In today's China, whether to jump on the car-making bandwagon seems to be a choice every powerful tech company has to make.

In the view of top local investment bank CICC, smartphone makers including Huawei and Xiaomi have already been fully involved in the car-making chain, and it is an irreversible trend for more phone companies to join in the future.

In a research note released on Wednesday, CICC analyst Deng Xue said smart electric vehicles are a round of capacity renewal with a ten-year cycle. Companies represented by Tesla are accelerating the development of this industry, pushing traditional car companies to actively embrace smart cars.

The analyst believes that the recovery cycle in China's auto industry is not over yet. The sector is still slowly entering a cycle of inventory additions from the bottom in 2019.

Recently, investors' concerns about the auto sector in China have stemmed from the industry's lack of momentum and concerns about the shortage of automotive chips, the analyst said.

After a round of market correction, investors have largely incorporated these into expectations, the analyst said, adding that the chip shortage is good for companies to reduce inventories and TSMC said supply will be steady after June, which leaves enough room for the auto industry to add inventory in the second half of the year, which could lead to a stronger boom return opportunity.

The analyst believes that the era when hardware for smart cars is the first to see significant development has opened. Important electrification platforms have been built and a larger revolution in intelligence is beginning to take place.

Xiaomi announced its entry into the smart electric vehicle market on March 30, with an expected investment of US$10 billion over 10 years, with an initial tranche of RMB10 billion, and Xiaomi Group CEO Lei Jun will also serve as CEO of the smart electric vehicle business.

Analysts at Pingan Securities said on March 31 that Xiaomi's cars will primarily target the sub-RMB 200,000 ($30,525) price band range.

The analyst said Xiaomi has strong supply chain management and cost control capabilities and will launch a very cost-effective model.

Huawei, on the other hand, is focusing its efforts on building self-driving technology as well as components.

On April 15, the BAIC Arcfox α-S model equipped with Huawei's autonomous driving technology made its public test ride in Shanghai.

On April 16, a video documenting the driving process began to spread virally on the Chinese Internet. The video showed the field test vehicle driving relatively smoothly, enabling intervention-free autonomous driving for urban commuting in situations such as starting and stopping at traffic lights, making unprotected left turns, avoiding vehicles at intersections, yielding to pedestrians, and changing lanes.

NIO learned from Xiaomi in its early days, and now the student has become the teacher

(A WM Motor's W6 with Baidu's Apollo ANP on self-drive. Source: CnEVPost)