Core Viewpoint - The recent announcements from various government departments regarding the implementation of large-scale equipment updates and trade-in policies for consumer goods in 2026 are seen as a comprehensive consumer stimulus plan, significantly impacting multiple sectors within the lithium battery industry, including passenger vehicles, public transport, 3C devices, home appliances, and battery recycling [3]. Group 1: Passenger Vehicle Subsidies - The new subsidy policy for passenger vehicles shifts from a fixed amount to a percentage of the vehicle price, favoring mid-to-high-end new energy vehicles. In 2026, individuals can receive a one-time subsidy of 12% of the new vehicle's tax-inclusive price (up to 20,000 yuan) when trading in old vehicles [4][5]. - The policy differentiates between the subsidies for new energy vehicles and traditional fuel vehicles, with the former receiving a higher percentage, thus concentrating funds on mid-to-high-end models. This change may disadvantage low-priced electric vehicles that rely on price competition [5]. Group 2: Public Transport and Commercial Vehicles - The policy framework also includes support for battery updates in public transport and commercial vehicles, encouraging the replacement of high-emission operational trucks with electric ones. The continuation of subsidies for new energy city buses and battery updates is emphasized [6]. - The allocation of 625 billion yuan in special bonds for local governments will support the trade-in and related infrastructure, indicating a stable demand for high-capacity, long-life batteries in public transport and freight sectors [6]. Group 3: Consumer Electronics and Smart Devices - The 2026 trade-in policy for consumer electronics will support the purchase of digital and smart products, with a subsidy of 15% for items priced under 6,000 yuan, expanding the scope to include smart glasses for the first time [7][8]. - This initiative aims to accelerate the integration of next-generation smart terminals into daily consumer scenarios, creating new demand for high-energy-density batteries and lightweight battery management systems [7]. Group 4: Home Appliances and Smart Home Products - The policy continues to support the trade-in of home appliances, offering a 15% subsidy for energy-efficient products, with a maximum of 1,500 yuan per item. This includes support for smart home products, with local governments determining specific categories and subsidy standards [8]. - The demand for lithium batteries in 3C products is expected to remain stable, while the implementation of smart home policies may influence the market for battery-powered devices [8]. Group 5: Recycling and Sustainable Practices - The new policies emphasize the importance of recycling and the development of recycling networks, supporting the application of recycled materials and adhering to environmental standards. This aligns with the anticipated large-scale retirement of batteries, providing clearer policy signals for the industry [9].

Investment Rating - The industry investment rating is "Overweight (Maintain)" [1] Core Viewpoints - The automotive sector has shown a mixed performance, with a recent increase in the sector index by 1.38%, outperforming the Shanghai and Shenzhen 300 index which increased by 1.28% [3] - The report highlights a significant shift towards new energy vehicles, with November retail sales of new energy vehicles reaching 135.4 million units, a year-on-year increase of 7% [4] - The report emphasizes the importance of companies involved in smart technology and those with potential for overseas sales as key investment opportunities [8] Summary by Relevant Sections Market Review - The automotive sector's performance ranked 10th among 31 primary industries, with the best-performing sub-sector being automotive parts, which increased by 1.83% [3] - The top five companies in terms of stock performance included Aerospace Science and Technology (+12.69%) and Huapei Power (+12.57%), while the bottom five included Zhenghe Industrial (-12.3%) and ST Meichen (-8.33%) [3] Sales Data - In November, the total retail sales of passenger vehicles were 2.263 million units, a year-on-year decrease of 7% but a month-on-month increase of 1% [4] - Cumulatively, from January to November, retail sales reached 21.519 million units, reflecting a year-on-year increase of 6% [4] Weekly Insights - The report notes that the fourth quarter's sales performance is weaker than previous years, with BYD's sales declining to 480,200 units [5] - New entrants like Li Auto have launched innovative products, such as AI smart glasses, indicating a diversification strategy beyond traditional automotive offerings [5] Investment Recommendations - The report suggests focusing on companies related to smart technology in vehicles and those with potential for overseas sales, as well as parts manufacturers benefiting from domestic substitution effects [8] - Specific recommendations include companies like BAIC Blue Valley, Great Wall Motors, and GAC Group for vehicle manufacturers, and various parts suppliers such as Songyuan Safety and Zhejiang Xiantong [10]