Broker: UOB Kay Hian
Date of Report: 18 July 2025
China Auto Sector Weekly: Electric Vehicle Growth Slows, Key Players Face Mixed Fortunes and Policy Shifts
Executive Summary: Chinese Auto Sector Sees Slower Growth Amid Rising Competition and Policy Intervention
The 28th week of 2025 brought a noticeable deceleration in China’s passenger vehicle (PV) sales, with insurance registrations barely nudging up 0.8% year-over-year and falling 8.8% week-over-week. The pullback comes as promotional discounts were rolled back, consumers await deeper deals, and the sector braces for regulatory pivots designed to curb destructive price wars. Although short-term risks are rising, long-term prospects remain robust for select leaders. This comprehensive update breaks down sector trends, company-level performance, and strategic shifts shaping China’s auto landscape.
Market Overview: Sales Slowdown and Seasonal Weakness
- PV insurance registrations: 362,000 units (+0.8% yoy, -19.6% mom, -8.8% wow).
- Passenger electric vehicles (PEV): 204,000 units (+10.3% yoy); Internal combustion engine (ICE) cars: 158,000 units (-9.2% yoy).
- PEV market share: 56.4% (+4.8ppt yoy).
- Factors: July’s traditional off-season, consumer purchase delays for deeper discounts, local subsidy anticipation, and new model launches ahead.
Sector Rating and Top Picks
- Sector rating: MARKET WEIGHT (maintained).
- Top BUYs: CATL, Geely, Tuopu.
BYD Company: Facing Short-Term Headwinds, Poised for Long-Term Transformation
- Insurance registrations: 53,400 units (-16.6% yoy, -30.6% mom, -12.3% wow).
- Breakdown:
- BYD brand: 48,630 units (-21.3% yoy).
- Denza: 1,880 units (+0.3% yoy).
- Fangchengbao (FCB): 2,840 units (+869.3% yoy).
- Yangwang (YW): 50 units (-51.5% yoy).
- Inventory days surged to 90 after promotions ended, with consumers now resisting purchases unless discounts return.
- High debt and overcapacity mean BYD needs 15% wholesale and 18% retail growth to break even.
- Recent L4 autonomous parking features failed to spark sales due to buyers waiting for newer models.
- 2025-27 net profit forecasts: Rmb45.35b/Rmb51.13b/Rmb57.66b; DCF-derived target price: HK\$142.00 (26x 2025F PE).
Geely Automobile: Strategic Synergy Through Zeekr Privatization
- EV insurance registrations: 26,130 units (+99.5% yoy, -8.1% mom, +1.4% wow).
- Brand breakdown:
- Geely + Galaxy: 19,670 units.
- Zeekr: 3,100 units (-7.3% yoy).
- Lynk & Co: 3,160 units.
- Zeekr privatization: US\$2.4bn cash or 1.23 Geely shares/Zeekr share (up to 10.9% dilution), straining cash reserves but enabling deeper EV/R&D integration and cost savings.
- 2025-27 net profit forecasts: Rmb16.19b/Rmb16.56b/Rmb20.35b; Target price: HK\$35.00 (23x 2025F PE).
XPeng: Model Pipeline and Flying Car Ambitions
- Insurance registrations: 5,820 units (+242.4% yoy, -8.9% mom, -9.9% wow), boosted by Mona M03.
- G7 mid-sized SUV launched, with 490 units registered (up 1,125% wow).
- Upcoming models: next-gen P7 sports coupe (3Q25, Rmb300,000 segment), G01 EREV (4Q25).
- Aeroht (flying car unit): Raised US\$250m, factory completion by 4Q25, deliveries targeted for 2026 (under Rmb2m).
- 2025-27 delivery estimates: 400,000/500,000/650,000 units; 2025 net loss: Rmb1,591m; 2026-27 net profit: Rmb1,098m/Rmb5,273m.
- Target price: HK\$150.00 (10-year DCF, WACC 14%).
Li Auto: Challenges in EV Transition and New Launches
- Insurance registrations: 7,330 units (-35.1% yoy, -6.9% mom, +2.4% wow).
- Issues: Intensifying EREV competition, L8/L9 sales fatigue, L6 underperformance, slow EV transition (MEGA flop, sparse 5C charging).
- New launches:
- Li i8: 6-seat pure EV SUV, Rmb350,000–400,000, 97.8 kWh/720km CLTC range, deliveries from late-August.
- Li i6: 5-seat SUV, September launch, 720km range, targets luxury segment, produced in Beijing and Changzhou.
- 2025-27 net profit forecasts: Rmb6.62b/Rmb8.27b/Rmb10.13b; Deliveries: 500,000/600,000/700,000 units; Target price: HK\$100.00 (24x 2026F PE).
