Investment Rating - The report recommends a positive investment outlook for companies with strong cost reduction capabilities, particularly BYD, Geely, Xpeng, and Leap Motor, suggesting they may exceed performance expectations in 2025 due to the "old-for-new" policy [4]. Core Insights - The domestic market is experiencing high prosperity, with Q1 2025 sales maintaining a strong performance due to the "old-for-new" policy and low base effects from the previous year, resulting in a year-on-year increase of 11.4% in wholesale sales [4][7]. - Electric vehicle (EV) sales are showing stable growth, with Q1 2025 EV wholesale sales reaching 2.847 million units, a year-on-year increase of 43.3% [4][35]. - The global automotive market remains stable, with Q1 2025 global EV sales increasing by 31.6% year-on-year, indicating a steady demand [4]. Summary by Sections 1.1 Passenger Car Overview - The Q1 2025 market is characterized by high prosperity, supported by comprehensive national and local subsidies under the "old-for-new" policy, leading to a year-on-year increase in wholesale sales to 6.276 million units [4][7]. - Retail sales in Q1 2025 reached 5.119 million units, up 5.9% year-on-year, while exports totaled 1.118 million units, reflecting a slight increase of 1.1% [4][7]. 1.2 Price Segment Analysis - The low-end market is expanding while the high-end market is contracting, with significant year-on-year growth in the under 50,000 and 50,000-100,000 price segments [4][13]. - The price war and policy incentives are driving demand in the low-end market, while high-end market demand remains weak due to a trend of consumer downgrade [4][13]. 1.3 Domestic Replacement - The penetration rate of domestic brands remains stable, with a retail penetration rate of 62.84% in Q1 2025, although there is a slight decline in high-end market performance [4][18]. - Domestic brands have achieved over 50% market share in the lower price segments, but face challenges in the high-end market due to supply issues and competitive pressures [4][18]. 1.4 Market Competition Landscape - Domestic brands continue to grow, with BYD and Geely showing significant market share increases, while joint ventures, particularly Japanese brands, are facing the most significant challenges [4][24][27]. - The competitive landscape is intensifying, with joint venture brands offering substantial discounts to stabilize their market positions [4][22]. 2.1 Domestic Electric Vehicle Overview - The EV market is maintaining high prosperity, with Q1 2025 EV wholesale sales reaching 2.847 million units, a year-on-year increase of 43.3% [4][35]. - The penetration rates for EVs are stable, with Q1 2025 wholesale penetration at 45.4% and retail penetration at 47.3% [4][39]. 2.2 Electric Vehicle Structure - The demand for pure electric vehicles is recovering, with significant growth in the low-end market, while the high-end market is experiencing a decline [4][39]. - The report highlights that the low-end market remains a critical area for growth, driven by the "old-for-new" policy [4][43]. 2.3 Price Segment Analysis for Electric Vehicles - The low-end electric vehicle market is showing strong growth, with sales in the under 50,000 and 50,000-100,000 segments increasing by 150.4% and 68.8% year-on-year, respectively [4][41]. - The high-end market, particularly the 300,000 and above segment, is facing challenges, with sales declining [4][41].