Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report The new round of "Supply - side Reform" centered around "Anti - involution" mainly focuses on the disorderly competition in the mid - downstream manufacturing and emerging industries. It aims to build a unified large market, promote economic circulation, optimize supply quality through reform, and ultimately achieve industrial upgrading and high - quality development. The regulation requires more complex institutional innovation and market mechanisms, and involves industry self - discipline, improvement of laws and regulations, and standardization of local government behavior. After being set by the Central Financial and Economic Affairs Commission, it will be a key mid - term policy task, and its effect release may be milder than the previous round of supply - side reform [2]. Summary According to the Table of Contents 1. Review of the Previous Round of "Supply - side Reform" 1.1 Progress of the Previous Round of "Supply - side Reform" The policy of reducing over - capacity started to appear in 2013. In 2015, "Supply - side Structural Reform" was first proposed, and in 2016, a more systematic "Three Reductions, One Lowering, and One Filling" framework was formed. The scope of over - capacity reduction expanded in 2017, and policies for cost reduction and de - leveraging were also introduced [7][8]. 1.2 Characteristics of the Previous Round of "Supply - side Reform" The tasks of "Three Reductions, One Lowering, and One Filling" formed a systematic policy framework, with over - capacity reduction in upstream resource products like steel and coal being the core. There were clear over - capacity reduction targets and supporting measures for employment stability [10][12]. 1.3 Effects of the Previous Round of "Supply - side Reform" From 2016 - 2018, it exceeded the over - capacity reduction targets for steel and coal. Raw material prices ended their long - term slump, PPI turned positive in September 2016, and the profitability of enterprises was restored [13]. 2. Connotation and Goals of the New Round of "Supply - side Reform" - "Anti - involution" On July 1, 2025, the Central Financial and Economic Affairs Commission meeting and an article in Qiushi Journal raised the expectation of a new round of "Supply - side Reform" through "Anti - involution". It aims to solve the problem of low prices in some fields caused by unfair competition and local protectionism, covering both traditional and emerging industries [15][18]. 3. Timeline of "Anti - involution" Policy Introduction The concept of "Anti - involution" was first proposed in the Politburo meeting in July 2024. After the Central Financial and Economic Affairs Commission meeting on July 1, 2025, it became more prominent. Since June 2025, industry organizations have accelerated the implementation of "Anti - involution" policies [20][21]. 4. Differences between the Two Rounds of "Supply - side Reform" 4.1 Different Targets for Over - capacity Reduction The previous round targeted the over - capacity of upstream traditional resource products, while the current round focuses on the over - competition in emerging industries and the mid - downstream manufacturing industries [22][23]. 4.2 Different Ownership of Over - capacity Enterprises In the previous round, state - owned enterprises in upstream resource industries accounted for a high proportion. In this round, private enterprises in mid - downstream and emerging industries such as photovoltaics and new energy vehicles account for a higher proportion, and market - oriented methods can be better used for over - capacity reduction [28]. 4.3 Different Policy Purposes and Implementation Methods The previous round repaired the deflation environment and improved corporate profits, while this round aims to build a unified large market, promote economic circulation, and achieve high - quality development. The previous round mainly used administrative measures, while this round requires more complex institutional innovation and market mechanisms [32]. 5. Outlook for the Follow - up of the Current Round of "Anti - involution" The "Anti - involution" policy is expected to be continuously implemented and may become an important mid - term policy direction. Policies are expected to be more diversified, legalized, and market - oriented, and supply - side policy intensification and demand - side support will go hand in hand [35][36]. 6. Research Feedback and Impact Outlook of Some Commodities on the "Anti - involution" Policy The previous round of supply - side reform effectively reduced over - capacity in upstream resource industries, and their current capacity utilization rates are not low. The marginal increment of this "Anti - involution" lies in emerging industries. However, there are difficulties in policy implementation in emerging industries, and the effect release may be weaker than the previous round [40][41].