Other Auto Brands: Weekly Registration Highlights
| Brand |
W28 Registrations (‘000) |
Yoy % Chg |
Mom % Chg |
Wow % Chg |
2025 YTD (‘000) |
YTD Yoy % Chg |
| BYD Co |
53.4 |
-16.6 |
-30.6 |
-12.3 |
1,679.0 |
12.8 |
| Geely Auto (EV) |
26.1 |
99.5 |
-8.1 |
1.4 |
620.8 |
272.7 |
| Tesla |
12.3 |
7.5 |
-20.7 |
145.2 |
283.6 |
-4.7 |
| Aito |
8.6 |
-8.6 |
-13.5 |
-8.5 |
166.2 |
-15.9 |
| Leapmotor |
8.5 |
89.6 |
-2.6 |
-8.9 |
195.5 |
115.8 |
| Li Auto |
7.3 |
-35.1 |
-6.9 |
2.4 |
224.3 |
5.4 |
| XPeng |
5.8 |
242.4 |
-8.9 |
-9.9 |
192.8 |
258.4 |
| Xiaomi |
6.7 |
190.4 |
20.1 |
36.6 |
169.1 |
405.7 |
| Nio |
4.1 |
20.3 |
-13.5 |
-20.0 |
121.3 |
32.0 |
| PEV Total |
204.0 |
10.3 |
-17.7 |
-3.8 |
5,701.3 |
29.5 |
| ICE-car Total |
158.0 |
-9.2 |
-21.8 |
-14.6 |
5,651.1 |
-6.4 |
EV Battery Market: CATL and BYD Retain Dominance, Sector Grows 36% YoY
- June 2025 installations: 58.20 GWh (+36% yoy, +1.9% mom).
- Market leaders:
- CATL: 25.41 GWh (43.7% share, +0.8ppt mom).
- BYD: 12.49 GWh (21.5% share, -1.0ppt mom).
- CALB: 4.39 GWh (7.5% share).
- Gotion: 1.92 GWh (3.3% share).
- EVE Energy: 2.53 GWh (4.3% share).
- 1H25 cumulative: 299.7 GWh (+47.5% yoy); CATL: 128.6 GWh (42.9% share), BYD: 70.4 GWh (23.5% share).
- BYD and CATL recently signed MOUs with BHP to electrify mining operations, supporting BHP’s 2050 net-zero emissions goal.
| Company |
Rec |
Price (lcy) |
Target Price (lcy) |
Upside/Downside (%) |
2025F PE (x) |
2026F PE (x) |
P/B 2025F (x) |
P/B 2026F (x) |
ROE 2025F (%) |
| BYD Company |
BUY |
123.80 |
142.00 |
14.7 |
24.6 |
26.3 |
0.0 |
0.0 |
18.7 |
| Geely Automobile |
BUY |
19.02 |
35.00 |
84.0 |
12.5 |
10.5 |
2.5 |
2.2 |
14.7 |
| Great Wall Motors |
SELL |
13.22 |
10.00 |
-24.4 |
15.5 |
13.7 |
1.2 |
1.1 |
11.8 |
| Li Auto Inc |
HOLD |
124.10 |
100.00 |
-19.4 |
27.3 |
22.0 |
3.9 |
3.9 |
11.5 |
| XPeng |
BUY |
71.10 |
150.00 |
111.0 |
Loss |
107.2 |
4.1 |
4.0 |
-5.1 |
| CATL |
BUY |
265.50 |
390.00 |
46.9 |
17.6 |
14.6 |
4.0 |
3.4 |
23.6 |
| Ningbo Tuopu |
BUY |
49.12 |
80.00 |
62.9 |
26.4 |
19.4 |
4.1 |
3.5 |
17.8 |
| Desay SV |
BUY |
103.85 |
190.00 |
83.0 |
21.8 |
16.4 |
4.9 |
4.0 |
24.8 |
| Minth |
BUY |
26.35 |
40.00 |
51.8 |
9.4 |
7.6 |
1.2 |
1.1 |
13.5 |
Tesla: New Model Y L and Market Momentum
- Launching 6-seat Model Y L in China at ~Rmb400,000 (dual motors, LG batteries).
- Insurance registrations surged 145% week-over-week (12,260 units), making Tesla the third-best-selling EV brand in China.
- Expected to boost average selling price (ASP) and margins; positive sentiment as new models address product evolution concerns.
Policy Update: State Council Moves to End Destructive EV Price Wars
- China’s State Council introduced measures against “irrational competition” in the EV sector.
- Initiatives: Cost investigations, price monitoring, checks on product configuration and safety, and a 60-day supplier payment cap.
- Policy goal: Shift from volume-driven to value-driven competition, emphasizing innovation, quality, and core competitiveness.
- 1H25 EV sales: 6.94m units (+40.3% yoy, 44.3% penetration); Full-year forecast: >16m units.
Ganfeng Lithium: Downgraded on Weaker-than-Expected Results
- 1H25 net loss guidance: Rmb300m-550m (down 28-61% yoy); Full-year 2025 net loss forecast: Rmb384m (cut from previous profit estimate of Rmb388m).
- 2Q25: Loss of Rmb194m to a slim profit of Rmb6m, improved from a Rmb356m net loss in 1Q25.
- Drivers: Lithium price declines and inventory write-downs; recent lithium carbonate rebound (+10% since June low) offers margin recovery prospects.
- Target price cut to HK\$25.00 (from HK\$30.00), based on 1.1x 2025F P/B; Rating downgraded from BUY to HOLD.
Investment Strategy and Sector Preferences
- Maintain MARKET WEIGHT on China’s auto sector.
- Preferred order: auto parts manufacturers > OEMs > automobile dealers.
- Reason: 60-day payment regulation favors auto parts suppliers, while dealers face continued electrification headwinds.
- Top BUYs reaffirmed: CATL, Geely, Tuopu.
Conclusion: Navigating the Shifting Landscape of China’s Auto Sector
As China’s auto industry transitions from aggressive price competition to a more stable, innovation-driven environment, investors should focus on companies best positioned for value-based growth and supply chain resilience. Despite near-term volatility and regulatory shifts, leading players in batteries, EVs, and auto parts remain well-placed to benefit from sector transformation and long-term secular growth.
