPOSIXandUNIX,supportsmultipleusers,multi-tasking,multithreadingandmultipleCPUsFree,flexible,highlysecureAppecosystemweakToyota,Nissan,Tesla,etcAndroidGoogle'ssystemdevelopedbasedonLinuxOpensourcenatureaidsin-housedevelopmentbyOEMs,robustmobiledeviceecosystemWeaksecurityandstability,notwellsuitedtosafety-criticalpartslikeinstrumentclustersAudi,GM,NIO,Xpeng,Geely,BYD,PATEO,NVIDIA,etcWinCEMicrosoft'sembedded32-bitoperatingsystemwithmulti-taskingMorereal-time,WindowsappdevelopmentismoreconvenientFewdevelopersorappsatpresentFordSync1,Sync2,etcSource:GASGOOAutoResearchInstituteChinaAutomotiveElectronicsSector15March202110B)BetterchipsprovidehorsepowerformorefeaturesAddingcockpitfeaturesrequiresadditional'computepower'fromtheonboardchip.GlobalchipmakersledbyQualcomm,NXP,Renesas,etchaveallbecomemoreseriousaboutautomotivechipsinrecentyears,launchingproductswithvaryingspecifications.Amongthese,theQualcommSnapdragon820Acanpowerthesmoothrunningofappsforall-LCDdashboardsandcentralcontrolpanelsinmostvehiclemodels.Figure11:Selectedvehiclecomputerchips—specificationsQualcommSnapdragon820ATIJacinto6NXPi.MX8RenesasR-CarH3CPUarchitectureARMv8-AARMv7-AARMv8-AARMv8-ACPUclockspeed2.1GHz1.5GHz1.2GHz+1.6GHz1.5GHzCPUcoresFour-coreKryoDual-coreCortex-A15Four-coreCortex-A53+Dual-coreCortex-A72Four-coreCortex-A57+Four-coreCortex-A53CPUbitwidth64-bit32-bit64-bit64-bitCPUprocess14nm28nm16nm16nmGPUAdreno530SGX544GC7000XSVXPowerVRGX6650GPUcorespeed624MHz384GHzUnknown450MHzDigitalsignalprocessingHexagon680C66XHiFi4DSPUnknownImagesignalprocessingSpectraISPTwodual-coreCortex-M4Twodual-coreCortex-M4FUnknownSource:AutohomeC)InteractionalgorithmsofferconvenientaccesstofunctionalityThesixmainmethodsofhuman-vehicleinterfacearephysicalmanipulation,touchcontrol,voiceinteraction,biometrics,visualinteractionandgestureinteraction,ofwhichthelastfourarerelativelynovelapproaches.Interactionalgorithmsincreasinglymakeitpossibletoremovetouchfromtheequation,providingvehicleoccupants,andespeciallydrivers,withmore-convenientwaystointeractwiththemachine.Whichcockpitelectronicsproductshavebiggerpotential?Wereviewedcockpitconfigurationsinasampleof174models(1,281variantsintotal)andfoundthat:1)Intermsofdrivinginformationdisplaysystems,colourdashboardsalreadyhaveveryhighpenetration,thoughall-LCDdashboardpenetrationbadlylagswhatweandthemarketexpected.HUDsmeanwhilearelikelytobecomeseconddashboards;2)InIVIsystems,penetrationofLCDtouchscreen-basedcentralcontrolpanelsishigh,butweexpecttwomajortrendstowardslargerandmorescreens;3)Amongnovelhuman-vehicleinterfacetypes,speechisalreadywidelyusedtocontrolmultimedia,phoneandnavigationfunctionsbutnotair-conditioningorwindows.Forgesturecontrolandfacialrecognition,twoothernovelmethods,penetrationisstillinlowsingledigits.Intermsofthemanyavailablecockpitelectronicsproducts,risingpenetrationforall-LCDdashboardsandlarger/morecentralcontrolpanelscreensarelikelytobecleartrends,inourview,asthesefacilitatebetter-looking,feature-richcabinsandsaferdriving.Voicerecognitionisalsolikelytobecomemoreintelligent.ChinaAutomotiveElectronicsSector15March202111Figure12:Cockpitelectronicspenetration—drivinginformationdisplaysystemsNote:Basedon30December2020data.Source:Autohome,UBS-SFigure13:Cockpitelectronicspenetration—IVIsystemsNote:Basedon30December2020data.Source:Autohome,UBS-SFigure14:Cockpitelectronicsproductpenetration:Novelhuman-machineinterfacesNote:Basedon30December2020data.Source:Autohome,UBS-S0%10%20%30%40%50%60%70%80%90%ColourinstrumentclusterAll-LCDdashboardInstrumentclusterHUD0%10%20%30%40%50%60%70%80%90%100%LCDcentralcontrolpanelTouchLCDcentralcontrolpanelSmartphoneconnectivityBackseatLCDCentralcontrolpanel0%10%20%30%40%50%60%70%80%PhoneMultimediasystemNavigationA/CSunroofGesturecontrolFacialrecognitionVoiceinteractionChinaAutomotiveElectronicsSector15March202112Figure15:CockpitelectronicsdevelopmenttrendsCategoryProductDevelopmenttrendPenetrationspeedDriversLimitationsDrivinginformationdisplaysystemDashboardAll-LCDAll-LCDdashboards:fastAll-LCDdashboardscanshowmorevaried,intuitiveandprecisedrivinginformation;NEVdatalikechargelevelandvoltagecannotbedisplayedbyanon-LCDinstrumentcluster;UBS'sautoteamseesdomesticNEVpenetrationreaching50%by2030ESafety-criticalcomponent,longdevelopmentcycleHUDPenetrationrising,couldbecomeseconddashboardFairlyfastSeevehicleinfowithoutlookingdown;drivercanbetterfocusonroadconditionsCostly;BMW5Series/Mercedes-BenzE-ClassofferoptionalHUDforadditionalRmb11,600/Rmb9,000IVILCD/touchLCDcentralcontrolpanelsLargerscreens,morescreensLimitedincreasesIntegratesmoreentertainmentandsafetyfeaturesSmartphoneconnectivityAppsloadeddirectlyonin-carsystemFallingOftenjuststacksbasicentertainmentfunctionsBack-seatLCDscreensPenetrationrisingslowlyImprovesback-seatpassengerexperienceWeakvalueformoney,AudiA8offersoptionalback-seatLCDforanextraRmb45,000Novelhuman-vehicleinterfacemethodsVoiceinteractionSmartervoicerecognitionPenetrationcomingupslowlyHighestsafetyGesturecontrolPenetrationrisingslowlyReducesuseofdriver'sarmsStilldistractsdriver,experiencenotimprovedmuchFacialrecognitionPenetrationrisingslowlySource:UBS-S1.DrivinginformationdisplaysystemsDashboard—All-LCDpenetrationjust33%Accordingtooursample,dashboarddisplaysaregenerallynowincolour:colourdrivinginformationsystemshave80%penetrationinmodelscurrentlyforsale.Meanwhileall-LCDdashboardpenetrationisstilllow(atjust33%).AmongJVbrands,thisfigureisjust19%.Comparedtolegacyinstrumentclusters,all-LCDdashboardshavethreemainadvantages:1)moreinformationdisplayed,withusersabletopersonalisewhatisshown.NEVsinparticularneedall-LCDdashboardstodisplayenergyrecoverysystemstatus,remainingcharge,etc;2)moreintuitivedisplay:All-LCDdashboardsusestrongerimageprocessingcapabilityformore-sophisticatedimagery.Indicatorscanfeatureskeuomorphicdesignstoputusersatease;3)more-precisedatadisplayed:all-LCDdashboardsgenerallyreaddatadirectlyfromsensors,whiletraditionalinstrumentclusterscollectdatamechanically.Asusagefrequencyincreases,themechanicalconnection'sprecisiondeterioratesfromrepeateduse.Welookfor'equiprates'ofall-LCDdashboardstorisequickly,basedonaclearfunctionalityedgeandtheprevalenceofNEVs.Perourconversationswithanindustryexpert,asdashboardsareasafety-criticalcomponent,JVbrandshavebeencautiousaboutdivingin.Nowthatall-LCDdashboardshaveproventhemselvesoverseveralyears,wethinkJVpenetrationislikelytorisesignificantly.ChinaAutomotiveElectronicsSector15March202113Figure16:Colourall-LCDdashboardpenetration,bybrandtypeFigure17:Colourall-LCDdashboardpenetration,byvehiclepricingNote:Basedon30December2020data.Source:Autohome,UBS-SNote:Basedon30December2020data.Source:Autohome,UBS-SHUD—Penetrationlessthan10%WithanHUD,adrivercanremainawareofvehicleinformationwithoutlookingdown;hence,theycanpaymoreattentiontotheroadandrespondmorepromptlytoemergencies.Inaddition,HUDscancombinewithsmartinformationsystemstoprojectinformationsuchasnavigation,maps,warnings,etcsoastoimprovethedrivingexperience.HUDpenetrationinoursamplewas8%,upfromourmostrecentestimateof5%(August2020,whenfewmodelshadreleased2021versions),andthepaceofincreasesisinlinewithourpreviousforecast.Figure18:HUDpenetration,bybrandtypeFigure19:HUDpenetration,byvehiclepricingNote:Basedon30December2020data.Source:Autohome,UBS-SNote:Basedon30December2020data.Source:Autohome,UBS-S0%20%40%60%80%100%DomesticJVLuxuryNEVstartupsPenetrationbybrandtypeSalesvolumeweightedpenetration0%20%40%60%80%100%BelowRmb200kRmb200-400kRmb400-700kAboveRmb700kPenetrationbypriceSalesvolumeweightedpenetration0%5%10%15%20%25%DomesticJVLuxuryNEVstartupsPenetrationbybrandtypeSalesvolumeweightedpenetration0%10%20%30%40%50%BelowRmb200kRmb200-400kRmb400-700kAboveRmb700kPenetrationbypriceSalesvolumeweightedpenetrationChinaAutomotiveElectronicsSector15March2021142.IVIsystems:UnmistakeabletrendtomoreandbiggerscreensCentralcontrolpanels—Larger,morescreensInoursample,theoverallpenetrationrateoftouch-basedLCDcentralcontrolpanelsiscloseto90%,withhighpenetrationinhigher-endbrands/pricepoints,thoughwealsoflagthetrendtowardslargerandmorescreens.Figure20:TouchLCDcentralcontrolpanelpenetration,bybrandtypeFigure21:TouchLCDcentralcontrolpanelpenetration,byvehiclepricingNote:Basedon30December2020data.Source:Autohome,UBS-SNote:Basedon30December2020data.Source:Autohome,UBS-SWeestimatetheaveragecentralcontrolpanelsizeonmodelsforsaleinoursamplehasincreasedsignificantlyinthe2021modelyearcomparedwith2019(note:NEVstart-upsdebutedmanymodelsin2020,sowecompare2020modelsversus2021modelsforthesebrands).Figure22:AveragesizeofLCDtouchcontrolpanels,bybrandtypeFigure23:AveragesizeofLCDtouchcontrolpanels,byvehiclepricingNote:Basedon30December2020data.Source:Autohome,UBS-SNote:Basedon30December2020data.Source:Autohome,UBS-S0%20%40%60%80%100%DomesticJVLuxuryNEVstartupsPenetrationbybrandtypeSalesvolumeweightedpenetration0%20%40%60%80%100%DomesticJVLuxuryNEVstartupsPenetrationbybrandtypeSalesvolumeweightedpenetration024681012141620192021201920212019202120202021DomesticJVLuxuryNEVstartups(inches)~+14%~+29%~+6%~+6%024681012141620192021201920212019202120192021BelowRmb200kRmb200-400kRmb400-700kAboveRmb700k(inches)~+19%~+5%~+42%~+12%ChinaAutomotiveElectronicsSector15March202115Wealsonotesomeluxury(Audi,LandRover,etc)modelsintroducedtwo-piececentralcontrolpanelsinthe2019modelyear,andLiONE,whicharrivedinlate2019,camefittedwithathree-screeninfotainmentsetup(16.2-inchcentralcontrolpanel,12.3-inchpassengerentertainmentscreenand10.1-inchfunctioncontrolscreen),showingaclearmulti-screentrend.Figure24:LiONE'stripleinfotainmentscreensSource:LiAutodataBackseatLCDdisplaysAsLCDspenetratebeyondfront-seatdashboardsandcentralcontrolpanels,andintothebackseat,thenumberofdisplayspervehiclecouldrisefromtwotoseven.RearLCDdisplaysarefeaturedmainlyonselectluxurymodelspricedaboveRmb700kcurrently:penetrationisjust2%inouroverallsample,thoughthisrisesto7%/19%forluxurybrands/modelspricedaboveRmb700k.WhilerearLCDdisplaysenhancethebackseatridingexperience,weexpectsluggishuptakeonaccountofthehighcosts.PerAutohomedata,anAudiA8fittedwithanoptionalrearLCDscreencostsanadditionalRmb45k.3.Novelapproachestohuman-vehicleinterfaceTraditionalphysicalmanipulationandtouchcontroltakethedriver'shandsawayfromthewheel.Tomitigatesafetyissues,ahostofnovelinterfacemethods—voice,biometrics,visualinteractionandgestureinteraction—cameintobeing.Inoursample,voiceinteractioniswidelyusedtocontrolmultimedia,phoneandnavigationfunctions.Althoughvoicemaybeseeinglimitedpenetrationgains,wefoundthevoicerecognitiononmostmodelsrespondsonlytospecificpresetcommands.Inthefuture,voiceinteractionislikelytoonlygetsmarterandcouldsomedaybecapableofnear-humanconversationallogic.CentralcontrolpanelPassengerentertainmentscreenFunctioncontrolscreenChinaAutomotiveElectronicsSector15March202116Gesturecontrolandfacialrecognition(atypeofbiometrics)haveanoverallpenetrationoflessthan2%inoursampleandaremainlyfoundinluxurybrandsandNEVstartupmodels.Inourview,novelinteractionmethodsrequirelessuseofthedriver'sarmsbutcanstillbedistracting,thuspenetrationislowandthegainsweexpectcouldtaketimetocomethrough.Figure25:Human-vehicleinterfacemethods,byselectOEMsOEMMethodVoicerecognitionmodelExperienceMercedes-BenzVoicerecognitionNaturallanguageUnderstandsunclearexpressions;largelyfollowshumanconversationallogicBMWVoice+gesturerecognitionAudiVoicerecognitionNIOVoicerecognitionXpengVoicerecognitionLiAutoVoicerecognitionTeslaVoicerecognitionPeugeotVoicerecognitionEnteringvoicecommandsOnlyrespondstocertaincommandssuchas"navigate","call",etc;poorinteractivityToyotaVoicerecognitionFordVoicerecognitionChanganVoicerecognitionMostlyvoicecommandsGreatWallVoicerecognitionGeelyVoicerecognitionSource:AutohomeChinaAutomotiveElectronicsSector15March202117ChinaAutomotiveElectronicsSectorUBS-SResearchSectorQ2PIVOTALQUESTIONSreturnQ:HowfaralongisautonomousdrivinginChina?Couldauto-partssuppliersbenefit?UBS-SVIEWWeexpectpenetrationofL2andL2.5/L3AVstoreach56%by2025E(versusourestimateofaround12%for2020E).Amongthethreebuildingblocksofautonomousdriving—namelysensing,decision-makingandaction—webelieveautopartssupplierscouldparticipateintensivelyatthesensingstage.EVIDENCE1)InFebruary2020,11authoritiesjointlyissuedtheIntelligentVehicleInnovation&DevelopmentStrategy.ThisdocumentoutlinesaclearplanandkeygoalpostsforautonomousdrivinginChina.Pertheplan,by2025,Chinawillachievelarge-scaleproductionofL3AVsandmarket-basedapplicationofL4AVsinspecificcontexts.2)Accordingtoourtalkswithanexpert,penetrationofL2autonomousdrivingwas10-15%inChina,asof2020.3)Thethreebuildingblocksneededforautonomousdrivingaresensing,decision-makingandaction.Sensorsreadinformationfrominsideandoutsidethevehicleandfeedintoacentralprocessingunit.Algorithmsthencrunchthedatatodeterminehowthevehicleshouldrespond.4)Withtheriseofovertheair(OTA)updates,OEMsareinclinedtopre-loadvehicleswithautonomousdrivinghardware.5)Ourworkshowsthattoday'sAVs,especiallyL2/3-capableones,achieveself-drivingmainlythroughcameras,ultrasonicradarandmmWaveradar.6)FormmWaveradar,HuayuandDesayaretheonlytwosuppliersinChinaabletomassproduce77GHzproducts.7)Steer-by-wiresystems,intelligentlightingsystemsandbrake-by-wiresystemsaretypicalexamplesoftraditionalautocomponentsincorporatingsmarttech.WHAT'SPRICEDIN?Suppliersexposedtoautonomousdrivingtradeatsimilarmultiplestobatteryandbattery-materialfirms.WeforecastChina'sNEVpenetrationwasabout6%andL2.5/L3autonomousdrivingpenetrationunder1%,asof2020E,autonomousdrivingisthusatamorenascentstagethanNEVs.Webelieveintelligent-vehicle-relatedsupplierswithstrongknowhowcouldhavemoreupsidepotential.Forautopartssuppliers,themarketseemsconcernedthatChinesefirmsareatadisadvantagetoglobaltier-1suppliersinautonomousdriving,andthuswon'tbeabletoridetheindustry'srisingtide.Wethinkthemarketisignoringpartssuppliers'presenceinthesensingstageofautonomousdriving.ChinaAutomotiveElectronicsSector15March202118By2025E,weestimateoverhalfofnewvehiclesinChinawillhaveL2orL2.5/L3capabilityInChina,weexpectmodelswithL2autonomousdrivingcapabilitytomakeacceleratedpenetrationgainsfrom2021Eonward.Meanwhile,L2.5/L3-capablemodelsshouldstarttohitthemarketin2021E.WeexpectL2andL2.5/L3-capablemodelstoachievedomesticpenetrationof56%in2025(versusourestimateofaround12%in2020).Figure26:AutonomousdrivingpenetrationinChinaFigure27:Salesvolumeofautonomous-drivingPVsinChinaSource:UBS-SestimatesSource:UBS-SestimatesOurbullishpenetrationforecastforself-drivingPVsinChinaisbasedon:1.ClearpolicyroadmapforautonomousdrivingInFebruary2020,11authoritiesjointlyissuedtheIntelligentVehicleInnovation&DevelopmentStrategy.ThedocumentoutlinesaclearplanandkeygoalpostsforautonomousdrivinginChina:2020:L1/L2penetrationof50%/10%fornewautos.LTE-V2X(long-termevolution-vehicletoeverything)coverageof90%forexpresswaysinmajorcities.2025:Large-scaleproductionofL3AVs;technologicalinnovation,industryecosystem,infrastructure,regulatorystandards,productregulationandcybersecuritysystemsforChina-standardsmartvehiclestobelargelyinplace;market-basedapplicationofL4AVsinspecificcontexts;regionalcoverageofLTE-V2X,5G-V2Xrolled-outtoselectcitiesandgraduallyusedonexpressways;fullcoverageforhigh-precisionspatiotemporalservicenetworks.2035-50:China-standardsmartvehiclenetworkfullybuilt-outandfurtherimproved;graduallyrealiselong-termvisionofsecure,efficient,green,civilisedintelligentvehicles;intelligentvehiclesmeetingthepublic'sever-growingaspirationsforagoodstandardofliving.InMarch2020,China'sMinistryofIndustryandInformationTechnology(MIIT),eightautomakers(Changan,GAC,Geely,Dongfeng,DongfengCommercialVehicle,BMWChina,VWChinaandFordChina),ChinaAutomotiveTechnologyandResearchCenter,ZhejiangAsia-PacificMechanical&ElectricandNeusoft0%10%20%30%40%50%60%2019E2020E2021E2022E2023E2024E2025EL1penetrationL2penetrationL2.5/3penetrationL4penetration0510152025302019E2020E2021E2022E2023E2024E2025E(munits)L1capablesalesvolumeL2capablesalesvolumeL2.5/L3capablesalesvolumeL4capablesalesvolumeL0salesvolumeChinaAutomotiveElectronicsSector15March202119ReachAutomotiveTechnology(Shenyang)jointlydraftedandreleasedanautonomousdrivingclassification,witheffectfrom1January2021.Followingthepublicationandimplementationoftheclassificationscale,someOEMsunveiledtheirplansforL3-capablevehicles.AtitsDecember2020shareholdermeeting,GreatWallrevealedplanstoreleaseanL3vehicleinSeptember2021,andXpengplanstolaunchtheL3-capableXPilot3.0inQ121.Wethereforethink2021Ewillbethekick-offyearforL3autonomousdriving.Figure28:AutonomousdrivingclassificationunderMIITstandardsLevelKeydatesDefinitionLateralandlongitudinalmotioncontrolTargetandtimingdetection/responseDynamicdrivingtasktakeoverOff-limitsscenarios?TypicalapplicationsLevel0Emergencyassistance:Performscontinuousdetectionandresponserelatingtosometargetsandtimepointsinthedynamicdrivingtask,butcannotcontinuouslycontrollateralandlongitudinalmotion.DriverDriverandsystemDriverYesCollisionwarning,lanedeparturewarning,pedestrianalert,blindspotmonitoringLevel12020:50%penetrationPartialdriverassistance:Continuouslyperformsvehiclelateralorlongitudinalmotioncontrolwithindesignedoperatingconditionsduringthedynamicdrivingtask,withabilitytodetecttargetsandtimepointsandrespondaccordingly.DriverandsystemDriverandsystemDriverYesCruisecontrol,automaticbraking,intelligentspeedadaptationLevel22020:10%penetrationCombineddriverassistance:Continuouslyperformslateralorlongitudinalvehiclemotioncontrolwithindesignedoperatingconditionsduringthedynamicdrivingtask,withabilitytodetecttargetsandtimepointsandrespondaccordingly.SystemDriverandsystemDriverYesLane-keepingassist,automaticlaneswitchingLevel32025:large-scaleproductionConditionalautomation:Continuouslyperformsalldynamicdrivingtaskswithinitsdesignedoperatingconditions.Thedynamicdrivingtasktakeoverusercantakeovercontrolinanappropriatemanner.SystemSystemDynamicdrivingtasktakeoveruser(becomesdriveraftertakeover)YesTraffic-jamassist,expresswayassistLevel42025:market-basedapplicationinspecificcontextsHighautomation:Continuouslyperformsalldynamicdrivingtasksanddynamicdrivingtasktakeoverswithindesignedoperatingconditions.Ifthesystemsendsatakeoverrequestandthepassengerfailstorespond,thesystemcanautomaticallyreachtheminimumriskstate.SystemSystemSystemYesRoboTaxi,unmannedlogisticsvehicles/busesLevel5Fullautomation:Continuouslyperformsalldynamicdrivingtasksanddynamicdrivingtasktakeoversinallnavigableconditions.Ifthesystemsendsatakeoverrequestandthepassengerfailstorespond,thesystemcanautomaticallyreachtheminimumriskstate.SystemSystemSystemNoSource:MIITautonomousdrivingclassificationChinaAutomotiveElectronicsSector15March2021202.ChineseconsumerssupportautonomousdrivingAMcKinseystudyfoundthatamongrespondentsfromChina,theUSandGermany,Chineseconsumersshowedthestrongestpreferenceforautonomoustechnologiesandweremorewillingtopayforthem.Figure29:NearlyhalfofsurveyedChineseconsumersregardfullautomationasveryimportantFigure30:Premiumthatconsumersarewillingtopayforautonomousdriving,bycountrySource:McKinsey"Chinamaybecomethelargestautonomousdrivingmarket”Source:McKinsey"Chinamaybecomethelargestautonomousdrivingmarket”Figure31:ConsumeracceptanceofdifferentdriverassistancefeaturesFigure32:ConsumeracceptanceofdifferentautonomousfeaturesSource:McKinseyAutoConsumerInsights2019Source:McKinseyAutoConsumerInsights20193.OEMshavedeeppresenceinautonomousdrivingInrecentyears,majorglobalOEMshavebuilt-outtheirfootprintsinautonomousdrivingtechthroughin-houseR&Dandco-development.Accordingtoourtalkswithanindustryexpert,L2autonomousdrivingpenetrationwasat10-15%domesticallyin2020.31%30%2%53%54%49%16%16%49%-40%-20%0%20%40%60%80%100%GermanyUSChinaNotwantedDon'tcareVeryimportant-1,0002,0003,0004,0005,000GermanyUSChina(US$)0%20%40%60%80%Auto-parkingAdaptivecruisecontrolLanekeepingCollisionavoidanceorpre-collisionsystem(%ofrespondents)0%10%20%30%40%50%AutonomousdrivingonrestrictedroadsAutonomousdrivingonexpresswaysRemoteautonomousparkingAutonomouskeepingpaceintrafficjams(%ofrespondents)ChinaAutomotiveElectronicsSector15March202121Figure33:GlobalOEMfootprintsinautonomousdrivingtechnologyOEMAutonomousdrivingtechnologyVWIn-house:MEBplatformandVW.OSoperatingsystem;VW.OSexpectedtocomeinstalledonallmodelsby2025Co-developed:Car-softwarebusinessunitsetupinpartnershipwithMicrosofttodevelopsoftwareandautomotivecloudservice;targetstoraisepercentageofin-housesoftwaredevelopmentinthecarfrom10%currentlyto60%AudiIn-house:OnethirdofR&Dbudgetspentondigitisation,EVs,andautonomousdrivingtechnologyuntil2025Co-developed:StrategicpartnershipwithHuaweiinintelligentconnectedvehicles,strategicpartnershipwithONSemiconductorToyotaIn-house:EstablishedToyotaConnected,developedmobileserviceplatformanddatacommunicationmodelforV2X;initiatedMobilityTeammateConcept,alsoinvestinginADASandautonomousdrivingCo-developed:WorkingwithUberandAmazontoco-developride-sharingandautonomousdrivingtech,builtICTplatformwithNTTData,developedhigh-precisionmapsGMIn-house:GlobalBAutomotiveE/EarchitectureCo-developed:Acquiredtheautonomousdrivingstart-upCruiseAutomationBMWIn-house:PlanstolaunchL3-capablevehiclesin2021andgetL5vehiclesontheroadby2025Co-developed:Co-developedautonomoustechnologywithMobileye,Intel,ContinentalandDelphi;joinedBaidu'sApolloAllianceDaimlerIn-house:DevelopedL3-capableDrivePilotsystemCo-developed:Co-developedautonomousdrivingtechnologywithNVIDIAandBosch,investmentsinMomenta,HERE,etcFordCo-developed:TogetherwithAudi,Qualcommandthe5GAutomotiveAssociation,jointlylaunchedIoVcommunicationtechnology;enteredstrategicpartnershipwithBaiduandAlibabaonsmartconnectedvehicles;investmentsinArgo.ai,Velodyne,CivilMapsandNiernbergNeuroscienceSource:iResearchFigure34:PenetrationofselectedautonomousdrivingfunctionsFigure35:%ofmodelsequippedwithselectedautonomousdrivinghardwareNote:Basedon30December2020data.Source:Autohome,UBS-SNote:Basedon30December2020data.Source:Autohome,UBS-SChina'sautopartsfirmscouldbeearlybeneficiariesofrisingautonomousdrivingpenetration,inourviewAsautonomousdrivingprogressestomore-advancedlevels,weestimatetheper-vehiclecontentvaluefromincrementalhardwareandsoftwarecoulddrasticallyincrease,withL4/L5hardware/softwarecontentreaching8x/4xthelevelsinL2/L1vehiclesoncethetechnologymatures.0%10%20%30%40%50%ActivebrakingLanedeparturewarningAdaptivecruisecontrolLanekeepingassistAutomaticparking0%20%40%60%80%100%RearparkingradarFrontparkingradar360-degreesurroundviewNightvisionChinaAutomotiveElectronicsSector15March202122Figure36:Per-vehiclecontentvalueofautonomousdrivinghardware(mainlysensors,circuitboards,memory/logicdevices)Figure37:Autonomousdrivingsoftware—per-vehiclecontentvalueSource:UBS-SestimatesSource:McKinseyAutomotiveSoftwareandElectronics2030,UBS-SestimatesForautopartssuppliers,wethinkthemainopportunitiestoparticipatecouldbeinhardware,andthatsoftwaremaybedominatedbytechcompaniesandtheautomakersthemselves.Figure38:Autonomousdriving-relatedsoftwarecategoriesandkeycompaniesSoftwaretypeOperatingsystemInterface-drivensoftwareMiddle-wareApplicationlayerMainparticipantsAUTOSAR,QNX,LinuxChipmakersOEMsLocation:Mapproviders;Sensing:Visionchipsuppliers;Integration/planning/testing:OEMsSource:UBS-SThethreebuildingblocksneededforautonomousdrivingaresensing,decision-makingandaction.Sensorsreadinformationfrominsideandoutsidethevehicleandfeedintoacentralprocessingunit.Algorithmsthencrunchthedatatodeterminehowthevehicleshouldrespond.Wethinkautopartssuppliershaveanopportunitytobedeeplyinvolvedatthesensinganddecision-makingstages.Theactionstagemainlyentailsputtingsmarttechintotoday'straditionalautoparts(eg,developmentofadaptiveheadlights).Sensing,incontrast,couldbeabiggerincrementalmarketforautopartsfirms.Asfordecision-making,chipsarelargelymonopolisedbysemiconductorandtechfirmssowedonotexpectautopartssupplierstograbmuchshare.Figure39:BuildingblocksofautonomousdrivingSource:UBS-S-2,0004,0006,0008,00010,00012,00014,00016,00018,000L1L2L3L4L5(Rmb/vehicle)-2,0004,0006,0008,00010,00012,00014,00016,00018,000L1L2L3L4L5(Rmb/vehicle)SensingEnvironmentaldataVehicledataDecision-makingChipAlgorithmsResultActionDriveBrakingSteering,etc.mmWaveradarChinaAutomotiveElectronicsSector15March202123Inaddition,wethinkautonomous-driving-relatedhardwarecouldfollowafastertimelinethanfinishedAVsthemselves.AnexamplewouldbeL3hardwarebeinginstalledinL2vehicles.WiththeadventofOTAupdates,OEMsaremoreinclinedtopre-loadvehicleswithforward-lookinghardwareandthengraduallyunlockfeatures(chargingupgradeservicefees)viaOTAoverthevehicle'slifecycle.Tesla,forinstance,shipsvehicleswithadvancedself-drivinghardwarepre-loaded,allowingownerstoactivatefunctionslaterviasoftwaresubscriptions/OTA.SensingFourmajortypesofsensorsareusedinautonomousdriving;Figure40looksattheirprosandconsfromsixdimensions.Figure40:Major-sensorcomparisonCategoryCostDetectionangleDetectiondistanceObstaclerecognitionNighttimeeffectivenessBadweatheradaptabilityUltrasonicradarsLow120degreesVerycloseModerateWeakModeratemmWaveradarsMedium10-70degreesFairlyfarFairlystrongStrongStrongLIDARHigh15-360degreesVeryfarFairlystrongWeakWeakCamerasMedium360degreesModerateStrongWeakWeakSource:EqualOceanAccordingtoourchecks,autonomousdrivingbelowtheL3levellargelyreliesonamixofcamera,ultrasonicradarandmmWaveradar,whileadditionalmmWaveradarandLIDARequipmentisneededforL3andabove.Figure41:TypicalsensorsneededforautonomousdrivinglevelsMajorsensorsLevel1Level2Level3Level4Level5(units)No.equippedNo.equippedNo.equippedNo.equippedNo.equippedUltrasonicradars4-88-128-128-128-12Cameras0-44-66-88-1010-1124GHzmmWaveradars11-31-51-51-5Surroundcameras44-104-104-1077GHzmmWaveradars4-84-84-8LIDAR1-21-31-3Drivermonitoringcameras111GPSnavigation11Infrarednightvision11Dynamicvisioncameras11Source:AutohomeOurworkshowsthattoday'sAVs,especiallyL2/L3-capableones,achieveself-drivingmainlythroughcameras,ultrasonicradarandmmWaveradar.ChinaAutomotiveElectronicsSector15March202124Figure42:Configurationsofmajorautonomousdriving-capablemodelsinChinaOEMChanganGACXpengSAICNIOLiAutoWMTeslaGreatWallModelUNI-TAionVP7MarvelXProES6ONEEX6Model3H63rdgenPricing(Rmb10k)11.39-13.3915.96-23.9622.99-34.9926.88-30.8835.80-51.8032.8018.99-25.9929.18-41.9812.20-14.10AutonomousdrivingsystemnaADiGO3.0Xpilot3.0naNIOPilotnaLivingPilotAutopilot3.0iPilotOptionprice(Rmb10k)Standard3.982.00Standard3.90StandardStandard4.63StandardFrontviewcamera113131131Recordcam001100011360-degreesurroundviewcamera449444444Drivermonitoringcamera111010000Frontparkingradar111111110Side-lookingradar444240202Ultrasonicradar121212121212121212ChipHorizonJourney2.0MobileyeEyeQ4NVIDIAXavieriECU,embedEyeQ4MobileyeEyeQ4MobileyeEyeQ4naTeslaFSDchipMobileyeEyeQ4Wafer28nmTSMC28nmFD-SOI12nmFFN28nmFD-SOI28nmFD-SOI28nmFD-SOIna14nmSamsung28nmFD-SOIComputepower4TOPS2.5TOPS30TOPS2.5TOPS2.5TOPS2.5TOPSna600TOPS2.5TOPSPowerconsumption2W3W30W3W3W3Wna3WHDmapsBaiduBaiduAmapHeadingnananananaSource:Companydata,UBSFactoringinourforecastsfordomesticpenetrationofautonomousdrivinglevels,weprojectthedomesticmmWaveradar/LIDARmarketstoreachRmb14bn/Rmb38bnby2025E.Figure43:DomesticmmWaveradarmarketsizeFigure44:DomesticLIDARmarketsizeSource:UBS-SestimatesSource:UBS-Sestimates-2468101214162019E2020E2021E2022E2023E2024E2025E(Rmbbn)24GHzmmWaveradarmarket77GHzmmWaveradarmarket-510152025303540452020E2021E2022E2023E2024E2025E(Rmbbn)ChinaAutomotiveElectronicsSector15March202125Perourresearch,HuayuandDesayareattheforefrontofmmWaveradarR&DinChinaastheonlytwodomesticnamescurrentlyabletomassproduce77GHzmmWaveradars.Figure45:ChinammWaveradarsuppliers—productstatusCompanyRadarfrequencyStatusHuayu24GHz,77GHz24GHzinmassproduction;77GHzinsmall-scalemassproductionDesay24GHz,77GHz24GHz:projectlaunched;77GHz:massproductioncontractwonHuaweiUnspecifiedAtthe2ndChinaIntelligentConnectedVehiclesConferenceinSept2020,HuaweisharedplanstoindependentlydevelopammWaveradarIntiBeam24GHz,77GHz24GHzinprototypestage;77GHzinlaboratorystageWHST24GHz,77GHz24GHzsuppliedinlowvolumes;77GHzprototypeinoutsidetestingstageATSElectronics77GHz77GHz:showcasedprototypeANNGIC24GHz,77GHz24GHz:abletoshipinsmallbatches;77GHz:productreleasedAutoroad77GHz77GHz:showcasedprototypeCheng-Tech77GHzExternaltestingkicked-offHawkeye77GHzShowcasedprototypeSource:CompanydataActionAsfortheactionstage,wethinkautonomousdrivingrequirestraditionalautocomponentstobecomesmarter—classicexampleswouldbeintelligentsteering,lightingandbrakingsystems:1)Steering:Steer-by-wire—eg,sensorsdetectthesteeringangleandlengthneededforanupcomingcornerandtransmitthedatatothechipforalgorithmicprocessing,enablingtheECUtocontrolthemotorthroughtheturn.2)Lighting:Adaptivehigh-beamsystems—eg,sensorsreadenvironmentaldatasuchastheangle,widthandlengthofanapproachingcorner,whicharefedintothechipandprocessedalgorithmicallytodecidethelightingandbrightnessofbeadsatdifferentlocationsintheheadlights,whichplaceshigherdemandsonthelampitselfandthelamp-controller'sdesign.3)Braking:Break-by-wiresystems—eg,sensorsfeeddataonapedestrian'swalkingspeedanddistancetoalgorithms,whichcomputetheamountofneededdeceleration,etc,allowingthebrakingsystemtoreactappropriately.Figure46:IntelligentvehiclelampdiagramSource:KebodaprospectusVerticalHorizontalDottedlinesshowbeamanglewithoutdynamicadjustmentWithouthorizontaladjustmentWithhorizontaladjustmentRegulardrivingAcceleratingDeceleratingChinaAutomotiveElectronicsSector15March202126ChinaAutomotiveElectronicsSectorUBS-SResearchSectorpricedinWHAT'SPRICEDIN?returnIntelligentvehiclesatanearlystage;earningsandmultiplestodrivesharepricesWethinkthatasintelligentvehiclesarestillbeingintroducedtothemarket,smartcockpitsandautonomousdrivingrepresentbrand-newgrowthmarketsforChina'sautoelectronicssector.Therefore,webelieveearningsandvaluationscoulddrivethesharepricesofrelatedfirmsinthevaluechain.Weroughlydividepotentialsharepricechangesofintelligent-vehicle-relatedsuppliersintothreestages:1)T1:Astheintelligentvehiclevaluechainremainsinanascentstage,themarketlikelyhasapoorunderstandingofthetechnologyandoftenevaluatesacompany'sstrengthbasedonpreliminaryorders.Inthisstage,thevaluationsshouldexpandforfirmsabletograduallysecureorders,butinvestorsremainunconvincedaboutcompanies'technologyandstrength.Multiplesdonotincreasemuch.2)T2:FirmswithsolidknowhowcontinuetowinordersbutR&Dtypicallytakestwotothreeyears.Companiesrecordnosignificantearningsgrowth.Atthisstage,marketskepticismaboutthetechnologyandstrengthoffirmsshowingsustainedorderinflowgraduallyfade,andinvestorsaretolerantifprofitstaketime.Valuationsforsomecompaniescouldrisequicklyinthisstage,inadvanceofearnings.3)T3:Firmsworkthroughtheirbacklogsandgraduallydeliverprofits.Asordercyclestendtobelong,earningsabilitystillneedstobeproven.Companiesabletodeliverconsistentearningsgrowthandorderinflowmightre-ratefurther.ForfirmsinChina'scockpitelectronicsvaluechain,wethinksharepricedynamicscouldgraduallytransitionfromthesecondphasetothethird,andthatcompaniesabletodeliversustainedearningsgrowthandnewordersmayenjoysharepriceupsidefromearningsandvaluations.Alongtheautonomousdrivingvaluechain,wethinksharepricesareremaininginthefirstphase,andthatfirmsabletosecuringorderscouldpotentiallyseemultipleexpansion.Afterthat,webelievetheywouldneedtoshowprofit;inthisphase,earningsandvaluationscoulddrivesharepricesofcompanieswithstrongknowhowandtheabilitytofulfilorders.ChinaAutomotiveElectronicsSector15March202127Figure47:Intelligentvehiclevaluechainfirms—valuationsvsearningsandorderwinsSource:UBS-SOnthewhole,webelieveintelligentvehiclecomponentfirmstradeatsimilarvaluationstobatteryandbattery-materialsuppliers.Asof2020,China'sNEVpenetrationwasintheregionof6%comparedtolessthan1%penetrationforL2.5/L3-capableAVs.Higherlevelsofautonomousdrivingcouldboosttheper-vehiclecontentvalueofsoftwareandhardwarebyover5x.Assuch,weexpectmorere-ratingpotentialforintelligent-vehicle-relatedsupplierswithstrongknowhowreserves.Profitsmaterialisewhileorderinflowcontinues;valuationandearningsriseProfitsgraduallymaterialise,minorre-ratingCannotdeliverearnings;earliermultipledeflatesKeepswinningorders,multipleexpandsrapidlyInitialorderssecured,multipleimprovesEarningsdeliveryperiod-->0100200300400500600700800…T3T2T1ValuationChinaAutomotiveElectronicsSector15March202128Figure48:ValuationtableNote:WindconsensusearningsforForyouCorp,ThunderSoftwareandNavInfo;ReutersconsensusearningsforCATL,BYD,NIO,LiAuto,XpengandMinth.Pricedtocloseon12March2021.Source:Wind,UBS-SestimatesTickerPrice(LC)2021E2022E2023E2021E2022E2023E2021E2022E2023E2021E2022E2023EIntelligentvehicleautoparts66.449.331.16.25.44.39.611.513.044.139.528.7Foryou002906.SZ27.5046.732.2NA3.43.1NA7.49.9NA62.444.8NAThunderSoftware300496.SZ110.6778.257.0NA13.110.9NA18.420.7NA30.937.1NANavInfo002405.SZ15.0796.776.8NA3.63.5NA4.14.7NANMNMNADesay002920.SZ81.9269.852.039.78.97.96.913.316.118.639.034.531.0Joyson600699.SH19.5340.428.522.61.81.71.64.66.17.367.341.426.5Batteryandbatterymaterialsupplers72.645.735.99.17.66.416.819.420.854.237.225.8EnergyNewMaterial002812.SZ120.4258.440.034.814.711.18.728.431.627.965.546.115.0Ganfeng-A002460.SZ99.1176.153.943.712.410.38.517.620.821.3NM41.123.3Putailai603659.SH83.1229.023.219.57.15.84.727.127.526.638.325.318.7EaspringMaterial300073.SZ46.6250.237.936.65.54.94.411.513.712.828.232.63.6Cnano688116.SH57.2362.239.631.87.26.35.412.116.918.371.156.824.8EVEenergy300014.SH81.7854.742.731.610.88.87.021.922.724.769.228.135.3GotionHigh-tech002074.SZ38.52163.461.544.54.74.44.02.97.49.460.6NM38.3CATL300750.SZ341.4686.966.645.110.59.48.513.114.925.746.630.547.7NEVOEMs74.385.4111.712.012.110.1-3.99.17.127.427.92.8BYD1211.HK191.1074.358.156.55.85.34.58.79.48.027.427.92.8NIONIO.N45.50NMNM220.029.030.022.8-12.215.710.7NMNMNMLiAutoLI.O25.69NM112.758.76.46.25.9-0.54.78.4NMNMNMXpengXPEV.N35.15NMNMNM6.67.07.3-11.66.61.2NMNMNMA-shareautoparts31.125.621.85.34.64.017.818.919.432.921.117.2Huayu600744.SH25.4511.810.49.31.41.31.212.513.113.431.414.211.0Xingyu601799.SH197.4636.328.322.97.96.65.523.825.526.130.028.223.6Linglong601966.SH46.5522.118.416.24.13.53.019.920.520.017.520.313.4Sanhua002050.SH21.0045.040.736.86.55.85.215.315.114.913.710.510.8Keboda603796.SH70.7641.030.723.76.95.84.917.920.522.444.233.729.7Fuyao-A600660.SH48.7430.425.422.15.14.54.017.518.819.260.619.615.0H-shareautoparts18.715.613.92.62.42.314.315.417.173.419.115.9Minth0425.HK35.8017.814.6NA2.11.9NA12.113.2NA32.119.0NAFuyao3606.HK46.0524.020.117.54.03.63.117.518.819.260.619.615.0Nexteer1316.HK11.3614.212.110.31.81.61.513.314.215.0127.418.716.7A-shareOEMs21.515.013.11.81.71.510.411.512.027.328.016.3SAICMotor600104.SH20.347.36.96.50.80.80.712.011.711.662.56.26.8JianghuaiAutomobile600418.SH9.3638.021.918.21.31.21.13.35.66.4-50.473.520.2GAC601238.SH10.8910.67.75.81.21.00.911.413.916.143.337.133.6GreatWallMotor-A601633.SH30.6027.223.121.34.33.93.516.717.617.391.317.88.6Chang'an000625.SZ15.9022.017.014.31.51.41.16.98.48.3-9.229.518.3Jiangling000550.SZ26.2533.428.225.92.01.91.86.16.97.252.418.39.1FAWJiefang000800.SZ11.1411.710.38.71.81.61.416.216.317.00.913.617.6P/E(x)P/BV(x)ROE(%)EPSgrowth(%)ChinaAutomotiveElectronicsSector15March202129Figure49:PeervaluationsvsearningsgrowthSource:UBSestimates,UBS-SestimatesUBSEvidenceLabisasell-sideteamofexperts,independentofUBSResearch,thatworkacross12practiceareasand45specializedlabscreatinginsight-readydatasets.Theexpertsturndataintoevidencebyapplyingacombinationoftoolsandtechniquestoharvest,cleanse,andconnectbillionsofdataitemseachmonth.Since2014,UBSResearchAnalystshaveutilizedtheexpertiseofUBSEvidenceLabforinsight-readydatasetsoncompanies,sectors,andthemes,resultingintheproductionofover6,000differentiatedUBSResearchreports.UBSEvidenceLabdoesnotprovideresearch,investmentrecommendations,oradvice,butprovidesinsight-readydatasetsforfurtheranalysisbyUBSResearchandbyclients.ThismarksthefourthiterationoftheUBSEvidenceLabGlobalElectricVehicleAdoptionConsumerSurvey.UBSEvidenceLabconductedanonlinesurveyamong9,605consumers,whoownprivatevehicleand/orintenttopurchaseavehicleinthefuture.Thesurveywasrunacrosssixcountries:Germany(1,593consumers),UK(1,566consumers),US(1,567consumers),SouthKorea(1,577consumers),Japan(1,802consumers)andChina(1,500consumers)inDec'2019andJan'2020.ThisreportleveragesthefollowingUBSEvidenceLabasset:GlobalElectricVehicleAdoptionConsumerSurvey.Datesofpreviousfieldworks:1Wave:Jul-Aug20162Wave:Jul-Aug20173Wave:Nov2018-Jan2019Pleasenote:ChinadatarecollectedinFebruary2020UBSEvidenceLabenteredintoapartnershipwithateamofengineersthatspecialisesinteardownbenchmarkingandaccuratecostingintheautomotiveindustry.TheprojectincludedateardownofaVWID.3.Thisincludedanoverviewofthevehicle,alongwithacomponentteardownoftheentirevehiclefocusedontheHVbatterysystem,theelectricaxlesystem,thevehiclecontrolunit,theDC-DCconverter,thermalmanagementsystem,HVharness,charginghardwareandservicesandADAScomponents.Detailsincludeafullcomponentcostbreakdown.0%5%10%15%20%25%30%35%01020304050607080IntelligentvehiclepartssuppliersavgBattery&batterymaterialsuppliersavgIntelligentvehiclepartssuppliersavgBattery&batterymaterialsuppliersavg2021EPE2021E-23EEPSgrowth(x)ChinaAutomotiveElectronicsSector15March202130ValuationMethodandRiskStatementWethinkriskstoChina'sautoelectronicssectorinclude:1)autoproductionfallingmorethanweexpect;2)heavypricingpressurefromOEMsonpartssuppliers;3)intelligentvehiclesmakingslowerheadwaythanweexpect,withsmartcockpitsandautonomousdrivingpenetrationgainsundershootingourforecasts;and4)overseascompetitorsaddingmorecapacityinChinaandtriggeringapricewar.WevalueDesaySVusingDCFmethodology.Wethinkmajorcompanyrisksinclude:1)slower-than-expectednewproductdevelopment;2)slower-than-expectedclientacquisition;3)clientscancellingordelayingorders;4)productrecallsduetoqualityissues.Wethinkmajorindustryrisksinclude:1)adeclineinautoproductionvolumeovershootingourestimates;2)significantpricepressureimposedbyautoOEMsontoautopartsmakers;3)foreigncompetitorsincreasingcapacityinChinaandtriggeringpricecompetition;4)risinglabourorraw-materialcosts;5)aslower-than-expectedriseintheall-LCDdashboardpenetrationratio;6)disappointingadoptionoflarge-screenCCPs.Wethinkmajormacroandregionalrisksinclude:1)adeclineinPVsalesvolumeduetoamacroeconomicslowdown;2)anescalationofthetradewarimpactingtariffsontheimport/exportofautoparts.WevalueJoysonElectronicsusingSOTPmethodology.Keyupsiderisksweidentifyinclude:1)better-than-expectedbusinessintegration;2)faster-than-expectedfulfilmentoforderbacklogs;and3)better-than-expectedorderinflow.Keydownsiderisksweidentifyinclude:1)slower-than-expectedbusinessintegration;2)competitivepressureleadingtopricecuts;3)productqualityrisks;4)slower-than-expectedfulfilmentoforderbacklogs;and5)weaker-than-expectedorderinflow.WevalueFuyaoGlassA/HusingDCFmethodology:Webelievemajordownsiderisksthecompanycouldfaceinclude:1)slower-thanexpectedincreasesinsalesofitshigh-valueproducts;2)clientscancellingorpostponingorders;and3)productrecallsduetoqualityissues.Webelievemajorsectorrisksthecompanycouldfaceinclude:1)decliningautopartsdemandcausedbyslowerpassengervehicleindustrygrowth;2)overseascompetitorsrampingupcapacityinChina,leadingtopricecompetition;3)highercostsoflabourorrawmaterials;and4)worse-than-expectedadoptionofall-glassroofsandHUDs.Webelievemajormacroandregionalrisksthecompanycouldfaceinclude:1)passengervehicleindustrycontractioncausedbymacroeconomicslowdown;and2)furthertradeconflictescalation,affectingimport/exporttariffsonautoparts.ChinaAutomotiveElectronicsSector15March202131RequiredDisclosuresThisreporthasbeenpreparedbyUBSSecuritiesCo.Limited,anaffiliateofUBSAG.UBSAG,itssubsidiaries,branchesandaffiliatesarereferredtohereinasUBS.ForinformationonthewaysinwhichUBSmanagesconflictsandmaintainsindependenceofitsresearchproduct;historicalperformanceinformation;certainadditionaldisclosuresconcerningUBSresearchrecommendations;andtermsandconditionsforcertainthirdpartydatausedinresearchreport,pleasevisithttps://www.ubs.com/disclosures.Thefigurescontainedinperformancechartsrefertothepast;pastperformanceisnotareliableindicatoroffutureresults.Additionalinformationwillbemadeavailableuponrequest.UBSSecuritiesCo.LimitedislicensedtoconductsecuritiesinvestmentconsultancybusinessesbytheChinaSecuritiesRegulatoryCommission.UBSactsormayactasprincipalinthedebtsecurities(orinrelatedderivatives)thatmaybethesubjectofthisreport.Thisrecommendationwasfinalizedon:15March202107:51AMGMT.UBShasdesignatedcertainResearchdepartmentmembersasDerivativesResearchAnalystswherethosedepartmentmemberspublishresearchprincipallyontheanalysisofthepriceormarketforaderivative,andprovideinformationreasonablysufficientuponwhichtobaseadecisiontoenterintoaderivativestransaction.WhereDerivativesResearchAnalystsco-authorresearchreportswithEquityResearchAnalystsorEconomists,theDerivativesResearchAnalystisresponsibleforthederivativesinvestmentviews,forecasts,and/orrecommendations.QuantitativeResearchReview:UBSpublishesaquantitativeassessmentofitsanalysts'responsestocertainquestionsaboutthelikelihoodofanoccurrenceofanumberofshorttermfactorsinaproductknownasthe'QuantitativeResearchReview'.Viewscontainedinthisassessmentonaparticularstockreflectonlytheviewsonthoseshorttermfactorswhichareadifferenttimeframetothe12-monthtimeframereflectedinanyequityratingsetoutinthisnote.Forthelatestresponses,pleaseclickhttps://neo.ubs.com/quantitative,orspeaktoyourUBSsalesrepresentativeforaccesstothereport.AnalystCertification:Eachresearchanalystprimarilyresponsibleforthecontentofthisresearchreport,inwholeorinpart,certifiesthatwithrespecttoeachsecurityorissuerthattheanalystcoveredinthisreport:(1)alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthosesecuritiesorissuersandwerepreparedinanindependentmanner,includingwithrespecttoUBS,and(2)nopartofhisorhercompensationwas,is,orwillbe,directlyorindirectly,relatedtothespecificrecommendationsorviewsexpressedbythatresearchanalystintheresearchreport.UBSInvestmentResearch:GlobalEquityRatingDefinitions12-MonthRatingDefinitionCoverage1IBServices2BuyFSRis>6%abovetheMRA.51%31%NeutralFSRisbetween-6%and6%oftheMRA.37%29%SellFSRis>6%belowtheMRA.12%18%Short-TermRatingDefinitionCoverage3IBServices4BuyStockpriceexpectedtorisewithinthreemonthsfromthetimetheratingwasassignedbecauseofaspecificcatalystorevent.