In the case of 2030, our ‘guess’ turned out to be spot on, and for 2035 our forecast alterations also align pretty well with the proposals, though we will need to make some adjustments regarding which powertrain types will be sold beyond that year. All quarter 3, 2025 forecast updates were aligned with the change in assumption. In short, we reduced the expectations for the EU+ BEV share of PV sales by circa 10 percentage points across the longer-term EU+ forecast, cutting it from around 60% in 2030 to 50%, ...

December 29, 2025 08:15 AM GMT China Autos & Shared Mobility | Asia Pacific 2026 Outlook – A Year of Recession and Reinvention China's auto industry will face cyclical and policy challenges in '26, but these could prove territorially and technologically beneficial. Capturing AI lift-off and global growth prospects will be key to re-rating and idiosyncratic return. Volume risk is anticipated; margin risk less so. Could "bad news" be "good news"? Concurring with autos' cyclical laws, we expect China auto sale ...

Summary of Key Points from the Conference Call on China Auto Manufacturers Industry Overview - The conference call focused on the **China Auto Manufacturers** industry, particularly the performance of **New Energy Vehicles (NEVs)** and traditional internal combustion engine (ICE) vehicles in October 2025. Core Insights and Arguments 1. **NEV Market Performance**: - October 2025 saw a **-8% month-over-month (MoM)** decline in domestically produced NEV passenger vehicle (NEV-PV) sales, although there was a **+1% year-over-year (YoY)** increase, which missed expectations [1][9]. - Local Chinese brands maintained a high NEV market share of **84.3%**, increasing by **+1.2 percentage points (ppt) MoM** [6]. 2. **ICE Vehicle Sales**: - The penetration of ICE vehicles increased to **42.4%**, up **+0.8 ppt MoM** [2]. - Chinese brands' ICE market share rose by **+1.7 ppt MoM** to **35.4%**, while foreign brands (German, Japanese, US) experienced declines [3]. 3. **Market Share Changes**: - **Xiaomi, Nio, and Seres** gained BEV market shares with increases of **+1.3 ppt, +1.0 ppt, and +0.8 ppt** respectively, while **Tesla and BYD** lost market shares of **-4.9 ppt and -2.6 ppt** [2]. - **Geely and Chery** gained PHEV market shares by **+1.2 ppt and +0.3 ppt** respectively, while **GWM and BYD** lost shares [2]. 4. **Tesla's Performance**: - Tesla's domestic insurance retail sales dropped **-61% MoM** and **-34% YoY** to **27,367 units**. Wholesales were **61,497 units**, down **-32% MoM** and **-10% YoY** [4][19]. - Tesla's inventory levels increased, indicating potential overstock issues [5]. 5. **Inventory Levels**: - Overall inventory for major OEMs rose from **2.3 months** at the end of September to **2.7 months** at the end of October [5]. - NEV inventory also increased by **0.3 months MoM** to **1.7 months** [5]. Additional Important Insights 1. **Export Performance**: - The export volume of NEVs reached **35,491 units**, reflecting a **+84% MoM** and **+28% YoY** increase, indicating strong international demand [4]. 2. **Sales Data**: - Total domestically produced NEV PV sales for October 2025 were **1,189,321 units**, with a **1% YoY increase** but an **8% MoM decrease** [9]. 3. **Market Dynamics**: - The competitive landscape is shifting, with local brands gaining ground against established players like Tesla and BYD, suggesting a potential long-term trend favoring domestic manufacturers [2][3]. 4. **Analyst Certification and Disclosures**: - The report includes important disclosures regarding potential conflicts of interest and the analysts' certifications, emphasizing the need for investors to consider these factors in their decision-making [7][26]. This summary encapsulates the key points discussed in the conference call, highlighting the current state and trends within the Chinese auto manufacturing industry, particularly focusing on NEVs and ICE vehicles.