Investment Rating - The industry investment rating is "Outperform the Market" [13] Core Viewpoints - The passage of the "big beautiful" bill in the U.S. is expected to negatively impact the domestic new energy vehicle industry, potentially widening the gap between China and the U.S. in this sector [1] - The cancellation of tax credits for new energy vehicles in the U.S. may reduce consumer enthusiasm for choosing electric vehicles over gasoline vehicles, especially as solid-state batteries remain in the early stages of commercialization and are costly [1] - The U.S. Department of Energy's efforts to reduce reliance on foreign entities, particularly from China, in the battery manufacturing sector may hinder local energy storage projects [2] - Chinese battery manufacturers are gaining global competitiveness, with companies like BYD and CATL showing significant growth in battery installation volumes [3] Summary by Sections Section 1: U.S. Policy Impact - The "big beautiful" bill modifies previous incentives for the new energy industry, likely leading to a decline in the U.S. electric vehicle market [1] - The removal of tax incentives could diminish consumer interest in electric vehicles, impacting sales and market dynamics [1] Section 2: Energy Storage and Supply Chain - The new legislation may exclude Chinese suppliers from U.S. energy storage projects, complicating the supply chain for local integrators [2] - Chinese companies dominate the global energy storage battery market, accounting for over 90% of shipments, which poses challenges for U.S. manufacturers [2] Section 3: Chinese Battery Manufacturers - Chinese battery companies are improving their global market positions, with BYD entering the top five in global battery installations [3] - CATL maintains a leading market share, indicating strong competitive advantages for Chinese firms in the battery sector [3] - Tesla's collaboration with CATL for localized production in the U.S. is expected to benefit from federal and state manufacturing subsidies [3]

Summary of Key Points from Conference Call Industry Overview - The conference call discusses the impact of tariff pressures on China's external demand, highlighting the resilience of Chinese exports despite these challenges [1][2][3]. Core Insights and Arguments - **Export Resilience**: China's exports have shown resilience, with growth outperforming most economies since the beginning of the year. In April and May, exports continued to grow, indicating a shift in trade dynamics with an increasing share from emerging markets and a decreasing share from developed economies [1][2]. - **Product Category Differences**: Tariffs have a more pronounced impact on consumer goods, while intermediate and capital goods demonstrate resilience, reflecting China's competitive advantages globally. High-demand products such as lithium batteries, new energy vehicles, engineering machinery, and integrated circuits are thriving, while sectors like photovoltaics, building materials, and textiles are struggling [1][4]. - **Impact on Exports to the U.S.**: Approximately 70% of products exported to the U.S. are sensitive to tariffs, with 10% facing severe impacts and 20% showing resilience. Consumer goods are more affected than intermediate goods, with consumer electronics under significant pressure, while electronic components and lithium batteries remain resilient [5][6]. - **Decline in Major Categories**: In the second quarter, exports to the U.S. across major categories saw a decline, although certain categories like automotive chains, electronic components, outdoor sports goods, steel products, and textiles maintained resilience due to price competitiveness [7]. - **Strategic Product Adjustments**: The demand for rare earths from the U.S. was strong in the first quarter, but after China implemented preventive measures in the second quarter, imports from the U.S. significantly decreased. Despite a slight easing in trade policies in May, exports of strategic goods continued to decline [8][9]. Additional Important Insights - **Value Chain Shifts**: The current tariff situation has altered the role of trade hubs, with countries like Chile and Peru emerging as important players, while traditional hubs like Mexico and Canada have diminished in significance. ASEAN, the EU, and India are also playing crucial roles in value chain adjustments [2][10]. - **Emerging Market Opportunities**: Excluding China, emerging markets are showing faster import demand growth compared to developed economies, particularly in capital goods. This indicates a strong alignment between China's manufacturing advantages and emerging market needs, providing both short-term safety and long-term growth potential [11][12]. - **Future Outlook**: In the short term, the resilience of demand in emerging markets offers a solid safety net for China's external demand. Long-term prospects are promising due to the competitive advantages of Chinese manufacturing aligning with the growth needs of emerging markets, suggesting structural opportunities despite tariff challenges [14].

