Core Insights - The Chinese vehicle exhaust treatment industry is entering a rapid development phase driven by dual forces of policy and technology under the "dual carbon" strategy and pollution control for mobile sources [2][3][4] Industry Development Status - The industry is experiencing a deep integration of policy-driven and technological transformation, with the implementation of the National VI standard and the acceleration of new energy technologies such as hydrogen fuel and silicon carbide electric drive [3][11] - The market size is projected to reach 32.8 billion yuan in 2024, with a forecasted increase to 38 billion yuan in 2025, driven by the advancement of the National VII standard and high coverage of the I/M system [3][11] - The upgrade of the National VII standard is expected to release over 200 billion yuan in incremental market space, with gasoline vehicle post-treatment systems projected to generate 164.4 billion yuan from 2027 to 2030 [3][4][11] Driving Factors for Industry Development - Vehicle pollutants are the main source of mobile source emissions, with NOx emissions from vehicles accounting for over 34% of the national total, and heavy-duty trucks contributing over 80% [4][11] - The urgent need for pollution control is highlighted by the contribution of vehicle emissions to PM2.5 levels in urban areas, often exceeding 40% [4][11] - Continuous upgrades in regulatory policies, such as the stringent National VI standards, are driving technological innovation in the industry [5][11] Future Development Direction - The National VII standard is being accelerated, focusing on the adaptability of cutting-edge technologies like silicon carbide electric drive and hydrogen internal combustion engines, marking a shift from traditional fuel to new energy pathways [6][11] - The industry is evolving towards a dual-track development model that encompasses deep treatment of traditional internal combustion engines and control of new energy vehicle emissions [3][6][11] Market Potential - China has the largest automotive market globally, with a vehicle ownership of 460 million as of mid-2025, creating a substantial replacement market for exhaust treatment products [8][11] - The annual sales of over 10 million new vehicles provide a stable incremental market for exhaust treatment systems, supported by policies promoting the replacement of old vehicles [8][11] Technological Innovation and Industry Upgrade - The industry is witnessing significant advancements in technology, with domestic companies making breakthroughs in key areas such as catalyst materials and system integration [9][11] - The collaborative effects within the industry chain are becoming more pronounced, with increasing localization of materials and enhanced system integration capabilities [9][11]