<1%<1%SellStockpriceexpectedtofallwithinthreemonthsfromthetimetheratingwasassignedbecauseofaspecificcatalystorevent.<1%<1%Source:UBS.Ratingallocationsareasof31December2020.1:Percentageofcompaniesundercoveragegloballywithinthe12-monthratingcategory.2:Percentageofcompanieswithinthe12-monthratingcategoryforwhichinvestmentbanking(IB)serviceswereprovidedwithinthepast12months.3:PercentageofcompaniesundercoveragegloballywithintheShort-Termratingcategory.4:PercentageofcompanieswithintheShort-Termratingcategoryforwhichinvestmentbanking(IB)serviceswereprovidedwithinthepast12months.KEYDEFINITIONS:ForecastStockReturn(FSR)isdefinedasexpectedpercentagepriceappreciationplusgrossdividendyieldoverthenext12months.Insomecases,thisyieldmaybebasedonaccrueddividends.MarketReturnAssumption(MRA)isdefinedastheone-yearlocalmarketinterestrateplus5%(aproxyfor,andnotaforecastof,theequityriskpremium).UnderReview(UR)StocksmaybeflaggedasURbytheanalyst,indicatingthatthestock'spricetargetand/orratingaresubjecttopossiblechangeinthenearterm,usuallyinresponsetoaneventthatmayaffecttheinvestmentcaseorvaluation.Short-TermRatingsreflecttheexpectednear-term(uptothreemonths)performanceofthestockanddonotreflectanychangeinthefundamentalvieworinvestmentcase.EquityPriceTargetshaveaninvestmenthorizonof12months.ChinaAutomotiveElectronicsSector15March202132EXCEPTIONSANDSPECIALCASES:UKandEuropeanInvestmentFundratingsanddefinitionsare:Buy:Positiveonfactorssuchasstructure,management,performancerecord,discount;Neutral:Neutralonfactorssuchasstructure,management,performancerecord,discount;Sell:Negativeonfactorssuchasstructure,management,performancerecord,discount.CoreBandingExceptions(CBE):Exceptionstothestandard+/-6%bandsmaybegrantedbytheInvestmentReviewCommittee(IRC).FactorsconsideredbytheIRCincludethestock'svolatilityandthecreditspreadoftherespectivecompany'sdebt.Asaresult,stocksdeemedtobeveryhighorlowriskmaybesubjecttohigherorlowerbandsastheyrelatetotherating.Whensuchexceptionsapply,theywillbeidentifiedintheCompanyDisclosurestableintherelevantresearchpiece.Researchanalystscontributingtothisreportwhoareemployedbyanynon-USaffiliateofUBSSecuritiesLLCarenotregistered/qualifiedasresearchanalystswithFINRA.SuchanalystsmaynotbeassociatedpersonsofUBSSecuritiesLLCandthereforearenotsubjecttotheFINRArestrictionsoncommunicationswithasubjectcompany,publicappearances,andtradingsecuritiesheldbyaresearchanalystaccount.Thenameofeachaffiliateandanalystemployedbythataffiliatecontributingtothisreport,ifany,follows.UBSSecuritiesCo.Limited:NoraMin.CompanyDisclosuresCompanyNameReuters12-monthratingShort-termratingPricePricedateFuyaoGlass1,4,5,183606.HKBuyN/AHK$46.0512Mar2021FuyaoGlass-A1,4,5,18600660.SSBuyN/ARmb48.7412Mar2021HuizhouDesaySVAutomotive002920.SZNotRatedN/ARmb81.9212Mar2021LiAuto2,4,6,16LI.OBuyN/AUS$25.6912Mar2021NingboJoysonElectronic2,4,5600699.SSNeutralN/ARmb19.5312Mar2021Source:UBS.Allpricesasoflocalmarketclose.Ratingsinthistablearethemostcurrentpublishedratingspriortothisreport.Theymaybemorerecentthanthestockpricingdate1.UBSisactingasmanager/co-manager,underwriter,placementorsalesagentinregardtoanofferingofsecuritiesofthiscompany/entityoroneofitsaffiliates.2.UBSAG,itsaffiliatesorsubsidiarieshasactedasmanager/co-managerintheunderwritingorplacementofsecuritiesofthiscompany/entityoroneofitsaffiliateswithinthepast12months.4.Withinthepast12months,UBSAG,itsaffiliatesorsubsidiarieshasreceivedcompensationforinvestmentbankingservicesfromthiscompany/entityoroneofitsaffiliates.5.UBSAG,itsaffiliatesorsubsidiariesexpecttoreceiveorintendtoseekcompensationforinvestmentbankingservicesfromthiscompany/entitywithinthenextthreemonths.6.Thiscompany/entityis,orwithinthepast12monthshasbeen,aclientofUBSSecuritiesLLC,andinvestmentbankingservicesarebeing,orhavebeen,provided.16.UBSSecuritiesLLCmakesamarketinthesecuritiesand/orADRsofthiscompany.18.MarketcapitalisationiscalculatedbymultiplyingthecurrentsharepricebythesumofAandHshares.Unlessotherwiseindicated,pleaserefertotheValuationandRisksectionswithinthebodyofthisreport.Foracompletesetofdisclosurestatementsassociatedwiththecompaniesdiscussedinthisreport,includinginformationonvaluationandrisk,pleasecontactUBSSecuritiesLLC,1285AvenueofAmericas,NewYork,NY10019,USA,Attention:InvestmentResearch.ChinaAutomotiveElectronicsSector15March202133FuyaoGlass-A(Rmb)01-Jan-1801-Mar-1801-May-1801-Jul-1801-Sep-1801-Nov-1801-Jan-1901-Mar-1901-May-1901-Jul-1901-Sep-1901-Nov-1901-Jan-2001-Mar-2001-May-2001-Jul-2001-Sep-2001-Nov-2001-Jan-2101-Mar-210.020.040.060.080.0PriceTarget(Rmb)StockPrice(Rmb)BuySellDateStockPrice(Rmb)PriceTarget(Rmb)Rating2017-12-1227.4721.6Sell2018-08-2224.1720.0Sell2019-05-0723.722.0Sell2019-10-3121.2520.8Sell2020-03-0523.9327.0Buy2020-05-2020.2224.4Buy2020-09-2432.8942.5Buy2020-10-2934.7744.8Buy2021-01-1552.7269.5Buy2021-01-2563.7876.0BuySource:UBS;asof12Mar2021FuyaoGlass(HK$)01-Jan-1801-Mar-1801-May-1801-Jul-1801-Sep-1801-Nov-1801-Jan-1901-Mar-1901-May-1901-Jul-1901-Sep-1901-Nov-1901-Jan-2001-Mar-2001-May-2001-Jul-2001-Sep-2001-Nov-2001-Jan-2101-Mar-210.020.040.060.080.0PriceTarget(HK$)StockPrice(HK$)BuyNoRatingDateStockPrice(HK$)PriceTarget(HK$)Rating2017-12-1230.5-NoRating2020-02-2723.328.0Buy2020-05-1318.024.0Buy2020-09-2826.438.8Buy2020-10-2928.640.6Buy2021-01-1548.0566.4Buy2021-01-2561.272.4BuySource:UBS;asof12Mar2021ChinaAutomotiveElectronicsSector15March202134HuizhouDesaySVAutomotive(Rmb)01-Jan-1801-Mar-1801-May-1801-Jul-1801-Sep-1801-Nov-1801-Jan-1901-Mar-1901-May-1901-Jul-1901-Sep-1901-Nov-1901-Jan-2001-Mar-2001-May-2001-Jul-2001-Sep-2001-Nov-2001-Jan-2101-Mar-21050100150PriceTarget(Rmb)StockPrice(Rmb)NoRatingDateStockPrice(Rmb)PriceTarget(Rmb)Rating2017-12-12NaN-NoRatingSource:UBS;asof12Mar2021LiAuto(US$)01-Jan-1801-Mar-1801-May-1801-Jul-1801-Sep-1801-Nov-1801-Jan-1901-Mar-1901-May-1901-Jul-1901-Sep-1901-Nov-1901-Jan-2001-Mar-2001-May-2001-Jul-2001-Sep-2001-Nov-2001-Jan-2101-Mar-210.010.020.030.040.050.0PriceTarget(US$)StockPrice(US$)BuyNoRatingDateStockPrice(US$)PriceTarget(US$)Rating2017-12-12NaN-NoRating2020-08-2417.0919.5Buy2020-09-2515.821.3Buy2020-12-0234.75-NoRating2020-12-0932.0344.0BuySource:UBS;asof12Mar2021ChinaAutomotiveElectronicsSector15March202135NingboJoysonElectronic(Rmb)01-Jan-1801-Mar-1801-May-1801-Jul-1801-Sep-1801-Nov-1801-Jan-1901-Mar-1901-May-1901-Jul-1901-Sep-1901-Nov-1901-Jan-2001-Mar-2001-May-2001-Jul-2001-Sep-2001-Nov-2001-Jan-2101-Mar-210.010.020.030.040.0PriceTarget(Rmb)StockPrice(Rmb)BuyNeutralNoRatingDateStockPrice(Rmb)PriceTarget(Rmb)Rating2017-12-1224.4226.24Neutral2018-05-2918.8922.86Buy2018-08-2316.7121.18Buy2018-10-2715.6219.66Buy2019-03-0118.5521.21Buy2019-04-2420.7422.5Buy2019-08-2014.7120.5Buy2019-09-0515.9919.1Buy2019-10-2915.2418.72Buy2020-02-0319.5624.5Neutral2020-05-1819.4221.5Neutral2020-06-1522.2-NoRating2021-03-0920.121.5NeutralSource:UBS;asof12Mar2021ChinaAutomotiveElectronicsSector15March202136TheDisclaimerrelevanttoGlobalWealthManagementclientsfollowstheGlobalDisclaimer.GlobalDisclaimerThisdocumenthasbeenpreparedbyUBSSecuritiesCo.Limited,anaffiliateofUBSAG.UBSAG,itssubsidiaries,branchesandaffiliatesarereferredtohereinasUBS.ThisDocumentisprovidedsolelytorecipientswhoareexpresslyauthorizedbyUBStoreceiveit.IfyouarenotsoauthorizedyoumustimmediatelydestroytheDocument.GlobalResearchisprovidedtoourclientsthroughUBSNeo,andincertaininstances,UBS.comandanyothersystemordistributionmethodspecificallyidentifiedinoneormorecommunicationsdistributedthroughUBSNeoorUBS.com(eachasystem)asanapprovedmeansfordistributingGlobalResearch.ItmayalsobemadeavailablethroughthirdpartyvendorsanddistributedbyUBSand/orthirdpartiesviae-mailoralternativeelectronicmeans.ThelevelandtypesofservicesprovidedbyGlobalResearchtoaclientmayvarydependinguponvariousfactorssuchasaclient'sindividualpreferencesastothefrequencyandmannerofreceivingcommunications,aclient'sriskprofileandinvestmentfocusandperspective(e.g.,marketwide,sectorspecific,long-term,short-term,etc.),thesizeandscopeoftheoverallclientrelationshipwithUBSandlegalandregulatoryconstraints.AllGlobalResearchisavailableonUBSNeo.PleasecontactyourUBSsalesrepresentativeifyouwishtodiscussyouraccesstoUBSNeo.WhenyoureceiveGlobalResearchthroughasystem,youraccessand/oruseofsuchGlobalResearchissubjecttothisGlobalResearchDisclaimerandtotheUBSNeoPlatformUseAgreement(the"NeoTerms")togetherwithanyotherrelevanttermsofusegoverningtheapplicableSystem.WhenyoureceiveGlobalResearchviaathirdpartyvendor,e-mailorotherelectronicmeans,youagreethatuseshallbesubjecttothisGlobalResearchDisclaimer,theNeoTermsandwhereapplicabletheUBSInvestmentBanktermsofbusiness(https://www.ubs.com/global/en/investment-bank/regulatory.html)andtoUBS'sTermsofUse/Disclaimer(http://www.ubs.com/global/en/legalinfo2/disclaimer.html).Inaddition,youconsenttoUBSprocessingyourpersonaldataandusingcookiesinaccordancewithourPrivacyStatement(http://www.ubs.com/global/en/legalinfo2/privacy.html)andcookienotice(http://www.ubs.com/global/en/homepage/cookies/cookie-management.html).IfyoureceiveGlobalResearch,whetherthroughaSystemorbyanyothermeans,youagreethatyoushallnotcopy,revise,amend,createaderivativework,providetoanythirdparty,orinanywaycommerciallyexploitanyUBSresearchprovidedviaGlobalResearchorotherwise,andthatyoushallnotextractdatafromanyresearchorestimatesprovidedtoyouviaGlobalResearchorotherwise,withoutthepriorwrittenconsentofUBS.Incertaincircumstances(includingforexample,ifyouareanacademicoramemberofthemedia)youmayreceiveGlobalResearchotherwisethaninthecapacityofaclientofUBSandyouunderstandandagreethat(i)theGlob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clyorthroughasubscriptionservice,andsuchuseandinterpretationhavenotbeenreviewedbythethirdparty.InnocircumstancesmaythisdocumentoranyoftheInformation(includinganyforecast,value,indexorothercalculatedamount("Values"))beusedforanyofthefollowingpurposes:(i)valuationoraccountingpurposes;(ii)todeterminetheamountsdueorpayable,thepriceorthevalueofanyfinancialinstrumentorfinancialcontract;or(iii)tomeasuretheperformanceofanyfinancialinstrumentincluding,withoutlimitation,forthepurposeoftrackingthereturnorperformanceofanyValueorofdefiningtheassetallocationofportfolioorofcomputingperformancefees.ByreceivingthisdocumentandtheInformationyouwillbedeemedtorepresentandwarranttoUBSthatyouwillnotusethisdocumentoranyoftheInformationforanyoftheabovepurposesorotherwiserelyuponthisdocumentoranyoftheInformation.ChinaAutomotiveElectronicsSector15March202137UBShaspoliciesandprocedures,whichinclude,withoutlimitation,independencepoliciesandpermanentinformationbarriers,thatareintended,anduponwhichUBSrelies,tomanagepotentialconflictsofinterestandcontroltheflowofinformationwithindivisionsofUBSandamongitssubsidiaries,branchesandaffiliates.ForfurtherinformationonthewaysinwhichUBSmanagesconflictsandmaintainsindependenceofitsresearchproducts,historicalperformanceinformationandcertainadditionaldisclosuresconcerningUBSresearchrecommendations,pleasevisithttps://www.ubs.com/disclosures.Researchwillinitiate,updateandceasecoveragesolelyatthediscretionofUBSResearchManagement,whichwillalsohavesolediscretiononthetimingandfrequencyofanypublishedresearchproduct.Theanalysiscontainedinthisdocumentisbasedonnumerousassumptions.Allmaterialinformationinrelationtopublishedresearchreports,suchasvaluationmethodology,riskstatements,underlyingassumptions(includingsensitivityanalysisofthoseassumptions),ratingshistoryetc.asrequiredbytheMarketAbuseRegulation,canbefoundonUBSNeo.Differentassumptionscouldresultinmateriallydifferentresults.Theanalyst(s)responsibleforthepreparationofthisdocumentmayinteractwithtradingdeskpersonnel,salespersonnelandotherpartiesforthepurposeofgathering,applyingandinterpretingmarketinformation.UBSreliesoninformationbarrierstocontroltheflowofinformationcontainedinoneormoreareaswithinUBSintootherareas,units,groupsoraffiliatesofUBS.Thecompensationoftheanalystwhopreparedthisdocumentisdeterminedexclusivelybyresearchmanagementandseniormanagement(notincludinginvestmentbanking).Analystcompensationisnotbasedoninvestmentbankingrevenues;however,compensationmayrelatetotherevenuesofUBSand/oritsdivisionsasawhole,ofwhichinvestmentbanking,salesandtradingareapart,andUBS'ssubsidiaries,branchesandaffiliatesasawhole.ForfinancialinstrumentsadmittedtotradingonanEUregulatedmarket:UBSAG,itsaffiliatesorsubsidiaries(excludingUBSSecuritiesLLC)actsasamarketmakerorliquidityprovider(inaccordancewiththeinterpretationofthesetermsunderEnglishlawor,ifnotcarriedoutbyUBSintheUKthelawoftherelevantjurisdictioninwhichUBSdeterminesitcarriesouttheactivity)inthefinancialinstrumentsoftheissuersavethatwheretheactivityofliquidityprovideriscarriedoutinaccordancewiththedefinitiongiventoitbythelawsandregulationsofanyotherEUjurisdictions,suchinformationisseparatelydisclosedinthisdocument.Forfinancialinstrumentsadmittedtotradingonanon-EUregulatedmarket:UBSmayactasamarketmakersavethatwherethisactivityiscarriedoutintheUSinaccordancewiththedefinitiongiventoitbytherelevantlawsandregulations,suchactivitywillbespecificallydisclosedinthisdocument.UBSmayhaveissuedawarrantthevalueofwhichisbasedononeormoreofthefinancialinstrumentsreferredtointhedocument.UBSanditsaffiliatesandemployeesmayhavelongorshortpositions,tradeasprincipalandbuyandsellininstrumentsorderivativesidentifiedherein;suchtransactionsorpositionsmaybeinconsistentwiththeopinionsexpressedinthisdocument.Withinthepast12monthsUBSAG,itsaffiliatesorsubsidiariesmayhavereceivedorprovidedinvestmentservicesandactivitiesorancillaryservicesasperMiFIDIIwhichmayhavegivenrisetoapaymentorpromiseofapaymentinrelationtotheseservicesfromortothiscompany.WhereGlobalResearchrefersto"UBSEvidenceLabInside"orhasmadeuseofdataprovidedbyUBSEvidenceLabyouunderstandthatUBSEvidenceLabisaseparatedepartmenttoGlobalResearchandthatUBSEvidenceLabdoesnotprovideresearch,investmentrecommendationsoradvice.UBSEvidenceLabmayprovideservicestootherinternalandexternalclients.UnitedKingdom:ThismaterialisdistributedbyUBSAG,LondonBranchtopersonswhoareeligiblecounterpartiesorprofessionalclients.UBSAG,LondonBranchisauthorisedbythePrudentialRegulationAuthorityandsubjecttoregulationbytheFinancialConductAuthorityandlimitedregulationbythePrudentialRegulationAuthority.Europe:Exceptasotherwisespecifiedherein,thesematerialsaredistributedbyUBSEuropeSE,asubsidiaryofUBSAG,topersonswhoareeligiblecounterpartiesorprofessionalclients(asdetailedintheBundesanstaltfurFinanzdienstleistungsaufsicht(BaFin)RulesandaccordingtoMIFID)andareonlyavailabletosuchpersons.Theinformationdoesnotapplyto,andshouldnotberelieduponby,retailclients.UBSEuropeSEisauthorisedbytheEuropeanCentralBank(ECB)andregulatedbytheBaFinandtheECB.Germany:WhereananalystofUBSEuropeSEhascontributedtothisdocument,thedocumentisalsodeemedtohavebeenpreparedbyUBSEuropeSE.InallcasesitisdistributedbyUBSEuropeSEandUBSAG,LondonBranch.Luxembourg,theNetherlands,BelgiumandIreland:WhereananalystofUBSEuropeSEhascontributedtothisdocument,thedocumentisalsodeemedtohavebeenpreparedbyUBSEuropeSE.InallcasesitisdistributedbyUBSEuropeSEandUBSAG,LondonBranch.Turkey:DistributedbyUBSAG,LondonBranch.Noinformationinthisdocumentisprovidedforthepurposeofoffering,marketingandsalebyanymeansofanycapitalmarketinstrumentsandservicesintheRepublicofTurkey.Therefore,thisdocumentmaynotbeconsideredasanoffermadeortobemadetoresidentsoftheRepublicofTurkey.UBSAG,LondonBranchisnotlicensedbytheTurkishCapitalMarketBoardundertheprovisionsoftheCapitalMarketLaw(LawNo.6362).Accordingly,neitherthisdocumentnoranyotherofferingmaterialrelatedtotheinstruments/servicesmaybeutilizedinconnectionwithprovidinganycapitalmarketservicestopersonswithintheRepublicofTurkeywithoutthepriorapprovaloftheCapitalMarketBoard.However,accordingtoarticle15(d)(ii)oftheDecreeNo.32,thereisnorestrictiononthepurchaseorsaleofthesecuritiesabroadbyresidentsoftheRepublicofTurkey.Poland:DistributedbyUBSEuropeSE(spolkazograniczonaodpowiedzialnoscia)OddzialwPolsceregulatedbythePolishFinancialSupervisionAuthority.WhereananalystofUBSEuropeSE(spolkazograniczonaodpowiedzialnoscia)OddzialwPolscehascontributedtothisdocument,thedocumentisalsodeemedtohavebeenpreparedbyUBSEuropeSE(spolkazograniczonaodpowiedzialnoscia)OddzialwPolsce.Russia:PreparedanddistributedbyUBSBank(OOO)."ShouldnotbeconstruedasanindividualInvestmentRecommendationforthepurposeoftheRussianLaw"-FederalLaw#39-FZONTHESECURITIESMARKETArticles6.1-6.2.Switzerland:DistributedbyUBSAGtopersonswhoareinstitutionalinvestorsonly.UBSAGisregulatedbytheSwissFinancialMarketSupervisoryAuthority(FINMA).Italy:PreparedbyUBSEuropeSEanddistributedbyUBSEuropeSEandUBSEuropeSE,ItalyBranch.WhereananalystofUBSEuropeSE,ItalyBranchhascontributedtothisdocument,thedocumentisalsodeemedtohavebeenpreparedbyUBSEuropeSE,ItalyBranch.France:PreparedbyUBSEuropeSEanddistributedbyUBSEuropeSEandUBSEuropeSE,FranceBranch.WhereananalystofUBSEuropeSE,FranceBranchhascontributedtothisdocument,thedocumentisalsodeemedtohavebeenpreparedbyUBSEuropeSE,FranceBranch.Spain:PreparedbyUBSEuropeSEanddistributedbyUBSEuropeSEandUBSEuropeSE,SpainBranch.WhereananalystofUBSEuropeSE,SpainBranchhascontributedtothisdocument,thedocumentisalsodeemedtohavebeenpreparedbyUBSEuropeSE,SpainBranch.Sweden:PreparedbyUBSEuropeSEanddistributedbyUBSEuropeSEandUBSEuropeSE,SwedenBranch.WhereananalystofUBSEuropeSE,SwedenBranchhascontributedtothisdocument,thedocumentisalsodeemedtohavebeenpreparedbyUBSEuropeSE,SwedenBranch.SouthAfrica:DistributedbyUBSSouthAfrica(Pty)Limited(RegistrationNo.1995/011140/07),anauthoriseduseroftheJSEandanauthorisedFinancialServicesProvider(FSP7328).SaudiArabia:ThisdocumenthasbeenissuedbyUBSAG(and/oranyofitssubsidiaries,branchesoraffiliates),apubliccompanylimitedbyshares,incorporatedinSwitzerlandwithitsregisteredofficesatAeschenvorstadt1,CH-4051BaselandBahnhofstrasse45,CH-8001Zurich.ThispublicationhasbeenapprovedbyUBSSaudiArabia(asubsidiaryofUBSAG),aSaudiclosedjointstockcompanyincorporatedintheKingdomofSaudiArabiaundercommercialregisternumber1010257812havingitsregisteredofficeatTatweerTowers,P.O.Box75724,Riyadh11588,KingdomofSaudiArabia.UBSSaudiArabiaisauthorizedandregulatedbytheCapitalMarketAuthoritytoconductsecuritiesbusinessunderlicensenumber08113-37.UAE/Dubai:TheinformationdistributedbyUBSAGDubaiBranchisonlyintendedforProfessionalClientsand/orMarketCounterparties,asclassifiedundertheDFSArulebook.Nootherpersonshouldactuponthismaterial/communication.TheinformationisnotforfurtherdistributionwithintheUnitedArabEmirates.UBSAGDubaiBranchisregulatedbytheDFSAintheDIFC.UBSisnotlicensedtoprovidebankingservicesintheUAEbytheCentralBankoftheUAE,norisitlicensedbytheUAESecuritiesandCommoditiesAuthority.Israel:ThisMaterialisdistributedbyUBSAG,LondonBranch.UBSSecuritiesIsraelLtdisalicensedInvestmentMarketerthatissupervisedbytheIsraelSecuritiesAuthority(ISA).UBSAG,LondonBranchanditsaffiliatesincorporatedoutsideIsraelarenotlicensedundertheIsraeliAdvisoryLaw.UBSmayengageamongothersinissuanceofFinancialAssetsorindistributionofFinancialAssetsofotherissuersforfeesorotherbenefits.UBSAG,LondonBranchanditsaffiliatesmayprefervariousFinancialAssetstowhichtheyhaveormayhaveanAffiliation(assuchtermisdefinedundertheIsraeliAdvisoryLaw).NothinginthisMaterialshouldbeconsideredasinvestmentadviceundertheIsraeliAdvisoryLaw.ThisMaterialisbeingissuedonlytoand/orisdirectedonlyatpersonswhoareEligibleClientswithinthemeaningoftheIsraeliAdvisoryLaw,andthisMaterialmustnotbefurnishedto,reliedonoracteduponbyanyotherpersons.UnitedStates:DistributedtoUSpersonsbyeitherUBSSecuritiesLLCorbyUBSFinancialServicesInc.,subsidiariesofUBSAG;orbyagroup,subsidiaryoraffiliateofUBSAGthatisnotregisteredasaUSbroker-dealer(a‘non-USaffiliate’)tomajorUSinstitutionalinvestorsonly.UBSSecuritiesLLCorUBSFinancialServicesInc.acceptsresponsibilityforthecontentofareportpreparedbyanothernon-USaffiliatewhendistributedtoUSpersonsbyUBSSecuritiesLLCorUBSFinancialServicesInc.AlltransactionsbyaUSpersoninthesecuritiesmentionedinthisreportmustbeeffectedthroughUBSSecuritiesLLCorUBSFinancialServicesInc.,andnotthroughanon-USaffiliate.UBSSecuritiesLLCisnotactingasamunicipaladvisortoanymunicipalentityorobligatedpersonwithinthemeaningofSection15BoftheSecuritiesExchangeAct(the"MunicipalAdvisorRule"),andtheopinionsorviewscontainedhereinarenotintendedtobe,anddonotconstitute,advicewithinthemeaningoftheMunicipalAdvisorRule.Canada:DistributedbyUBSSecuritiesCanadaInc.,aregisteredinvestmentdealerinCanadaandaMember-CanadianInvestorProtectionFund,orbyanotheraffiliateofUBSAGthatisregisteredtoconductbusinessinCanadaorisotherwiseexemptfromregistration.Brazil:Exceptasotherwisespecifiedherein,thismaterialispreparedbyUBSBrasilCCTVMS.A.¹topersonswhoareeligibleinvestorsresidinginBrazil,whichareconsideredtobeInvestidoresProfissionais,asdesignatedbytheapplicableregulation,mainlytheCVMInstructionNo.539fromthe13thofNovember2013(determinesthedutytoverifythesuitabilityofproducts,servicesandtransactionswithregardstotheclient´sprofile).¹UBSBrasilCCTVMS.A.isasubsidiaryofUBSBBServicosdeAssessoriaFinanceiraeParticipacoesS.A.(“UBSBB”).UBSBBisanassociationbetweenUBSAGandBancodoBrasil,ofwhichUBSAGisthemajorityowner.Mexico:ThisreporthasbeendistributedandpreparedbyUBSCasadeBolsa,S.A.deC.V.,asubsidiaryofUBSAG.Thisdocumentisintendedfordistributiontoinstitutionalorsophisticatedinvestorsonly.Researchreportsonlyreflecttheviewsoftheanalystsresponsibleforthereport.AnalystsdonotreceiveanycompensationfromthepersonsorentitiesdifferentfromUBSCasadeBolsa,S.A.deC.V.,ordifferentfromentitiesbelongingtothesamefinancialgrouporbusinessgroupofsuchHongKong:DistributedbyUBSSecuritiesAsiaLimited.PleasecontactlocallicensedpersonsofUBSSecuritiesAsiaLimitedinrespectofanymattersarisingfrom,orinconnectionwith,theanalysisordocumentSingapore:DistributedbyUBSSecuritiesPte.Ltd.[MCI(P)003/08/2020andCo.Reg.No.:198500648C]orUBSAG,SingaporeBranch.PleasecontactUBSSecuritiesPte.Ltd.,anexemptfinancialadviserundertheSingaporeFinancialAdvisersAct(Cap.110);orUBSAG,SingaporeBranch,anexemptfinancialadviserundertheSingaporeFinancialAdvisersAct(Cap.110)andawholesalebanklicensedundertheSingaporeBankingAct(Cap.19)regulatedbytheMonetaryAuthorityofChinaAutomotiveElectronicsSector15March202138Singapore,inrespectofanymattersarisingfrom,orinconnectionwith,theanalysisordocument.TherecipientsofthisdocumentrepresentandwarrantthattheyareaccreditedandinstitutionalinvestorsasdefinedintheSecuritiesandFuturesAct(Cap.289).Japan:DistributedbyUBSSecuritiesJapanCo.,Ltd.toprofessionalinvestors(exceptasotherwisepermitted).WherethisreporthasbeenpreparedbyUBSSecuritiesJapanCo.,Ltd.,UBSSecuritiesJapanCo.,Ltd.istheauthor,publisheranddistributorofthereport.DistributedbyUBSAG,TokyoBranchtoProfessionalInvestors(exceptasotherwisepermitted)inrelationtoforeignexchangeandotherbankingbusinesseswhenrelevant.Australia:ClientsofUBSAG:DistributedbyUBSAG(ABN47088129613andholderofAustralianFinancialServicesLicenseNo.231087).ClientsofUBSSecuritiesAustraliaLtd:DistributedbyUBSSecuritiesAustraliaLtd(ABN62008586481andholderofAustralianFinancialServicesLicenseNo.231098).ThisDocumentcontainsgeneralinformationand/orgeneraladviceonlyanddoesnotconstitutepersonalfinancialproductadvice.Assuch,theInformationinthisdocumenthasbeenpreparedwithouttakingintoaccountanyinvestor’sobjectives,financialsituationorneeds,andinvestorsshould,beforeactingontheInformation,considertheappropriatenessoftheInformation,havingregardtotheirobjectives,financialsituationandneeds.IftheInformationcontainedinthisdocumentrelatestotheacquisition,orpotentialacquisitionofaparticularfinancialproductbya‘Retail’clientasdefinedbysection761GoftheCorporationsAct2001whereaProductDisclosureStatementwouldberequired,theretailclientshouldobtainandconsidertheProductDisclosureStatementrelatingtotheproductbeforemakinganydecisionaboutwhethertoacquiretheproduct.NewZealand:DistributedbyUBSNewZealandLtd.UBSNewZealandLtdisnotaregisteredbankinNewZealand.YouarebeingprovidedwiththisUBSpublicationormaterialbecauseyouhaveindicatedtoUBSthatyouarea“wholesaleclient”withinthemeaningofsection5CoftheFinancialAdvisersAct2008ofNewZealand(PermittedClient).ThispublicationormaterialisnotintendedforclientswhoarenotPermittedClients(non-permittedClients).Ifyouareanon-permittedClientyoumustnotrelyonthispublicationormaterial.Ifdespitethiswarningyouneverthelessrelyonthispublicationormaterial,youhereby(i)acknowledgethatyoumaynotrelyonthecontentofthispublicationormaterialandthatanyrecommendationsoropinionsinsuchthispublicationormaterialarenotmadeorprovidedtoyou,and(ii)tothemaximumextentpermittedbylaw(a)indemnifyUBSanditsassociatesorrelatedentities(andtheirrespectiveDirectors,officers,agentsandAdvisors)(eacha‘RelevantPerson’)foranyloss,damage,liabilityorclaimanyofthemmayincurorsufferasaresultof,orinconnectionwith,yourunauthorisedrelianceonthispublicationormaterialand(b)waiveanyrightsorremediesyoumayhaveagainstanyRelevantPersonfor(orinrespectof)anyloss,damage,liabilityorclaimyoumayincurorsufferasaresultof,orinconnectionwith,yourunauthorisedrelianceonthispublicationormaterial.Korea:DistributedinKoreabyUBSSecuritiesPte.Ltd.,SeoulBranch.ThisreportmayhavebeeneditedorcontributedtofromtimetotimebyaffiliatesofUBSSecuritiesPte.Ltd.,SeoulBranch.Thismaterialisintendedforprofessional/institutionalclientsonlyandnotfordistributiontoanyretailclients.Malaysia:ThismaterialisauthorizedtobedistributedinMalaysiabyUBSSecuritiesMalaysiaSdn.Bhd(CapitalMarketsServicesLicenseNo.:CMSL/A0063/2007).Thismaterialisintendedforprofessional/institutionalclientsonlyandnotfordistributiontoanyretailclients.India:DistributedbyUBSSecuritiesIndiaPrivateLtd.