Summary of the Conference Call on Asia EV Battery & Materials Industry Overview - The conference call focused on the **Asia EV Battery & Materials** sector, particularly in relation to the **EU's Automotive Action Plan** released on March 5, 2025, which addresses emission requirements and competitiveness against rivals from China and the United States [4][10]. Key Points and Arguments 1. **EU Emission Policy Changes**: - The European Commission's Action Plan allows car manufacturers to average their emission performance over a three-year period (2025-2027), alleviating immediate pressure to meet the 2025 targets [4][9]. - The long-term targets remain unchanged, including the ICE ban in 2035 and a ~50% reduction in emissions by 2030 [4][10]. 2. **Impact on EV Battery Demand**: - A previously projected **20% growth** in EV and PHEV sales in Europe for 2025 may face downside risks due to the new emission policy, which allows OEMs to miss the 2025 target as long as they compensate in subsequent years [4][10]. - A sensitivity analysis indicates that if EU NEV growth is halved, there could be a **2% cut** to global EV battery demand forecasts and a **1% cut** to global lithium-ion power battery demand [6][10]. 3. **Stock Recommendations**: - J.P. Morgan recommends **CATL** and **Hunan Yuneng** in China, while expressing caution regarding geopolitical risks affecting these stocks [4][5]. - For Korean battery cell makers, the focus is on US production and demand, with a modeled **10% EU growth** as the base case for **LGES** [5][10]. 4. **Local Content Requirements**: - The Action Plan includes measures to support EU battery production and establish local content requirements for battery components, which are expected to be detailed in upcoming legislation [15][16][17]. 5. **Incentives for EV Demand**: - The Commission is working on incentives to boost demand for zero-emission vehicles, including social leasing schemes for low-income groups and measures to encourage corporate fleet adoption [11][12][13][14]. 6. **Funding Sources**: - The European Commissioner highlighted available funding sources for decarbonization, including **€50 billion** under InvestEU for clean tech and mobility, and **€1.8 billion** from the Innovation Fund for battery manufacturing [20]. Additional Important Content - The report emphasizes the importance of maintaining a competitive EU battery production base to ensure long-term industry resilience and job creation [18][19]. - The potential for new conditions on foreign investments in the EU automotive sector was discussed, focusing on enhancing competitiveness and technological edge [18][19]. - The report includes a detailed sensitivity analysis table showing the potential impact of demand changes on battery supply and sales forecasts for various companies [6][7]. Companies Discussed - **CATL** (300750.SZ) - **Hunan Yuneng** (301358.SZ) - **LG Energy Solution** (LGES) - **Samsung SDI** (SDI) - **POSCO Future M** (003670.KS) - **L&F** (066970.KQ) - **Ecopro BM** (247540.KQ) [22].