Summary of the China Passenger Vehicle Monthly Chartbook - December 2025 Industry Overview - The report focuses on the **passenger vehicle (PV)** and **new energy vehicle (NEV)** industry in China, highlighting trends in retail and wholesale volumes, inventory levels, pricing, and battery prices [1][2][5]. Key Industry Trends - **NEV Retail Growth**: NEV retail growth decelerated to **+3% year-over-year (yoy)** in December 2025, down from **+4% yoy** in November 2025, attributed to decreasing subsidies [1][5]. - **ICE Decline**: Internal combustion engine (ICE) vehicle sales further deteriorated, showing a decline of **-31% yoy** in December, compared to **-22% yoy** in November, with higher ICE inventory levels [1][5]. - **Export Growth**: Exports of passenger vehicles (PV) and NEVs showed significant strength, with growth rates of **+47% yoy** and **+164% yoy** respectively in November, compared to **+41% yoy** and **+67% yoy** in October [1][5]. Detailed Industry Data - **December 2025 Highlights**: - PV retail sales decreased by **-14% yoy** and increased by **+2% month-over-month (mom)**. - Wholesale sales for PV decreased by **-9% yoy** and **-7% mom**. - NEV retail sales increased by **+3% yoy** and **+1% mom**, while wholesale sales increased by **+3% yoy** but decreased by **-8% mom**. - NEV retail penetration reached **59.1%**, an increase of **9.7 percentage points (pp) yoy**, while wholesale penetration was **56.0%**, up **6.8 pp yoy** [5][6]. Pricing and Inventory Trends - **Inventory**: NEV inventory remained stable, while ICE inventory levels increased [5][6]. - **Pricing**: Dealer discounts for both NEVs and ICE vehicles narrowed month-over-month, with one NEV manufacturer implementing a price cut [6]. - **Battery Prices**: Lithium cobalt oxide (LCE) battery prices increased by **+32% mom**, while lithium iron phosphate (LFP) and nickel-cobalt-manganese (NCM) battery prices remained flat [6]. Company Highlights - **BYD**: - Delivered **133,000 units** of export volume in December 2025, maintaining strong overseas expansion momentum. - Expected overseas sales volume to reach between **1.5 million to 3.5 million** units from 2026 to 2035, driven by NEV penetration and product competitiveness. - Forecasted **30% earnings compound annual growth rate (CAGR)** from 2025 to 2028, with overseas profit contribution expected to rise from **21% in 2024 to 60% by 2028** [6][7]. - **XPeng**: - Delivered **32,000 units** of domestic retail volume in December 2025, reflecting a **-5% yoy** decline but a **+2% mom** increase. - Market share remained relatively stable with a **-0.2 pp** change. - Blended transaction price increased by **5% yoy** and **4% mom**, attributed to a favorable model mix [7]. Future Outlook - Domestic PV and NEV volume growth is expected to slow down in 2026, with projections of **-2% yoy** for PV and **+11% yoy** for NEV, compared to **+4% yoy** and **+18% yoy** in 2025. - Exports are anticipated to be a bright spot for the industry, particularly for companies like BYD, which is well-positioned for overseas exposure [6][7]. Conclusion The December 2025 report indicates a challenging environment for the domestic PV market, particularly for ICE vehicles, while NEVs continue to show growth albeit at a slower pace. Export opportunities remain robust, particularly for leading companies like BYD and XPeng, which are expected to capitalize on international markets in the coming years [1][5][6][7].

Core Insights - Retail sales of passenger vehicles in China fell by over 8% year-on-year to 2.23 million units in November 2025, down from 2.45 million units in the same month last year, marking the second consecutive month of decline [1][2] - The market is experiencing saturation after a strong rebound last year, with sales having increased by 18% in November 2024 [2] - China's GDP growth slowed to 4.8% year-on-year in Q3 2025, influenced by weakening consumer sentiment and trade tensions with the US [2] Vehicle Sales Breakdown - Sales of internal combustion engine (ICE) vehicles decreased by 22% to 910,000 units, while new energy vehicle (NEV) sales increased by 4% to 1.32 million units, representing over 59% of total sales [3] - In the first eleven months of 2025, overall passenger vehicle retail sales rose by 6.6% to 21.622 million units, with NEV sales increasing by nearly 20% to 11.47 million units, accounting for 53% of total passenger vehicle sales [4] - ICE vehicle sales during the same period totaled 10.15 million units [4] Government Policy and Market Expectations - The Chinese government plans to reduce its NEV stimulus program by the end of the year, with expectations of a strong surge in NEV sales in December as confirmed by the CPCA [5]