Summary of Key Points from the Conference Call on China Auto Manufacturers Industry Overview - The conference call focused on the **China Auto Manufacturers** industry, specifically insights from Mr. Cui Dongshu of the **China Passenger Car Association (CPCA)** regarding sales forecasts, stimulus outlook, and market trends in the automotive sector. Core Insights and Arguments 1. **August Sales Forecast**: - Mr. Cui forecasts a **6% month-over-month (MoM)** increase in domestic retail for passenger vehicles (PV) in August, translating to a **2% year-over-year (YoY)** growth. - Wholesales are expected to rise by **5% MoM** and **9% YoY**, while exports are projected to grow by **3.8% MoM** and **20% YoY**, reaching **500,000 units** [1][2]. 2. **Auto Stimulus Outlook**: - The Chinese government is expected to be conservative with auto industry stimulus in the second half of 2025, potentially reallocating some funds to 2026 due to strong GDP growth in the first half of 2025 and high sales driven by previous stimulus policies. - The available funding for the consumption replacement scheme is estimated at **Rmb138 billion** in 2H25, down from **Rmb162 billion** in 1H25 [2][10]. 3. **2025 Forecast**: - Mr. Cui anticipates a **6% YoY growth** in PV retail for 2025, with the second half likely to be flat YoY. - NEV (New Energy Vehicle) wholesales are expected to increase by **27% YoY**, with a **20% YoY growth** in 2H25 [3]. 4. **July Sales Review**: - PV production volume decreased by **7% MoM** but increased by **12% YoY**. - Wholesales fell by **11% MoM** but rose **13% YoY**, while retail sales dropped **12% MoM** but grew **6% YoY**. - The decline in retail sales is attributed to consumer hesitation [4]. 5. **NEV Performance**: - NEV wholesales grew by **24% YoY**, with retail up **12% YoY**. - Battery Electric Vehicles (BEV) showed strong performance with a **45% YoY** increase, while Plug-in Hybrid Electric Vehicles (PHEV) and Extended Range Electric Vehicles (EREV) were weaker, with growth of **3%** and a decline of **6% YoY**, respectively [4]. 6. **Market Trends**: - The average pricing of passenger vehicles has been declining, with July 2025 average pricing at **Rmb169,000**, down from **Rmb183,000** in 2023 and **Rmb177,000** in 2024. - The high-end segment is experiencing weaker sales, particularly among German luxury brands [8][9]. 7. **Lithium Carbonate Inventory**: - Mr. Cui noted that the current inventory of lithium carbonate is estimated at **140,000 tons**, with a reasonable future price around **Rmb60,000 per ton** due to low production costs and tepid global NEV demand [7]. 8. **BYD Sales Forecast**: - BYD's wholesales for 2025 are projected to be around **4.8 million units**, with a potential increase in dealer discounts if the target of **5.5 million units** is not adjusted [12]. Additional Important Insights - **Discount Levels**: - NEV discount levels remained stable at **10.2%** in July, while luxury ICE (Internal Combustion Engine) discounts increased to **27.2%** from **25.7%** in May [4][11]. - **New Model Highlights**: - Several new models were highlighted, including the **Leapmotor B01** and **BYD Seal 06 Touring**, which are competitively priced to target existing market players [5]. This summary encapsulates the key points discussed during the conference call, providing a comprehensive overview of the current state and future outlook of the China auto manufacturing industry.

Investment Rating - The report maintains a "Buy" rating for LG Chem and BYD, while it has a "Sell" rating for POSCO Future M and EcoPro BM [6][31]. Core Insights - The global share of consumers considering buying a Battery Electric Vehicle (BEV) has declined by 5 percentage points year-on-year to 41%, leading to a downward revision of the 2030 global EV penetration forecast by 8 percentage points to 41% [2][10][16]. - The US and EU markets are particularly affected, with expected 2030 EV penetration reduced by approximately 9 percentage points to 24% and 10 percentage points to 38%, respectively, resulting in a significant reduction in global EV battery demand [2][18][27]. - Battery-related issues, particularly range anxiety, have overtaken purchase price as the main consumer concern regarding BEV purchases [2][17]. Summary by Sections Global Electric Vehicle Battery Makers - The Korea EV supply chain is the most negatively impacted by the decline in BEV purchase intentions, especially in ex-China markets [2][16]. - The report highlights that BYD has become a global player, rapidly increasing its exports despite trade barriers, while Tesla has lost its brand image in Europe [2][11]. US Autos, Auto Parts and Auto-tech - The report indicates a significant decline in US consumer interest in BEVs, with purchase intention dropping 5 percentage points to 32% [21][25]. - The potential removal of the $7,500 consumer clean vehicle tax credit and slower rollout of charging infrastructure are key factors contributing to the revised forecasts [21][41]. Lithium Market - The lithium market is currently oversupplied, with spot prices trading into the cost curve, leading to a downward revision of long-term spodumene prices to $1,200 per ton [4][54]. - The report anticipates a 12% reduction in lithium demand forecasts, primarily due to the weaker outlook for EVs [54][55]. Top Picks - The preferred order for the Korea EV supply chain is LG Chem > Samsung SDI > LG Energy Solution > SK Innovation > EcoPro BM > POSCO Future M [6][19]. - BYD is highlighted as the only Chinese OEM with rapidly growing traction in export markets, benefiting from the vacuum left by Tesla [31][32].