(CorporateIdentityNumberU67120MH1996PTC097299)2/F,2NorthAvenue,MakerMaxity,BandraKurlaComplex,Bandra(East),Mumbai(India)400051.Phone:+912261556000.ItprovidesbrokerageservicesbearingSEBIRegistrationNumber:INZ000259830;merchantbankingservicesbearingSEBIRegistrationNumber:INM000010809andResearchAnalystservicesbearingSEBIRegistrationNumber:INH000001204.UBSAG,itsaffiliatesorsubsidiariesmayhavedebtholdingsorpositionsinthesubjectIndiancompany/companies.Withinthepast12months,UBSAG,itsaffiliatesorsubsidiariesmayhavereceivedcompensationfornon-investmentbankingsecurities-relatedservicesand/ornon-securitiesservicesfromthesubjectIndiancompany/companies.Thesubjectcompany/companiesmayhavebeenaclient/clientsofUBSAG,itsaffiliatesorsubsidiariesduringthe12monthsprecedingthedateofdistributionoftheresearchreportwithrespecttoinvestmentbankingand/ornon-investmentbankingsecurities-relatedservicesand/ornon-securitiesservices.Withregardtoinformationonassociates,pleaserefertotheAnnualReportat:http://www.ubs.com/global/en/about_ubs/investor_relations/annualreporting.htmlTaiwan:Exceptasotherwisespecifiedherein,thismaterialmaynotbedistributedinTaiwan.Informationandmaterialonsecurities/instrumentsthataretradedinaTaiwanorganizedexchangeisdeemedtobeissuedanddistributedbyUBSSecuritiesPte.LTD.,TaipeiBranch,whichislicensedandregulatedbyTaiwanFinancialSupervisoryCommission.Saveforsecurities/instrumentsthataretradedinaTaiwanorganizedexchange,thismaterialshouldnotconstitute"recommendation"toclientsorrecipientsinTaiwanforthecoveredcompaniesoranycompaniesmentionedinthisdocument.NoportionofthedocumentmaybereproducedorquotedbythepressoranyotherpersonwithoutauthorisationfromUBS.Indonesia:ThisreportisbeingdistributedbyPTUBSSekuritasIndonesiaandisdeliveredbyitslicensedemployee(s),includingmarketing/salesperson,toitsclient.PTUBSSekuritasIndonesia,havingitsregisteredofficeatSequisTowerLevel22unit22-1,Jl.Jend.Sudirman,kav.71,SCBDlot11B,Jakarta12190,Indonesia,isasubsidiarycompanyofUBSAGandlicensedunderCapitalMarketLawno.8year1995,aholderofbroker-dealerandunderwriterlicensesissuedbytheCapitalMarketandFinancialInstitutionSupervisoryAgency(nowOtoritasJasaKeuangan/OJK).PTUBSSekuritasIndonesiaisalsoamemberofIndonesiaStockExchangeandsupervisedbyOtoritasJasaKeuangan(OJK).NeitherthisreportnoranycopyhereofmaybedistributedinIndonesiaortoanyIndonesiancitizensexceptincompliancewithapplicableIndonesiancapitalmarketlawsandregulations.ThisreportisnotanofferofsecuritiesinIndonesiaandmaynotbedistributedwithintheterritoryoftheRepublicofIndonesiaortoIndonesiancitizensincircumstancewhichconstitutesanofferingwithinthemeaningofIndonesiancapitalmarketlawsandregulations.ThedisclosurescontainedinresearchdocumentsproducedbyUBSAG,LondonBranchorUBSEuropeSEshallbegovernedbyandconstruedinaccordancewithEnglishlaw.UBSspecificallyprohibitstheredistributionofthisdocumentinwholeorinpartwithoutthewrittenpermissionofUBSandinanyeventUBSacceptsnoliabilitywhatsoeverforanyredistributionofthisdocumentoritscontentsortheactionsofthirdpartiesinthisrespect.Imagesmaydepictobjectsorelementsthatareprotectedbythirdpartycopyright,trademarksandotherintellectualpropertyrights.©UBS2021.ThekeysymbolandUBSareamongtheregisteredandunregisteredtrademarksofUBS.Allrightsreserved.GlobalWealthManagementDisclaimerYoureceivethisdocumentinyourcapacityasaclientofUBSGlobalWealthManagement.ThispublicationhasbeendistributedtoyoubyUBSSwitzerlandAG(regulatedbyFINMAinSwitzerland)oritsaffiliates("UBS")withwhomyouhaveabankingrelationshipwith.Thefullnameofthedistributingaffiliateanditscompetentauthoritycanbefoundinthecountry-specificdisclaimerattheendofthisdocument.Thedateandtimeofthefirstdisseminationofthispublicationisthesameasthedateandtimeofitspublication.Riskinformation:Youagreethatyoushallnotcopy,revise,amend,createaderivativework,providetoanythirdparty,orinanywaycommerciallyexploitanyUBSresearch,andthatyoushallnotextractdatafromanyresearchorestimates,withoutthepriorwrittenconsentofUBS.Thisdocumentisfordistributiononlyasmaybepermittedbylaw.Itisnotdirectedto,orintendedfordistributiontooruseby,anypersonorentitywhoisacitizenorresidentoforlocatedinanylocality,state,countryorotherjurisdictionwheresuchdistribution,publication,availabilityorusewouldbecontrarytolaworregulationorwouldsubjectUBStoanyregistrationorlicensingrequirementwithinsuchjurisdiction.Thisdocumentisforyourinformationonly;itisnotanadvertisementnorisitasolicitationoranoffertobuyorsellanyfinancialinstrumentsortoparticipateinanyparticulartradingstrategy.Nothinginthisdocumentconstitutesarepresentationthatanyinvestmentstrategyorrecommendationissuitableorappropriatetoaninvestor’sindividualcircumstancesorotherwiseconstitutesapersonalrecommendation.Byprovidingthisdocument,noneofUBSoritsrepresentativeshasanyresponsibilityorauthoritytoprovideorhaveprovidedinvestmentadviceinafiduciarycapacityorotherwise.Investmentsinvolverisks,andinvestorsshouldexerciseprudenceandtheirownjudgmentinmakingtheirinvestmentdecisions.NoneofUBSoritsrepresentativesissuggestingthattherecipientoranyotherpersontakeaspecificcourseofactionoranyactionatall.Byreceivingthisdocument,therecipientacknowledgesandagreeswiththeintendedpurposedescribedaboveandfurtherdisclaimsanyexpectationorbeliefthattheinformationconstitutesinvestmentadvicetotherecipientorotherwisepurportstomeettheinvestmentobjectivesoftherecipient.Thefinancialinstrumentsdescribedinthedocumentmaynotbeeligibleforsaleinalljurisdictionsortocertaincategoriesofinvestors.Options,derivativeproductsandfuturesarenotsuitableforallinvestors,andtradingintheseinstrumentsisconsideredrisky.Mortgageandasset-backedsecuritiesmayinvolveahighdegreeofriskandmaybehighlyvolatileinresponsetofluctuationsininterestratesorothermarketconditions.Foreigncurrencyratesofexchangemayadverselyaffectthevalue,priceorincomeofanysecurityorrelatedinstrumentreferredtointhedocument.Forinvestmentadvice,tradeexecutionorotherenquiries,clientsshouldcontacttheirlocalsalesrepresentative.Thevalueofanyinvestmentorincomemaygodownaswellasup,andinvestorsmaynotgetbackthefull(orany)amountinvested.Pastperformanceisnotnecessarilyaguidetofutureperformance.NeitherUBSnoranyofitsdirectors,employeesoragentsacceptsanyliabilityforanyloss(includinginvestmentloss)ordamagearisingoutoftheuseofalloranyoftheinformation(asdefinedbelow).Priortomakinganyinvestmentorfinancialdecisions,anyrecipientofthisdocumentortheinformationshouldtakestepstounderstandtheriskandreturnoftheinvestmentandseekindividualizedadvicefromhisorherpersonalfinancial,legal,taxandotherprofessionaladvisorsthattakesintoaccountalltheparticularfactsandcircumstancesofhisorherinvestmentobjectives.ChinaAutomotiveElectronicsSector15March202139Anypricesstatedinthisdocumentareforinformationpurposesonlyanddonotrepresentvaluationsforindividualsecuritiesorotherfinancialinstruments.Thereisnorepresentationthatanytransactioncanorcouldhavebeeneffectedatthoseprices,andanypricesdonotnecessarilyreflectUBS'sinternalbooksandrecordsortheoreticalmodel-basedvaluationsandmaybebasedoncertainassumptions.DifferentassumptionsbyUBSoranyothersourcemayyieldsubstantiallydifferentresults.Norepresentationorwarranty,eitherexpressedorimplied,isprovidedinrelationtotheaccuracy,completenessorreliabilityoftheinformationcontainedinanymaterialstowhichthisdocumentrelates(the"Information"),exceptwithrespecttoInformationconcerningUBS.TheInformationisnotintendedtobeacompletestatementorsummaryofthesecurities,marketsordevelopmentsreferredtointhedocument.UBSdoesnotundertaketoupdateorkeepcurrenttheInformation.Anyopinionsexpressedinthisdocumentmaychangewithoutnoticeandmaydifferorbecontrarytoopinionsexpressedbyotherbusinessareasorgroups,personnelorotherrepresentativeofUBS.AnystatementscontainedinthisreportattributedtoathirdpartyrepresentUBS'sinterpretationofthedata,informationand/oropinionsprovidedbythatthirdpartyeitherpubliclyorthroughasubscriptionservice,andsuchuseandinterpretationhavenotbeenreviewedbythethirdparty.InnocircumstancesmaythisdocumentoranyoftheInformation(includinganyforecast,value,indexorothercalculatedamount("Values"))beusedforanyofthefollowingpurposes:(i)valuationoraccountingpurposes;(ii)todeterminetheamountsdueorpayable,thepriceorthevalueofanyfinancialinstrumentorfinancialcontract;or(iii)tomeasuretheperformanceofanyfinancialinstrumentincluding,withoutlimitation,forthepurposeoftrackingthereturnorperformanceofanyValueorofdefiningtheassetallocationofportfolioorofcomputingperformancefees.ByreceivingthisdocumentandtheInformationyouwillbedeemedtorepresentandwarranttoUBSthatyouwillnotusethisdocumentoranyoftheInformationforanyoftheabovepurposesorotherwiserelyuponthisdocumentoranyoftheInformation.UBShaspoliciesandprocedures,whichinclude,withoutlimitation,independencepoliciesandpermanentinformationbarriers,thatareintended,anduponwhichUBSrelies,tomanagepotentialconflictsofinterestandcontroltheflowofinformationwithindivisionsofUBS(includingbetweenGlobalWealthManagementandUBSGlobalResearch)andamongitssubsidiaries,branchesandaffiliates.ForfurtherinformationonthewaysinwhichUBSmanagesconflictsandmaintainsindependenceofitsresearchproducts,historicalperformanceinformationandcertainadditionaldisclosuresconcerningUBSresearchrecommendations,pleasevisithttps://www.ubs.com/disclosures.Researchwillinitiate,updateandceasecoveragesolelyatthediscretionofresearchmanagement,whichwillalsohavesolediscretiononthetimingandfrequencyofanypublishedresearchproduct.Theanalysiscontainedinthisdocumentisbasedonnumerousassumptions.Differentassumptionscouldresultinmateriallydifferentresults.Theanalyst(s)responsibleforthepreparationofthisdocumentmayinteractwithtradingdeskpersonnel,salespersonnelandotherpartiesforthepurposeofgathering,applyingandinterpretingmarketinformation.UBSreliesoninformationbarrierstocontroltheflowofinformationcontainedinoneormoreareaswithinUBSintootherareas,units,groupsoraffiliatesofUBS.Thecompensationoftheanalystwhopreparedthisdocumentisdeterminedexclusivelybyresearchmanagementandseniormanagement(notincludinginvestmentbanking).Analystcompensationisnotbasedoninvestmentbankingrevenues;however,compensationmayrelatetotherevenuesofUBSand/oritsdivisionsasawhole,ofwhichinvestmentbanking,salesandtradingareapart,andUBS'ssubsidiaries,branchesandaffiliatesasawhole.ForfinancialinstrumentsadmittedtotradingonanEUregulatedmarket:UBSAG,itsaffiliatesorsubsidiaries(excludingUBSSecuritiesLLC)actsasamarketmakerorliquidityprovider(inaccordancewiththeinterpretationofthesetermsintheUK)inthefinancialinstrumentsoftheissuersavethatwheretheactivityofliquidityprovideriscarriedoutinaccordancewiththedefinitiongiventoitbythelawsandregulationsofanyotherEUjurisdictions,suchinformationisseparatelydisclosedinthisdocument.Forfinancialinstrumentsadmittedtotradingonanon-EUregulatedmarket:UBSmayactasamarketmakersavethatwherethisactivityiscarriedoutintheUSinaccordancewiththedefinitiongiventoitbytherelevantlawsandregulations,suchactivitywillbespecificallydisclosedinthisdocument.UBSmayhaveissuedawarrantthevalueofwhichisbasedononeormoreofthefinancialinstrumentsreferredtointhedocument.UBSanditsaffiliatesandemployeesmayhavelongorshortpositions,tradeasprincipalandbuyandsellininstrumentsorderivativesidentifiedherein;suchtransactionsorpositionsmaybeinconsistentwiththeopinionsexpressedinthisdocument.Optionsandfuturesarenotsuitableforallinvestors,andtradingintheseinstrumentsisconsideredriskyandmaybeappropriateonlyforsophisticatedinvestors.Priortobuyingorsellinganoption,andforthecompleterisksrelatingtooptions,youmustreceiveacopyof"CharacteristicsandRisksofStandardizedOptions".Youmayreadthedocumentathttps://www.theocc.com/about/publications/character-risks.jsporaskyourfinancialadvisorforacopy.Investinginstructuredinvestmentsinvolvessignificantrisks.Foradetaileddiscussionoftherisksinvolvedininvestinginanyparticularstructuredinvestment,youmustreadtherelevantofferingmaterialsforthatinvestment.Structuredinvestmentsareunsecuredobligationsofaparticularissuerwithreturnslinkedtotheperformanceofanunderlyingasset.Dependingonthetermsoftheinvestment,investorscouldloseallorasubstantialportionoftheirinvestmentbasedontheperformanceoftheunderlyingasset.Investorscouldalsolosetheirentireinvestmentiftheissuerbecomesinsolvent.UBSFinancialServicesInc.doesnotguaranteeinanywaytheobligationsorthefinancialconditionofanyissuerortheaccuracyofanyfinancialinformationprovidedbyanyissuer.Structuredinvestmentsarenottraditionalinvestmentsandinvestinginastructuredinvestmentisnotequivalenttoinvestingdirectlyintheunderlyingasset.Structuredinvestmentsmayhavelimitedornoliquidity,andinvestorsshouldbepreparedtoholdtheirinvestmenttomaturity.Thereturnofstructuredinvestmentsmaybelimitedbyamaximumgain,participationrateorotherfeature.Structuredinvestmentsmayincludecallfeaturesand,ifastructuredinvestmentiscalledearly,investorswouldnotearnanyfurtherreturnandmaynotbeabletoreinvestinsimilarinvestmentswithsimilarterms.Structuredinvestmentsincludecostsandfeeswhicharegenerallyembeddedinthepriceoftheinvestment.Thetaxtreatmentofastructuredinvestmentmaybecomplexandmaydifferfromadirectinvestmentintheunderlyingasset.UBSFinancialServicesInc.anditsemployeesdonotprovidetaxadvice.Investorsshouldconsulttheirowntaxadvisorabouttheirowntaxsituationbeforeinvestinginanysecurities.ImportantInformationAboutSustainableInvestingStrategies:Sustainableinvestingstrategiesaimtoconsiderandincorporateenvironmental,socialandgovernance(ESG)factorsintoinvestmentprocessandportfolioconstruction.StrategiesacrossgeographiesandstylesapproachESGanalysisandincorporatethefindingsinavarietyofways.IncorporatingESGfactorsorSustainableInvestingconsiderationsmayinhibittheportfoliomanager’sabilitytoparticipateincertaininvestmentopportunitiesthatotherwisewouldbeconsistentwithitsinvestmentobjectiveandotherprincipalinvestmentstrategies.ThereturnsonaportfolioconsistingprimarilyofsustainableinvestmentsmaybelowerorhigherthanportfolioswhereESGfactors,exclusions,orothersustainabilityissuesarenotconsideredbytheportfoliomanager,andtheinvestmentopportunitiesavailabletosuchportfoliosmaydiffer.CompaniesmaynotnecessarilymeethighperformancestandardsonallaspectsofESGorsustainableinvestingissues;thereisalsonoguaranteethatanycompanywillmeetexpectationsinconnectionwithcorporateresponsibility,sustainability,and/orimpactperformance.Withinthepast12monthsUBSSwitzerlandAG,itsaffiliatesorsubsidiariesmayhavereceivedorprovidedinvestmentservicesandactivitiesorancillaryservicesasperMiFIDIIwhichmayhavegivenrisetoapaymentorpromiseofapaymentinrelationtotheseservicesfromortothiscompany.IfyourequiredetailedinformationondisclosuresofinterestorconflictofinterestasrequiredbyMarketAbuseRegulationpleasecontactthemailboxMAR_disclosures_twopager@ubs.com.Pleasenotethate-mailcommunicationisunsecured.ExternalAssetManagers/ExternalFinancialConsultants:IncasethisresearchorpublicationisprovidedtoanExternalAssetManageroranExternalFinancialConsultant,UBSexpresslyprohibitsthatitisredistributedbytheExternalAssetManagerortheExternalFinancialConsultantandismadeavailabletotheirclientsand/orthirdparties.Austria:ThispublicationisnotintendedtoconstituteapublicofferunderAustrianlaw.ItisdistributedonlyforinformationpurposestoclientsofUBSEuropeSE,NiederlassungÖsterreich,withplaceofbusinessatWächtergasse1,A-1010Wien.UBSEuropeSE,NiederlassungÖsterreichissubjecttothejointsupervisionoftheEuropeanCentralBank("ECB"),theGermanCentralBank(DeutscheBundesbank),theGermanFederalFinancialServicesSupervisoryAuthority(BundesanstaltfürFinanzdienstleistungsaufsicht),aswellasoftheAustrianFinancialMarketAuthority(Finanzmarktaufsicht,FMA),towhichthispublicationhasnotbeensubmittedforapproval.UBSEuropeSEisacreditinstitutionconstitutedunderGermanlawintheformofaSocietasEuropaea,dulyauthorizedbytheECB.Bahrain:UBSisaSwissbanknotlicensed,supervisedorregulatedinBahrainbytheCentralBankofBahrainanddoesnotundertakebankingorinvestmentbusinessactivitiesinBahrain.Therefore,clientshavenoprotectionunderlocalbankingandinvestmentserviceslawsandregulations.Brazil:ThisreportisonlyintendedforBrazilianresidentswhoaredirectlypurchasingorsellingsecuritiesintheBrazilcapitalmarketthroughalocalauthorizedinstitution.Canada:Theinformationcontainedhereinisnot,andundernocircumstancesistobeconstruedas,aprospectus,anadvertisement,apublicoffering,anoffertosellsecuritiesdescribedherein,solicitationofanoffertobuysecuritiesdescribedherein,inCanadaoranyprovinceorterritorythereof.AnyofferorsaleofthesecuritiesdescribedhereininCanadawillbemadeonlyunderanexemptionfromtherequirementstofileaprospectuswiththerelevantCanadiansecuritiesregulatorsandonlybyadealerproperlyregisteredunderapplicablesecuritieslawsor,alternatively,pursuanttoanexemptionfromthedealerregistrationrequirementintherelevantprovinceorterritoryofCanadainwhichsuchofferorsaleismade.UndernocircumstancesistheinformationcontainedhereintobeconstruedasinvestmentadviceinanyprovinceorterritoryofCanadaandisnottailoredtotheneedsoftherecipient.Totheextentthattheinformationcontainedhereinreferencessecuritiesofanissuerincorporated,formedorcreatedunderthelawsofCanadaoraprovinceorterritoryofCanada,anytradesinsuchsecuritiesmustbeconductedthroughadealerregisteredinCanadaor,alternatively,pursuanttoadealerChinaAutomotiveElectronicsSector15March202140registrationexemption.NosecuritiescommissionorsimilarregulatoryauthorityinCanadahasreviewedorinanywaypasseduponthesematerials,theinformationcontainedhereinorthemeritsofthesecuritiesdescribedhereinandanyrepresentationtothecontraryisanoffence.InCanada,thispublicationisdistributedbyUBSInvestmentManagementCanadaInc.China:ThisresearchreportisneitherintendedtobedistributedtoPRCinvestorsnortoprovidesecuritiesinvestmentconsultancyserviceswithintheterritoryofPRC.CzechRepublic:UBSisnotalicensedbankintheCzechRepublicandthusisnotallowedtoprovideregulatedbankingorinvestmentservicesintheCzechRepublic.Thiscommunicationand/ormaterialisdistributedformarketingpurposesandconstitutesa"CommercialMessage"underthelawsofCzechRepublicinrelationtobankingand/orinvestmentservices.PleasenotifyUBSifyoudonotwishtoreceiveanyfurthercorrespondence.Denmark:ThispublicationisnotintendedtoconstituteapublicofferunderDanishlaw.ItisdistributedonlyforinformationpurposestoclientsofUBSEuropeSE,DenmarkBranch,filialafUBSEuropeSE,withplaceofbusinessatSanktAnnaePlads13,1250Copenhagen,Denmark,registeredwiththeDanishCommerceandCompaniesAgency,underNo.38172433.UBSEuropeSE,DenmarkBranch,filialafUBSEuropeSEissubjecttothejointsupervisionoftheEuropeanCentralBank("ECB"),theGermanCentralBank(DeutscheBundesbank),theGermanFederalFinancialServicesSupervisoryAuthority(BundesanstaltfürFinanzdienstleistungsaufsicht),aswellasoftheDanishFinancialSupervisoryAuthority(Finanstilsynet),towhichthispublicationhasnotbeensubmittedforapproval.UBSEuropeSEisacreditinstitutionconstitutedunderGermanlawintheformofaSocietasEuropaea,dulyauthorizedbytheECB.Egypt:SecuritiesorotherinvestmentproductsarenotbeingofferedorsoldbyUBStothepublicinEgyptandtheyhavenotbeenandwillnotberegisteredwiththeEgyptianFinancialSupervisoryAuthority.France:ThispublicationisnotintendedtoconstituteapublicofferunderFrenchlaw,itdoesnotconstituteapersonalrecommendationasitisdistributedonlyforinformationpurposestoclientsofUBS(France)S.A.,French"sociétéanonyme"withsharecapitalof€132.975.556,at69boulevardHaussmannF-75008Paris,registeredwiththe“RegistreduCommerceetdesSociétés”ofParisunderN°B421255670.UBS(France)S.A.isaproviderofinvestmentservicesdulyauthorizedaccordingtothetermsofthe"Codemonétaireetfinancier",regulatedbyFrenchbankingandfinancialauthoritiesasthe"Autoritédecontrôleprudentieletderésolution",towhichthispublicationhasnotbeensubmittedforapproval.Germany:ThispublicationisnotintendedtoconstituteapublicofferunderGermanlaw.ItisdistributedonlyforinformationpurposestoclientsofUBSEuropeSE,Germany,withplaceofbusinessatBockenheimerLandstrasse2-4,60306FrankfurtamMain.UBSEuropeSEisacreditinstitutionconstitutedunderGermanlawintheformofaSocietasEuropaea,dulyauthorizedbytheEuropeanCentralBank("ECB"),andsupervisedbytheECB,theGermanCentralBank(DeutscheBundesbank)andtheGermanFederalFinancialServicesSupervisoryAuthority(BundesanstaltfürFinanzdienstleistungsaufsicht),towhichthispublicationhasnotbeensubmittedforapproval.Greece:UBSSwitzerlandAGanditsaffiliates(UBS)arenotlicensedasabankorfinancialinstitutionunderGreeklegislationanddonotprovidebankingandfinancialservicesinGreece.Consequently,UBSprovidessuchservicesfrombranchesoutsideofGreece,only.ThisdocumentmaynotbeconsideredasapublicofferingmadeortobemadetoresidentsofGreece.HongKong:ThispublicationisdistributedtoclientsofUBSAGHongKongBranchbyUBSAGHongKongBranch,alicensedbankundertheHongKongBankingOrdinanceandaregisteredinstitutionundertheSecuritiesandFuturesOrdinance.UBSAGHongKongBranchisincorporatedinSwitzerlandwithlimitedliability.India:UBSSecuritiesIndiaPrivateLtd.(CorporateIdentityNumberU67120MH1996PTC097299)2/F,2NorthAvenue,MakerMaxity,BandraKurlaComplex,Bandra(East),Mumbai(India)400051.Phone:+912261556000.ItprovidesbrokerageservicesbearingSEBIRegistrationNumberINZ000259830;merchantbankingservicesbearingSEBIRegistrationNumber:INM000010809andResearchAnalystservicesbearingSEBIRegistrationNumber:INH000001204.UBSAG,itsaffiliatesorsubsidiariesmayhavedebtholdingsorpositionsinthesubjectIndiancompany/companies.Withinthepast12months,UBSAG,itsaffiliatesorsubsidiariesmayhavereceivedcompensationfornon-investmentbankingsecurities-relatedservicesand/ornon-securitiesservicesfromthesubjectIndiancompany/companies.Thesubjectcompany/companiesmayhavebeenaclient/clientsofUBSAG,itsaffiliatesorsubsidiariesduringthe12monthsprecedingthedateofdistributionoftheresearchreportwithrespecttoinvestmentbankingand/ornon-investmentbankingsecurities-relatedservicesand/ornon-securitiesservices.Withregardtoinformationonassociates,pleaserefertotheAnnualReportat:http://www.ubs.com/global/en/about_ubs/investor_relations/annualreporting.html.Indonesia:ThismaterialwasprovidedtoyouasaresultofarequestreceivedbyUBSfromyouand/orpersonsentitledtomaketherequestonyourbehalf.Shouldyouhavereceivedthematerialerroneously,UBSasksthatyoukindlydestroy/deleteitandinformUBSimmediately.Anyandalladviceprovidedand/ortradesexecutedbyUBSpursuanttothematerialwillonlyhavebeenprovideduponyourspecificrequestorexecuteduponyourspecificinstructions,asthecasemaybe,andmaybedeemedassuchbyUBSandyou.Thematerialmaynothavebeenreviewed,approved,disapprovedorendorsedbyanyfinancialorregulatoryauthorityinyourjurisdiction.Therelevantinvestmentswillbesubjecttorestrictionsandobligationsontransferassetforthinthematerial,andbyreceivingthematerialyouundertaketocomplyfullywithsuchrestrictionsandobligations.Youshouldcarefullystudyandensurethatyouunderstandandexerciseduecareanddiscretioninconsideringyourinvestmentobjective,riskappetiteandpersonalcircumstancesagainsttheriskoftheinvestment.Youareadvisedtoseekindependentprofessionaladviceincaseofdoubt.Israel:UBSisapremierglobalfinancialfirmofferingwealthmanagement,assetmanagementandinvestmentbankingservicesfromitsheadquartersinSwitzerlandanditsoperationsinover50countriesworldwidetoindividual,corporateandinstitutionalinvestors.InIsrael,UBSSwitzerlandAGisregisteredasForeignDealerincooperationwithUBSWealthManagementIsraelLtd.,awhollyownedUBSsubsidiary.UBSWealthManagementIsraelLtd.isaPortfolioManagerlicenseewhichengagesalsoinInvestmentMarketingandisregulatedbytheIsraelSecuritiesAuthority.Thispublicationisintendedforinformationonlyandisnotintendedasanoffertobuyorsolicitationofanoffer.Furthermore,thispublicationisnotintendedasaninvestmentadviceand/orinvestmentmarketingandisnotreplacinganyinvestmentadviceand/orinvestmentmarketingprovidedbytherelevantlicenseewhichisadjustedtoeachpersonneeds.Noactionhasbeen,orwillbe,takeninIsraelthatwouldpermitanofferingoftheproduct(s)mentionedinthisdocumentoradistributionofthisdocumenttothepublicinIsrael.Inparticular,thisdocumenthasnotbeenreviewedorapprovedbytheIsraeliSecuritiesAuthority.Theproduct(s)mentionedinthisdocumentis/arebeingofferedtoalimitednumberofsophisticatedinvestorswhoqualifyasoneoftheinvestorslistedinthefirstsupplementtotheIsraeliSecuritiesLaw,5728-1968.Thisdocumentmaynotbereproducedorusedforanyotherpurpose,norbefurnishedtoanyotherpersonotherthanthosetowhomcopieshavebeensent.Anyonewhopurchasestheproduct(s)mentionedhereinshalldosoforitsownbenefitandforitsownaccountandnotwiththeaimorintentionofdistributingorofferingtheproduct(s)tootherparties.Anyonewhopurchasestheproduct(s)shalldosoinaccordancewithitsownunderstandinganddiscretionandafterithasreceivedanyrelevantfinancial,legal,business,taxorotheradviceoropinionrequiredbyitinconnectionwithsuchpurchase(s).Theword"advice"and/oranyofitsderivativesshallbereadandconstruedinconjunctionwiththedefinitionoftheterm"investmentmarketing"asdefinedundertheIsraeliRegulationofInvestmentAdvice,InvestmentMarketingandPortfolioManagementLaw,1995.TheSwisslawsandregulationsrequireanumberofmandatorydisclosurestobemadeinindependentfinancialresearchreportsorrecommendations.PursuanttotheSwissFinancialMarketInfrastructureActandtheFinancialMarketInfrastructureOrdinance-FINMA,banksmustdisclosethepercentageofvotingrightstheyholdincompaniesbeingresearched,iftheseholdingsareequaltoorexceedthestatutorythresholds.Inaddition,theDirectivesontheIndependenceofFinancialResearch,issuedbytheSwissBankersAssociation,mandateanumberofdisclosures,includingthedisclosureofpotentialconflictsofinterest,theparticipationwithinprevious12monthsinanysecuritiesissuesonbehalfofthecompanybeingresearched,aswellasthefactthatremunerationpaidtothefinancialanalystsisbasedgenerallyupontheperformanceof(i)thenewissuesdepartmentorinvestmentbanking;or(ii)securitiestradingperformance(includingproprietarytrading)orsales.Italy:ThispublicationisnotintendedtoconstituteapublicofferunderItalianlaw.ItisdistributedonlyforinformationpurposestoclientsofUBSEuropeSE,SuccursaleItalia,withplaceofbusinessatViadelVecchioPolitecnico,3-20121Milano.UBSEuropeSE,SuccursaleItaliaissubjecttothejointsupervisionoftheEuropeanCentralBank("ECB"),theGermanCentralBank(DeutscheBundesbank),theGermanFederalFinancialServicesSupervisoryAuthority(BundesanstaltfürFinanzdienstleistungsaufsicht),aswellasoftheBankofItaly(Bancad’Italia)andtheItalianFinancialMarketsSupervisoryAuthority(CONSOB-CommissioneNazionaleperleSocietàelaBorsa),towhichthispublicationhasnotbeensubmittedforapproval.UBSEuropeSEisacreditinstitutionconstitutedunderGermanlawintheformofaSocietasEuropaea,dulyauthorizedbytheECB.Jersey:UBSAG,JerseyBranch,isregulatedandauthorizedbytheJerseyFinancialServicesCommissionfortheconductofbanking,fundsandinvestmentbusiness.WhereservicesareprovidedfromoutsideJersey,theywillnotbecoveredbytheJerseyregulatoryregime.UBSAG,JerseyBranchisabranchofUBSAGapubliccompanylimitedbyshares,incorporatedinSwitzerlandwhoseregisteredofficesareatAeschenvorstadt1,CH-4051BaselandBahnhofstrasse45,CH8001Zurich.UBSAG,JerseyBranch'sprincipalplaceofbusinessis1,IFCJersey,StHelier,Jersey,JE23BX.Luxembourg:ThispublicationisnotintendedtoconstituteapublicofferunderLuxembourglaw.ItisdistributedonlyforinformationpurposestoclientsofUBSEuropeSE,LuxembourgBranch("UBSLUX"),R.C.S.Luxembourgn°B209123,withregisteredofficeat33A,AvenueJ.F.Kennedy,L-1855Luxembourg.UBSLUXisabranchofUBSEuropeSE,acreditinstitutionconstitutedunderGermanlawintheformofaSocietasEuropaea(HRBn°107046),withregisteredofficeatBockenheimerLandstrasse2-4,D-60306FrankfurtamMain,Germany,dulyauthorizedbytheGermanFederalFinancialServicesSupervisoryAuthority(BundesanstaltfürFinanzdienstleistungsaufsicht–"BaFin")andsubjecttothejointprudentialsupervisionofBaFin,thecentralbankofGermany(DeutscheBundesbank)andtheEuropeanCentralBank.UBSLUXisfurthermoresupervisedbytheLuxembourgprudentialsupervisoryauthority(CommissiondeSurveillanceduSecteurFinancier),initsroleashostmemberstateauthority.Thispublicationhasnotbeensubmittedforapprovaltoanypublicsupervisoryauthority.Malaysia:ThismaterialwasprovidedtoyouasaresultofarequestreceivedbyUBSfromyouand/orpersonsentitledtomaketherequestonyourbehalf.Shouldyouhavereceivedthematerialerroneously,UBSasksthatyoukindlydestroy/deleteitandinformUBSimmediately.Anyandalladviceprovidedand/ortradesexecutedbyUBSpursuanttothematerialwillonlyhavebeenprovideduponyourspecificrequestorexecuteduponyourspecificinstructions,asthecasemaybe,andmaybedeemedassuchbyUBSandyou.Thematerialmaynothavebeenreviewed,approved,disapprovedorendorsedbyanyfinancialorregulatoryauthorityinyourjurisdiction.Therelevantinvestmentswillbesubjecttorestrictionsandobligationsontransferassetforthinthematerial,andbyreceivingthematerialyouundertaketocomplyfullywithsuchrestrictionsandobligations.Youshouldcarefullystudyandensurethatyouunderstandandexerciseduecareanddiscretioninconsideringyourinvestmentobjective,riskappetiteandpersonalcircumstancesagainsttheriskoftheinvestment.Youareadvisedtoseekindependentprofessionaladviceincaseofdoubt.Mexico:ThisinformationisdistributedbyUBSAsesoresMéxico,S.A.deC.V.