Summary of Key Points from Conference Call Records Industry Overview - The conference call discusses the "anti-involution" policy in China, focusing on structural adjustments aimed at increasing the proportion of high-quality supply to achieve industrial upgrades, contrasting with the 2016 policies targeting cyclical supply-demand imbalances in the steel and coal industries [1][6][10]. Core Insights and Arguments - **Anti-Involution Policy Goals**: The policy aims to regulate low-price disorderly competition among enterprises, enhance product quality, and facilitate the orderly exit of outdated production capacity to achieve high-quality development through technological upgrades [2][5]. - **Electricity Consumption vs. Industrial Value Added**: In 2023-2024, China's industrial electricity consumption is expected to grow faster than industrial value added, indicating a slowdown in investment and a necessary capacity clearance [11]. - **Wind Power Sector**: The wind power sector is benefiting from stabilized bidding prices and increased demand, with private companies showing significant profit recovery potential if strict cost control measures are implemented [3][21]. - **Copper Smelting Industry Challenges**: The copper smelting industry faces severe raw material shortages, with over 80% reliance on imports. The TC price is currently negative, indicating unsustainable conditions that may improve with industry consolidation [34]. - **Pig Farming Industry**: The pig farming sector is under pressure from CPI and capacity recovery issues, with policies aimed at controlling sow inventory to stabilize prices [3][39]. Additional Important Content - **New Anti-Unfair Competition Law**: The revised law includes provisions to combat involution-style competition, prohibiting illegal subsidies from local governments and enhancing regulation of low-quality products [7]. - **Differences from Previous Policies**: The current anti-involution policy differs from the 2016 supply-side reforms by focusing on structural quality improvements rather than merely reducing total capacity [6][15]. - **Investment Opportunities**: The conference highlights potential investment opportunities in sectors like wind power, where companies like Goldwind Technology and Yunda shares are recommended due to their cost advantages and recovery potential [21]. - **Challenges in the Photovoltaic Industry**: The photovoltaic sector faces challenges such as oversupply in the silicon material segment and financial pressures on companies, necessitating regulatory measures against low-cost sales [16][17]. - **Future of the Construction Materials Sector**: The construction materials sector, particularly in waterproofing and cement, is expected to see consolidation and price increases as inefficient players exit the market [26][29]. Conclusion - The anti-involution policy is set to reshape various industries in China, focusing on quality and efficiency rather than sheer output. Key sectors such as wind power, copper smelting, and the pig farming industry are highlighted for their unique challenges and opportunities in this evolving landscape.

Group 1 - The core viewpoint of the news highlights that the photovoltaic industry is undergoing a "de-involution" movement that has reached the highest strategic level of the country, focusing on capacity integration in the silicon material segment and strengthening price regulation across the industry chain [1][4] - The current state of the photovoltaic industry is at the bottom of the cycle, with future policy strength being a key variable affecting industry trends [1][4] - In the medium to long term, the photovoltaic industry is expected to enter a phase of high-quality development, where technological upgrades and market structure optimization will become core competitive factors for companies [1][4] Group 2 - Weekly market review indicates that from June 29 to July 4, the Shanghai Composite Index rose by 1.40%, the Shenzhen Component Index by 1.25%, and the ChiNext Index by 1.50%, with the Shenwan Electric Equipment Index increasing by 1.99%, outperforming the CSI 300 by 0.45 percentage points [2] - In the sub-sectors, the Shenwan photovoltaic equipment increased by 5.76%, while wind power equipment decreased by 0.86%, battery by 1.63%, and grid equipment by 0.82% [2] Group 3 - The report tracks key sectors, noting that EVE Energy has submitted an IPO application to the Hong Kong Stock Exchange, with funds primarily allocated for projects in Hungary and Malaysia, as well as working capital and general corporate purposes [3] - The Hungarian project is already under construction and is expected to be operational by 2027, with a planned capacity of 30GWh, focusing on producing power batteries, particularly the 46 series cylindrical batteries [3] Group 4 - Investment suggestions for the photovoltaic sector emphasize the importance of focusing on silicon materials, glass, and battery segments that have undergone sufficient corrections, as well as new technologies and leading manufacturers [4][5] - For the wind power sector, the domestic industry chain has a localization rate exceeding 90%, with strong global competitiveness in upstream materials and core components [4] - The report suggests focusing on companies like Goldwind Technology, Dongfang Cable, and others in the wind power sector, while in the new energy vehicle sector, it recommends companies benefiting from low upstream material prices and stable profitability [5]

