Bank of America Securities: Electric vehicle sales growth in the second quarter generally weaker than expected, with overseas growth being a highlight.

Bank of America Securities issued a research report stating that, when reviewing the performance of automotive manufacturers, component suppliers, and dealers in the second quarter, it has downgraded sales forecasts for several automakers, including LI AUTO-W (02015) and XPENG-W (09868), due to weak domestic demand. However, it upgraded the forecasts for LEAPMOTOR (09863) and Chery (09973) due to stronger vehicle cycle and export growth. Regarding expectations for second-quarter performance, the report indicated that, following a reduction in subsidies for trade-ins and the early depletion of demand, sales growth for electric vehicles was generally weaker than anticipated. Leap Motor and NIO performed better, driven by strong vehicle cycles; BYD Company Limited faced sales growth limitations due to restricted capacity of its second-generation blade batteries; and Chang'an Automobile experienced weak domestic sales attributed to inventory clearance and lackluster performance of new models. Traditional state-owned automakers such as BAIC, SAIC, and Lantu saw sales fall short of expectations, while GAC benefited from the stable performance of its own brands, with sales roughly in line with expectations. Overseas growth remained a highlight in the first half, driven by robust electric vehicle exports. The bank expects that BYD COMPANY (01211), Chery, GEELY AUTO (00175), and Leap Motor will see export growth of 72%, 39%, 149%, and 340% respectively in 2026, reaching 1.85 million, 1.8 million, 1.05 million, and 220,000 units. All automakers are facing inflation in raw material costs, including memory chips, batteries, and metals, but some may mitigate the impact through more favorable product mixes, higher export ratios, premium brands, and increased self-developed technology content. The report stated that BYD Company Limited is in a transition year from its first generation to the second generation of batteries, limiting earnings per share growth in 2026. Supported by export growth, energy storage system shipments, and the recovery of domestic profit margins, the bank expects BYD Company Limited's earnings growth to re-accelerate in 2027.