2026-01-20 01:50Summary of Key Points from the Conference Call Industry Overview: Greater China Auto, EV, and EV Battery Industry Forecasts - China's Auto Industry: Expected to face challenges in 2026 with a forecasted decline in auto wholesales by 1.6% YoY compared to a 10% YoY increase in 2025. This decline is attributed to front-loaded demand in 2025 [1] - Domestic EV Sales: Anticipated to grow only 7% YoY in 2026 due to a 5% increase in purchase tax and reduced trade-in subsidies [1] - Export Sales: Projected to increase by 12% YoY, reaching 7.9 million units in 2026, with EV exports expected to surge by 40% YoY [1] - Competition Dynamics: Shift from price competition to configuration-based competition, necessitating more investment in autonomous driving (AD) and smart cabin technologies [1] Key Automotive/EV Themes for 2026 Theme 1: Export Growth - Export Growth: Companies like Chery and BYD are expected to benefit significantly from exports, especially with the EU's minimum EV price replacing tariffs [2] Theme 2: Autonomous Driving Development - ADAS to AD Transition: L3 permits issued to Changan and BAIC, with highway/city NOA penetration expected to exceed 40% in 2026 and 85% by 2030. L4/L5 penetration is projected to reach 8% by 2030 [3] Theme 3: Cost Concerns - Battery and Memory Costs: Rising costs and supply stability of memory are key concerns for auto OEMs [3] Key Battery Themes for 2026 Theme 1: Energy Storage Systems (ESS) - ESS Demand: Global battery ESS installations expected to grow by 33% YoY in 2026, with shipments increasing by 41% YoY [4] Theme 2: Global Expansion - Overseas Capacity Expansion: Chinese battery manufacturers are accelerating their overseas capacity expansion, particularly in Europe and Southeast Asia, in response to rising tariffs and trade tensions [4] Theme 3: VAT Rebate Changes - Export VAT Rebate Cut: Anticipated to lead to a rush in battery production and shipment in Q1 2026, potentially increasing raw material prices and exerting cost pressure on battery makers and auto OEMs [5] Theme 4: Technological Innovation - Sodium-Ion Battery: Launch of Gen-2 sodium-ion battery expected, with ASSB (all-solid-state battery) small-batch production anticipated to start in 2027 and scale up significantly post-2029 [5] Investment Recommendations - Top Picks: - XPeng: Launch of Mona SUV and HR in 2H26, with a focus on AI-related businesses [6] - CATL: Growth driven by CEV, ESS, and overseas capacity despite short-term cost pressures [6] - Tuopu: Major supplier for humanoid robots with overseas expansion [6] - Minth: Resilient earnings growth supported by high overseas market exposure [6] - Hesai: Increased LiDAR adoption in China alongside L3 ADAS development [6] Additional Insights - Market Dynamics: The shift in competition and the focus on technological advancements highlight the evolving landscape of the automotive and EV sectors in China, emphasizing the need for companies to adapt to changing consumer preferences and regulatory environments [1][3][4][5]