Core Viewpoint - The automotive market is experiencing a tug-of-war between the certainty of increased costs due to the reduction of purchase tax exemptions and the uncertainty surrounding the details of government subsidies, particularly the "trade-in" policies [1][4]. Group 1: Policy Changes and Market Reactions - Starting January 1, 2026, the purchase tax for new energy vehicles will be halved from full exemption to 5%, with the maximum exemption amount reduced from 30,000 yuan to 15,000 yuan [2]. - The Central Economic Work Conference has confirmed the continuation of the "trade-in" policy, which sets a foundation for the extension of current subsidies beyond 2025 [4]. - Over 20 automakers, including Zeekr and Xiaomi, have introduced "purchase tax guarantee" policies, promising to cover the tax difference for customers who lock in orders by the end of the year, with a maximum coverage of 15,000 yuan [4][11]. Group 2: Market Performance and Sales Trends - Despite the expected increase in sales due to tax incentives, the market has started cold in December, with retail sales of passenger cars dropping by 32% year-on-year and 8% month-on-month in the first week of December [5]. - The anticipated "tail effect" in the fourth quarter, where sales typically surge due to promotional policies, has not materialized as expected, with November sales down 8.1% year-on-year [7][8]. - Analysts suggest that consumer hesitation, driven by uncertainty over subsidy details and the impact of automakers' tax guarantee policies, has led to a subdued demand in the fourth quarter [8][14]. Group 3: Supply Chain and Battery Demand - The demand for batteries is intensifying as automakers scramble to secure supplies, with some companies facing production delays due to battery shortages [10][11]. - The cumulative installed capacity of domestic power batteries reached 578.0 GWh from January to October, reflecting a year-on-year growth of 42.4% [10]. - The shift in demand towards high-performance batteries, coupled with the growing energy storage market, is creating a structural imbalance in battery supply and demand [11][12]. Group 4: Future Market Outlook - The automotive industry is bracing for a slowdown in growth, with predictions indicating a potential decline in sales growth from 8% in 2025 to -2% in 2026 due to the phased-out subsidies [14][15]. - The focus is shifting towards structural adjustments and value extraction, with emerging opportunities in underdeveloped markets and service-oriented consumption around vehicle lifecycle services [15]. - The overall sentiment suggests that achieving a 5% growth in the automotive market next year would be considered optimistic, emphasizing the need for automakers to rely on product quality and performance [15].