Soochow: August domestic sales of electric vehicles shine, overseas demand surges, industry chain boom season continues.

Soochow released a research report stating that domestic electric vehicle sales were strong in August, maintaining an annual growth expectation of around 25%, while sales growth in Europe, America, and other regions continued to be weak. The global electric vehicle sales are expected to grow by around 20% in 2024, slightly decreasing to 15% in 2025, and then expected to recover to 20% in 2026 with the launch of overseas models. The industry outlook for September remains positive, mainly benefiting from overseas energy storage demand. The demand for energy storage in Europe, emerging markets, and the US is expected to increase significantly in the coming years. In August, domestic electric vehicle sales were strong, maintaining an annual growth expectation of around 25%, while sales growth in Europe, America, and other regions remained weak. Domestic sales in August reached 1.1 million units, with a year-on-year increase of 30% and a month-on-month increase of 11%, with a penetration rate of 45%. Pure electric vehicle models like Tesla and Geely's Galaxy performed well, with a 3% increase in market share month-on-month. In August, electric vehicle exports reached 110,000 units, with a 22% increase month-on-month and 6% year-on-year, totaling 820,000 units, a 13% increase, with an expected annual growth of 20% to 1.4 million units. From January to August, domestic electric car sales reached 7.04 million units, a 31% increase year-on-year, with a conservative annual expected total of 11.85 million units, a 25% increase. Energy storage is driving the industry, with significant production growth expected in September. Industry production in Q3 is expected to increase by 10-20% compared to the previous quarter, with expectations for high industry activity until November. Battery production in September is better than materials production, with a clear differentiation among materials. The industry is expected to see a 10-20% increase in production in Q3, with high industry activity expected to continue until November. Unit profitability for batteries in Q2-Q3 is relatively stable, with slight decreases in profitability for materials such as iron-lithium, electrolytes, and structural components. From Q2 onwards, iron-lithium, electrolyte hexafluoride, copper foil, and some auxiliary materials have maintained industry-wide losses apart from the leading companies, gradually improving profitability and stabilizing unit profits for structural components. A slight decrease in profitability is expected due to price decreases in Q3. Leading companies in the structural component sector show significant cost advantages, while lower-end products are expected to see slightly lower profitability due to increased market share. Nickel price increases have led to a rebound in profits for precursor materials, while leading battery companies with customer structure and cost advantages continue to perform better than second-tier companies. Investment recommendations: We recommend investing in companies with stable competitive positions, clear profit advantages, and involvement in energy storage. Top recommendations include Contemporary Amperex Technology, BYD Company Limited, Eve Energy Co., Ltd., Shenzhen Kedali Industry, Hunan Yuneng New Energy Battery Material, Shijiazhuang Shangtai Technology, Shenzhen Capchem Technology, Shanghai Putailai New Energy Technology, Guangzhou Tinci Materials Technology, CNGR Advanced Material, Jiangsu Cnano Technology Co., Ltd., Zhejiang Huayou Cobalt, Ningbo Ronbay New Energy Technology, Beijing Easpring Material Technology, Yongxing Special Materials Technology, Sinomine Resource Group, Ganfeng Lithium Group, Tianqi Lithium Corporation, Shenzhen VMAX New Energy, Yunnan Energy New Material, and Shenzhen.Senior Technology Material, Shenzhen Dynanonic, and Shenzhen Manst Technology.Risk alert: Price competition exceeds market expectations, fluctuation in raw material prices, and investment growth rate declining.