Core Viewpoint - BYD Company reported strong sales and record exports in November, indicating competitive strength against Tesla in various global markets, particularly outside the U.S. [1] Sales Performance - BYD sold 480,186 new energy vehicles (NEV) in November, marking its highest monthly figure in 2025, although this represents a 5.3% decrease year-over-year but an 8.7% increase from October [2] - Commercial NEVs saw an 88% year-over-year increase, totaling 5,625 units sold in November [2] - Battery-powered electric vehicle sales rose 19.9% year-over-year to 237,540 units, up 6.7% from October [3] - Passenger plug-in hybrid vehicle sales were 237,381 units, down 22.4% year-over-year but up 10.8% from October, marking the eighth consecutive month of year-over-year declines [3] - From January to November, BYD's total NEV sales reached 4,182,038 units, an 11.3% year-over-year increase [3] Export Growth - BYD's exports in November reached a record 131,935 units, a significant 325.9% increase year-over-year and a 57.3% increase from October [5] - From January to November, BYD sold 912,911 vehicles overseas, reflecting a 153.6% year-over-year growth [5] Competitive Landscape - Tesla's wholesale sales in China increased by 10% year-over-year in November, totaling 78,856 units, which is also a 41% increase from October [6] - Tesla's total wholesale sales from January to November stand at 754,561 units, down 8.3% year-over-year, trailing behind BYD's overall NEV sales [8] - Tesla has experienced year-over-year declines in wholesale sales in China for eight of the eleven months in 2025, although the recovery in November may indicate a positive trend [9] Market Dynamics - BYD's aggressive expansion in Europe and Asia could disrupt Tesla's market share, particularly with lower-priced models gaining consumer preference [10] - A survey indicated a growing preference among European consumers for vehicles made in China over those made in the U.S. [10] - Tesla faces challenges from brand perception issues and increased competition from lower-cost rivals like BYD [11] Stock Performance - BYD shares are trading at $12.69, up 12.03% year-to-date in 2025, while Tesla shares are at $426.79, up 5.68% year-to-date [12]

Summary of Key Points from the Conference Call Industry Overview - The conference focused on the **Electric Mobility** sector within the **Asia Pacific** region, highlighting the competitive landscape and future trends in electric vehicle (EV) adoption and sales [9][10]. Core Insights - **Passenger Vehicle (PV) Sales Forecast**: - Estimated **28.5 million units** of PV sales in 2026, reflecting a **5% year-over-year decline** [10][12]. - Breakdown of PV wholesale volume for 2024-2027: - 2024: 27.553 million units - 2025: 29.925 million units - 2026: 28.454 million units - 2027: 29.354 million units - Domestic sales are projected to decline by **7%** in 2026, while exports are expected to grow by **4%** [13]. - **New Energy Vehicle (NEV) Sales Forecast**: - Anticipated **16.5 million units** of NEV sales in 2026, representing an **8% year-over-year increase** [17]. - Breakdown of EV wholesale volume for 2024-2027: - 2024: 12.281 million units - 2025: 15.201 million units - 2026: 16.486 million units - 2027: 18.136 million units - Battery Electric Vehicles (BEV) and Plug-in Hybrid Electric Vehicles (PHEV) are expected to see growth rates of **10%** and **6%** respectively in 2026 [18]. - **Market Dynamics**: - Retail discounts have stabilized in Q3 2025 amid an anti-involution campaign, indicating a shift in pricing strategies [14]. - The average time car owners spend in their vehicles is approximately **1.5 hours per day** [25]. Export Insights - **China's Vehicle Exports**: - Asia and Europe accounted for over **65%** of China's vehicle exports in 2025 [21]. - Breakdown of vehicle export units by region: - Asia: **28%** - Europe: **19%** - North America: **6%** [22]. OEM Market Share - Chinese OEMs hold approximately **13%** of vehicles sold outside the US and China, indicating a growing international presence [25]. Future Focus Areas for Auto OEMs - Key areas of focus for automotive OEMs include: - AI-enabled smart cockpit technologies - Development of humanoid robots - Electric Vertical Takeoff and Landing (eVTOL) vehicles - Autonomous vehicles [26]. Conclusion - The electric mobility sector in the Asia Pacific is poised for significant changes, with a mixed outlook on traditional PV sales and a robust growth trajectory for NEVs. The strategic focus on technology and international market expansion will be crucial for OEMs navigating this evolving landscape.

Investment Rating - The investment rating for Chongqing Changan Automobile is Overweight [7]. Core Insights - The report highlights a resilient performance in Q1 2025, with a net profit after tax (NPAT) of Rmb1.35 billion, reflecting a year-on-year growth of 16.8%, despite a revenue decline of 7.7% to Rmb34.1 billion [1][2]. - The report anticipates a notable narrowing of losses in the NEV (New Energy Vehicle) segment, as indicated by a reduction in minority interest losses [1]. - Gross margin improved modestly by 1.1 percentage points year-on-year to 13.9%, although it remains below the previous year's margin of 14.9%, suggesting ongoing pricing pressures [2]. - The investment thesis is strengthened by the visibility of profit growth driven by advancements in NEV technology [2]. Summary by Sections Financial Performance - Q1 2025 NPAT: Rmb1.35 billion, YoY growth of 16.8% [1]. - Revenue decreased by 7.7% to Rmb34.1 billion [1]. - Gross margin increased by 1.1 percentage points YoY to 13.9% [2]. NEV Business Outlook - Expected significant reduction in losses related to the NEV business, with minority interest losses decreasing from Rmb302 million in Q1 2024 to Rmb137 million in Q1 2025 [1]. - The report emphasizes improving profit growth visibility into 2025 due to NEV advancements [2]. Market Position - The price target for Chongqing Changan Automobile is set at Rmb17.90, indicating a potential upside of 45% from the current price of Rmb12.35 [7]. - The company has a market capitalization of Rmb105.43 billion [7].