Zheshang: Policy disruptions do not change the long-term trend of going global; automotive globalization layout is accelerating.

Zheshang released a research report stating that, from a long-term perspective, EU policy disruptions will force domestic automakers to accelerate the construction of localized overseas production capacity to reduce policy risks, and the overall impact will be relatively manageable. Currently, domestic new energy vehicle manufacturers have already occupied a pivotal position globally, and the long-term space for going global remains broad. The bank expects that by 2030, there will still be room for 60% growth compared with current export volumes, and short-term disruptions will not change the long-term direction. Zheshang's main views are as follows: EU trade policy has been frequently disrupted, but the long-term impact is overall manageable Looking back at history, in November 2024, after the EU's countervailing duties on Chinese BEVs officially took effect in October 2024, China's BEV exports to Europe fell 59.4% month on month, but then recovered quickly. In 2025, under the influence of earlier rush exports, they still grew 7.2% year on year, and from January to July 2026 they rebounded rapidly to 65.6%, indicating that tariffs mainly caused short-term shipment and model mix disruptions and did not significantly weaken end demand in Europe. Recently, there have been many export-related policies, including the reduction of tax rebates for new energy vehicles starting April 1, 2027, and a decrease in exports of hybrid models to the EU due to China-EU trade consultations. On the tax rebate front, the bank believes there will be some changes in the export rhythm around April 2027, and in the long run automakers can pass on the costs downstream through price adjustments; in addition, if the China-EU trade consultations are formally implemented, there will be some short-term impact on hybrid exports to the EU, but from a long-term perspective it will force domestic automakers to accelerate the construction of localized overseas production capacity to reduce policy risks, and the overall impact will be relatively manageable. Reviewing solar and power batteries to infer changes in complete vehicles Since the implementation of the tax rebate policy for new energy, although factors such as rush exports, order fluctuations, and quotation adjustments have appeared around the rebate nodes, the final export performance, profitability, and stock price performance have shown some divergence. The reason is ultimately that tax rebates are not the core variable affecting export profitability, and judgment still needs to be made comprehensively in combination with industry development trends, the competitive landscape, supply and demand conditions, and other factors. In addition, new energy manufacturers have actively laid out overseas production capacity construction to cope with policy risks while also supporting local customers, which can serve as a reference for the future development of complete vehicles. Local vehicle plant construction is imminent, and short-term disruptions will not change the long-term direction Currently, domestic new energy vehicle manufacturers have already occupied a pivotal position globally, and the long-term space for going global remains broad. The bank believes that as new energy tax rebates decrease, domestic companies can buffer the impact through partial price adjustments, and even after price adjustments, the cost-effectiveness and product performance advantages of domestic automakers remain prominent. In the long run, many automakers have begun the pace of localized plant construction overseas, forming a multi-regional manufacturing network in Southeast Asia, Latin America, Europe, and Central Asia. Although this will increase capital expenditure and fixed costs in the short term, in the medium and long term, leading automakers with product matrices, financial strength, channel foundations, and supply chain integration capabilities are more likely to be the first to cross the break-even point and, through local manufacturing, form barriers in cost, delivery, and policy access. As overseas sales continue to rise, localized plant construction by Chinese automakers is expected to gradually transform from a defensive choice to respond to trade barriers into an essential path for enhancing global competitiveness. Taking the EU + UK market, which has recently been significantly affected by policy, as an example, the bank expects that by 2030 there will still be room for 60% growth compared with current export volumes, and short-term disruptions will not change the long-term direction. Key targets BYD Company Limited, GEELY AUTO, LEAPMOTOR, SAIC Motor Corporation, CHERY AUTO, XPeng Group, Sinotruk Jinan TruckH, BAIC Foton Motor, Yutong Bus Co.,Ltd., Zhejiang CFMOTO Power, Loncin Motor. Risk warnings: EU trade policy toward Chinese automobiles tightens beyond expectations; overseas demand for new energy vehicles and penetration rate improvement fall short of expectations; overseas factory construction progress, capacity ramp-up, and utilization fall short of expectations; price competition in overseas markets intensifies; shipping prices, exchange rates, and geopolitical risks.