As we stand on the brink of technological transformation, the impending rise of humanoid robots in the upcoming years is a topic garnering considerable attentionWith the calendar year 2025 looming on the horizon, industry leaders both in China and abroad are anticipating a significant leap into mass production of these advanced machinesCompanies such as BYD, Huawei, Xiaomi, and ByteDance are already making their moves in the sector, while international titans like Tesla, NVIDIA, and Samsung are ramping up their investments and advancements as well.

This wave of innovation and investment has created a pronounced push toward the commercialization of humanoid robots, emphasizing the burgeoning demand for an entire industry ecosystem. However, deciphering which company will emerge victorious in this competitive landscape remains an enigma until confirmed orders and designated clients surface.

Exceptions exist, of courseSome businesses possess innate technical advantages and established customer bases, setting them apart from their competitorsA prime example of this is Top Group, a comprehensive automotive parts platform that specializes in vehicle chassis, interior components, shock absorbers, and thermal management systems.

You might wonder why a company rooted in automotive parts has ventured into roboticsThe answer is nuancedBack in 2023, Top Group established a robotics division, and by early 2024, the company had declared its intention to invest a staggering 5 billion yuan to construct a production base for electric drive systems for robotsCurrently, this project is in full swing.

Furthermore, as a core supplier of parts to Tesla, Top Group has seamlessly integrated itself into Tesla's robotics supply chain, positioning it advantageously within an industry on the cusp of rapid development.

Almost a year has passed since these momentous developments—what progress has Top Group made in its robotic endeavors? Let’s delve deeper.

1. Entering the Realm of Actuators

Top Group’s introduction of robotics centers on the development of drive actuators, which constitute more than 50% of the total costs associated with two pivotal actuator products: linear and rotary actuators.

To break this down further, these actuators are intricate assemblies comprising sensors, frameless motors, gear reducers, bearings, and screws, functioning as consolidated products

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Thanks to Top Group's inherent capabilities in product integration and autonomous motor development, the company stands out in the robotics market compared to many manufacturers focused solely on individual componentsThis differentiation mirrors their established automotive sector positioning, allowing them to aspire to become a Tier 1 or Tier 0.5 supplier in the robotics industry.

2. Building a Substantial Robotics Business

Currently, Top Group's actuator products have begun to cement their presence in the marketReports suggest that the company has consistently delivered samples to clients, which received positive feedbackBy 2023, the electric drive system business achieved sales of 20 units (equating to actuators), with revenue exceeding 1 million yuanBy the first half of 2024, the revenue soared to over 6 million yuan, signifying a clear transition from the ground up.

Moreover, Top Group has initiated production on its two robotic electric drive system assembly lines, with an impressive capacity projected at 300,000 units per yearIn pure numerical terms, this represents a staggering potential to increase production by 1,500 times compared to the mere 20 units sold in 2023!

But what of Top Group's other business ventures beyond robotics?

Having examined the company's robotics segment, let’s take a glance at its automotive parts industry, which remains its core business.

Firstly, after 40 years of evolution, the automotive parts sector shows remarkable resilience.

The journey of Top Group parallels the broader narrative of China's automotive industryBeginning in 1984 as the first joint venture to supply parts for Beijing Jeep, the company has adeptly seized opportunities during periods of localization and the emergence of new automotive brandsTop Group has consistently aligned with each wave of industrial growth.

By 2023, the company recorded a remarkable 19.7 billion yuan in revenue, establishing itself as one of the leading automotive parts platforms domestically

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Yet Top Group's success is not purely serendipitous; it stems from solid operational capabilities.

In the fiercely contended landscape of automotive components, Top Group boasts leading market shares in various sectors, especially the traditional domains of shock absorbers and soundproofing materialsCurrent market shares hover around 20%, placing the company decisively in first and within the top three of these industries, respectively.

Beyond that, in recent years, Top Group has ventured further into new territories, including chassis products, thermal management systems, and automotive electronics, maintaining a trajectory of rapid growthThis bolstered competitiveness highlights the company's broadening horizons.

Top Group's enhanced stature has attracted endorsement from numerous clients, including prominent domestic firms like BYD, Geely, and Li Auto, alongside international giants such as Audi, BMW, Volkswagen, and Tesla.

It’s particularly noteworthy that as Tesla's primary automotive parts supplier in China, Top Group’s revenue share from this partnership exceeds 30%, aligning their growth trajectory closely with Tesla's expanding influence.

Next, the automotive parts sector finds itself buoyed by dual market trends: the upgrade of consumer preferences and the emergence of domestic counterparts.

As highlighted earlier, Top Group's impressive performance in recent years is undeniableAs of the third quarter of 2024, the company continues to showcase rapid growth, clocking in revenues and net profits at 19.35 billion yuan and 2.23 billion yuan, which represented year-on-year increases of 36.75% and 39.89%, respectively.

Despite robotic sales yet to show significant growth and the automotive sector's pricing wars still ongoing, the main catalyst for the company's revenue surge unquestionably stems from the driving force of their automotive parts products.

Analysis of the product structure from the first half of 2024 reveals that while revenue across all products is on the rise, profit margins have seen downward pressure.

Interestingly, revenue growth in the broader automotive parts industry has remained robust, with increases of 16.45% and 7.89% reported for 2023 and the first three quarters of 2024, respectively.

Thus, while Top Group's potential for growth hinges on competitiveness, some structural industry trends underlie the company’s strength.

One of those trends is the upgrade of consumer preferences. The ongoing push towards electric vehicles and smart technology, alongside heightened consumer attention to comfort and functionality, foster demand for refined automotive components, causing an upward shift in vehicle values.

Although, at present, the impact of this consumer upgrade on product pricing is relatively subtle, incremental changes in product portfolios could enhance Top Group's profit potential in the future.

For instance, the price of interior components had been on a steady decline in recent years, only to rebound in 2023, signaling a potential turning point.

The second trend is domestic substitution. There are numerous automotive parts categories where the local production rate remains low, particularly in fields such as thermal management systems and automotive electronics (notably electronic braking systems.) A significant share of these sectors' core market has been monopolized by foreign firms, which are spaces where Top Group aims to make a significant impact.

Moreover, these markets are substantial, projected to reach 96.7 billion yuan and 11.6 billion yuan, respectively, by 2025. Thus, they hold significant growth potential for the company.

In conclusion, Top Group exemplifies a versatile automotive parts enterprise striving for an expanded footprint in the robotics sector

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