("UBSAsesores"),anaffiliateofUBSSwitzerlandAG,incorporatedasanon-independentinvestmentadvisorundertheMexicanregulationduetotherelationwithaForeignBank.UBSAsesoresisregisteredundernumber30060andsubjecttothesupervisionoftheMexicanBankingandSecuritiesCommission("CNBV")exclusivelyregardingtherenderingof(i)portfoliomanagementservices,(ii)securitiesinvestmentadvisoryservices,analysisandissuanceofindividualinvestmentrecommendations,and(iii)anti-moneylaunderingmatters.ThisUBSpublicationoranymaterialrelatedtheretoisaddressedtoSophisticatedorInstitutionalInvestorslocatedinMexico.Thecompensationoftheanalyst(s)whopreparedthisreportisdeterminedexclusivelybyresearchChinaAutomotiveElectronicsSector15March202141managementandseniormanagementofanyentityofUBSGrouptowhichsuchanalyst(s)renderservices.Nigeria:UBSSwitzerlandAGanditsaffiliates(UBS)arenotlicensed,supervisedorregulatedinNigeriabytheCentralBankofNigeriaortheNigerianSecuritiesandExchangeCommission(SEC)anddonotundertakebankingorinvestmentbusinessactivitiesinNigeria.TheinvestmentproductsmentionedinthismaterialarenotbeingofferedorsoldbyUBStothepublicinNigeriaandtheyhavenotbeensubmittedforapprovalnorregisteredwiththeNigerianSEC.Ifyouareinterestedinproductsofthisnature,pleaseletusknowandwewilldirectyoutosomeonewhocanadviseyou.Theinvestmentproductsmentionedinthismaterialarenotbeingdirectedto,andarenotbeingmadeavailableforsubscriptionbyanypersonswithinNigeriaotherthantheselectedinvestorstowhomtheoffermaterialshavebeenaddressedasaprivatesaleordomesticconcernwithintheexemptionandmeaningofSection69(2)oftheInvestmentsandSecuritiesAct,2007(ISA).Philippines:ThismaterialwasprovidedtoyouasaresultofarequestreceivedbyUBSfromyouand/orpersonsentitledtomaketherequestonyourbehalf.Shouldyouhavereceivedthematerialerroneously,UBSasksthatyoukindlydestroy/deleteitandinformUBSimmediately.Anyandalladviceprovidedand/ortradesexecutedbyUBSpursuanttothematerialwillonlyhavebeenprovideduponyourspecificrequestorexecuteduponyourspecificinstructions,asthecasemaybe,andmaybedeemedassuchbyUBSandyou.Thematerialmaynothavebeenreviewed,approved,disapprovedorendorsedbyanyfinancialorregulatoryauthorityinyourjurisdiction.Therelevantinvestmentswillbesubjecttorestrictionsandobligationsontransferassetforthinthematerial,andbyreceivingthematerialyouundertaketocomplyfullywithsuchrestrictionsandobligations.Youshouldcarefullystudyandensurethatyouunderstandandexerciseduecareanddiscretioninconsideringyourinvestmentobjective,riskappetiteandpersonalcircumstancesagainsttheriskoftheinvestment.Youareadvisedtoseekindependentprofessionaladviceincaseofdoubt.Poland:UBSisapremierglobalfinancialservicesfirmofferingwealthmanagementservicestoindividual,corporateandinstitutionalinvestors.UBSisestablishedinSwitzerlandandoperatesunderSwisslawandinover50countriesandfromallmajorfinancialcentres.UBSSwitzerlandAGisnotlicensedasabankorasaninvestmentfirmunderPolishlegislationandisnotpermittedtoprovidebankingandfinancialservicesinPoland.Portugal:UBSSwitzerlandAGisnotlicensedtoconductbankingandfinancialactivitiesinPortugalnorisUBSSwitzerlandAGsupervisedbytheportugueseregulators(BankofPortugal"BancodePortugal"andPortugueseSecuritiesExchangeCommission"ComissãodoMercadodeValoresMobiliários").Russia:Thisdocumentorinformationcontainedthereinisforinformationpurposesonlyandconstitutesneitherapublicnoraprivateoffering,isnotaninvitationtomakeoffers,tosell,exchangeorotherwisetransferanyfinancialinstrumentsintheRussianFederationtoorforthebenefitofanyRussianpersonorentityanddoesnotconstituteanadvertisementorofferingofsecuritiesintheRussianFederationwithinthemeaningofRussiansecuritieslaws.Theinformationcontainedhereinisnotan“individualinvestmentrecommendation”asdefinedinFederalLawof22April1996No39-FZ"OnSecuritiesMarket"(asamended)andthefinancialinstrumentsandoperationsspecifiedhereinmaynotbesuitableforyourinvestmentprofileoryourinvestmentgoalsorexpectations.Thedeterminationofwhetherornotsuchfinancialinstrumentsandoperationsareinyourinterestsoraresuitableforyourinvestmentgoals,investmenthorizonortheacceptablerisklevelisyourresponsibility.Weassumenoliabilityforanylossesconnectedwithmakinganysuchoperationsorinvestingintoanysuchfinancialinstrumentsandwedonotrecommendtousesuchinformationastheonlysourceofinformationformakinganinvestmentdecision.SaudiArabia:UBSSaudiArabiaisauthorisedandregulatedbytheCapitalMarketAuthoritytoconductsecuritiesbusinessunderlicencenumber08113-37.Singapore:ThismaterialwasprovidedtoyouasaresultofarequestreceivedbyUBSfromyouand/orpersonsentitledtomaketherequestonyourbehalf.Shouldyouhavereceivedthematerialerroneously,UBSasksthatyoukindlydestroy/deleteitandinformUBSimmediately.ClientsofUBSAGSingaporebranchareaskedtopleasecontactUBSAGSingaporebranch,anexemptfinancialadviserundertheSingaporeFinancialAdvisersAct(Cap.110)andawholesalebanklicensedundertheSingaporeBankingAct(Cap.19)regulatedbytheMonetaryAuthorityofSingapore,inrespectofanymattersarisingfrom,orinconnectionwith,theanalysisorreport.UBSAGisincorporatedinSwitzerlandwithlimitedliability.UBSAGhasabranchregisteredinSingapore(UENS98FC5560C).Spain:ThispublicationisnotintendedtoconstituteapublicofferunderSpanishlaw.ItisdistributedonlyforinformationpurposestoclientsofUBSEuropeSE,SucursalenEspaña,withplaceofbusinessatCalleMaríadeMolina4,C.P.28006,Madrid.UBSEuropeSE,SucursalenEspañaissubjecttothejointsupervisionoftheEuropeanCentralBank("ECB"),theGermanCentralbank(DeutscheBundesbank),theGermanFederalFinancialServicesSupervisoryAuthority(BundesanstaltfürFinanzdienstleistungsaufsicht),aswellasoftheSpanishsupervisoryauthority(BancodeEspaña),towhichthispublicationhasnotbeensubmittedforapproval.Additionallyitisauthorizedtoprovideinvestmentservicesonsecuritiesandfinancialinstruments,regardingwhichitissupervisedbytheComisiónNacionaldelMercadodeValoresaswell.UBSEuropeSE,SucursalenEspañaisabranchofUBSEuropeSE,acreditinstitutionconstitutedunderGermanlawintheformofaSocietasEuropaea,dulyauthorizedbytheECB.Sweden:ThispublicationisnotintendedtoconstituteapublicofferunderSwedishlaw.ItisdistributedonlyforinformationpurposestoclientsofUBSEuropeSE,SwedenBankfilial,withplaceofbusinessatRegeringsgatan38,11153Stockholm,Sweden,registeredwiththeSwedishCompaniesRegistrationOfficeunderReg.No516406-1011.UBSEuropeSE,SwedenBankfilialissubjecttothejointsupervisionoftheEuropeanCentralBank("ECB"),theGermanCentralbank(DeutscheBundesbank),theGermanFederalFinancialServicesSupervisoryAuthority(BundesanstaltfürFinanzdienstleistungsaufsicht),aswellasoftheSwedishsupervisoryauthority(Finansinspektionen),towhichthispublicationhasnotbeensubmittedforapproval.UBSEuropeSEisacreditinstitutionconstitutedunderGermanlawintheformofaSocietasEuropaea,dulyauthorizedbytheECB.Taiwan:ThismaterialisprovidedbyUBSAG,TaipeiBranchinaccordancewithlawsofTaiwan,inagreementwithorattherequestofclients/prospects.Thailand:ThismaterialwasprovidedtoyouasaresultofarequestreceivedbyUBSfromyouand/orpersonsentitledtomaketherequestonyourbehalf.Shouldyouhavereceivedthematerialerroneously,UBSasksthatyoukindlydestroy/deleteitandinformUBSimmediately.Anyandalladviceprovidedand/ortradesexecutedbyUBSpursuanttothematerialwillonlyhavebeenprovideduponyourspecificrequestorexecuteduponyourspecificinstructions,asthecasemaybe,andmaybedeemedassuchbyUBSandyou.Thematerialmaynothavebeenreviewed,approved,disapprovedorendorsedbyanyfinancialorregulatoryauthorityinyourjurisdiction.Therelevantinvestmentswillbesubjecttorestrictionsandobligationsontransferassetforthinthematerial,andbyreceivingthematerialyouundertaketocomplyfullywithsuchrestrictionsandobligations.Youshouldcarefullystudyandensurethatyouunderstandandexerciseduecareanddiscretioninconsideringyourinvestmentobjective,riskappetiteandpersonalcircumstancesagainsttheriskoftheinvestment.Youareadvisedtoseekindependentprofessionaladviceincaseofdoubt.Turkey:Noinformationinthisdocumentisprovidedforthepurposeofoffering,marketingandsalebyanymeansofanycapitalmarketinstrumentsandservicesintheRepublicofTurkey.Therefore,thisdocumentmaynotbeconsideredasanoffermadeortobemadetoresidentsoftheRepublicofTurkeyintheRepublicofTurkey.UBSSwitzerlandAGisnotlicensedbytheTurkishCapitalMarketBoard(theCMB)undertheprovisionsoftheCapitalMarketLaw(LawNo.6362).Accordinglyneitherthisdocumentnoranyotherofferingmaterialrelatedtotheinstruments/servicesmaybeutilizedinconnectionwithprovidinganycapitalmarketservicestopersonswithintheRepublicofTurkeywithoutthepriorapprovaloftheCMB.However,accordingtoarticle15(d)(ii)oftheDecreeNo.32thereisnorestrictiononthepurchaseorsaleoftheinstrumentsbyresidentsoftheRepublicofTurkey.UnitedArabEmirates(UAE):UBSisnotafinancialinstitutionlicensedintheUnitedArabEmirates(UAE)bytheCentralBankoftheUAEnorbytheEmirates’SecuritiesandCommoditiesAuthorityanddoesnotundertakebankingactivitiesintheUAE.UBSAGDubaiBranchislicensedbytheDFSAintheDIFC.UnitedKingdom:ThisdocumentisissuedbyUBSWealthManagement,adivisionofUBSAGwhichisauthorisedandregulatedbytheFinancialMarketSupervisoryAuthorityinSwitzerland.IntheUnitedKingdom,UBSAGisauthorisedbythePrudentialRegulationAuthorityandissubjecttoregulationbytheFinancialConductAuthorityandlimitedregulationbythePrudentialRegulationAuthority.DetailsabouttheextentofregulationbythePrudentialRegulationAuthorityareavailablefromusonrequest.AmemberoftheLondonStockExchange.ThispublicationisdistributedtoretailclientsofUBSWealthManagement.Ukraine:UBSisnotregisteredandlicensedasabank/financialinstitutionunderUkrainianlegislationanddoesnotprovidebankingandotherfinancialservicesinUkraine.UBShasnotmadeandwillnotmakeanyofferofthementionedproductstothepublicinUkraine.NoactionhasbeentakentoauthorizeanofferofthementionedproductstothepublicinUkraineandthedistributionofthisdocumentshallnotconstitutefinancialservicesforthepurposesoftheLawofUkraine"OnFinancialServicesandStateRegulationofFinancialServicesMarkets"dated12July2001.Accordingly,nothinginthisdocumentoranyotherdocument,informationorcommunicationrelatedtothementionedproductsshallbeinterpretedascontaininganofferorinvitationtooffer,orsolicitationofsecuritiesintheterritoryofUkraine.ElectroniccommunicationmustnotbeconsideredasanoffertoenterintoanelectronicagreementorelectronicinstrumentwithinthemeaningoftheLawofUkraine"OnElectronicCommerce"dated3September2015.Thisdocumentisstrictlyforprivateusebyitsholderandmaynotbepassedontothirdpartiesorotherwisepubliclydistributed.USA:DistributedtoUSpersonsbyUBSFinancialServicesInc.orUBSSecuritiesLLC,subsidiariesofUBSAG.UBSSwitzerlandAG,UBSEuropeSE,UBSBank,S.A.,UBSBrasilAdministradoradeValoresMobiliáriosLtda.,UBSAsesoresMéxico,S.A.deC.V.,UBSSecuritiesJapanCo.,Ltd.,UBSWealthManagementIsraelLtd.andUBSMenkulDegerlerASareaffiliatesofUBSAG.UBSFinancialServicesIncorporatedofPuertoRicoisasubsidiaryofUBSFinancialServicesInc.UBSFinancialServicesInc.acceptsresponsibilityforthecontentofareportpreparedbyanon-USaffiliatewhenitdistributesreportstoUSpersons.AlltransactionsbyaUSpersoninthesecuritiesmentionedinthisreportshouldbeeffectedthroughaUS-registeredbrokerdealeraffiliatedwithUBS,andnotthroughanon-USaffiliate.ThecontentsofthisreporthavenotbeenandwillnotbeapprovedbyanysecuritiesorinvestmentauthorityintheUnitedStatesorelsewhere.UBSFinancialServicesInc.isnotactingasamunicipaladvisortoanymunicipalentityorobligatedpersonwithinthemeaningofSection15BoftheSecuritiesExchangeAct(the"MunicipalAdvisorRule")andtheopinionsorviewscontainedhereinarenotintendedtobe,anddonotconstitute,advicewithinthemeaningoftheMunicipalAdvisorRule.©UBS2021.ThekeysymbolandUBSareamongtheregisteredandunregisteredtrademarksofUBS.Allrightsreserved.