Group 1 - Tesla's stock price closed down 6.8% at $293.94, marking a 27% decline year-to-date [2] - The company has lost its competitive advantages, previously held by strong political connections and a positive brand image [4][5] - The relationship between Elon Musk and Donald Trump has deteriorated, impacting Tesla's political support [5][8] Group 2 - The recent "Inflation Reduction Act" has negatively affected Tesla by increasing government debt and eliminating a $7,500 subsidy for electric vehicles [7][10] - Tesla's global deliveries fell to 336,700 units in Q1 2025, a 13% year-over-year decline, with significant drops in key markets like Germany (down 59.5%) and France (down 63%) [17] - The company is facing increased competition from Chinese electric vehicle manufacturers, which are gaining market share in Europe and China [24][28] Group 3 - Analysts have downgraded Tesla's earnings expectations, with Wells Fargo setting a target price of $130, nearly halving the current stock price [29] - The departure of Tesla's North America and Europe operations head, Omid Afshar, is linked to declining sales in those regions [19] - Tesla's future prospects, including autonomous driving and new low-cost models, remain uncertain and are not expected to offset the current downturn [20][29]

Regulatory & Policy Impacts - China's new regulation on single-pedal driving mode, effective January 1, 2026, prohibits stopping a vehicle solely by releasing the accelerator pedal, requiring brake pedal use, impacting Tesla's vehicle control logic and user experience [1] - The US federal tax credit of $7,500 is set to expire on September 30, 2025, prompting Tesla to alert customers [1] - A US manufacturing auto loan interest tax deduction policy proposed by Trump allows consumers to deduct up to $10,000 in interest on loans for US-assembled vehicles between 2025 and 2028, benefiting Tesla [1] Market Trends & Sales Performance - China's new energy vehicle sales account for over 60% of global sales, with over 30 million vehicles in use by early 2024, holding the largest global share [1] - Tesla's China insurance registrations for the week of June 30 to July 6, 2025, fell 75.8% week-over-week to 5,010 units and 22.9% year-over-year, indicating sales pressure [1] - Year-to-date, Tesla's China insurance registrations are down 5.3% compared to last year, reflecting market competition or economic factors affecting consumer confidence [1] - Statista forecasts the global electric vehicle market revenue to reach $784.2 billion in 2025, with China contributing $377.9 billion, nearly half of the total [1] Industry Challenges & Adjustments - China's electric vehicle market faces overcapacity, intense competition among hundreds of manufacturers, leading to price wars and reduced profits [1] - Porsche's IT subsidiary is cutting hundreds of jobs as part of a digital transformation and cost control strategy [2] - Honda has canceled the development of a large electric SUV, originally planned for 2027, and lowered its 2030 electric vehicle sales target from 30% to 20% due to slowing demand in the US market [2] - Other automakers like Ford, Jaguar Land Rover, and Nissan are also slowing down or canceling electric vehicle projects [2]

Group 1 - The core viewpoint of the article highlights that the wholesale penetration rate of new energy vehicles (NEVs) reached 49.8% in June, marking an increase of 4.6 percentage points compared to June 2024 [1] - Domestic brand NEVs achieved a penetration rate of 66.7% in June [1] - The penetration rate of NEVs in the luxury vehicle segment was 33% [1] - Mainstream joint venture brands had a significantly lower NEV penetration rate of only 6.6% [1]

Group 1 - The core viewpoint of the article highlights that in June, the retail penetration rate of new energy vehicles (NEVs) in the overall passenger car market in China reached 53.3%, an increase of 4.8 percentage points compared to the same period last year [1] Group 2 - In June, the penetration rate of NEVs among domestic independent brands was 75.4% [1] - The penetration rate of NEVs in the luxury car segment was 30.3% [1] - The penetration rate of NEVs among mainstream joint venture brands was only 5.3% [1]

中国乘联分会：6月新能源车市场零售111.1万辆，同比增29.7%。 ...