China Securities Co., Ltd.: Electric vehicle sales in July showed a significant rebound, maintaining an optimistic outlook for lithium batteries in 2026 beyond expectations.

China Securities Co., Ltd. released a research report stating that in July, the domestic sales of new energy vehicles (NEVs) reached 1.561 million units according to the China Association of Automobile Manufacturers (CAAM), with a year-on-year increase of 23.7% and a month-on-month decrease of 5.0%; among these, exports accounted for 553,000 units, reflecting a year-on-year increase of 145.8% and a month-on-month increase of 5.7%, maintaining a high growth trend with strong overseas demand. According to the China Passenger Car Association (CPCA), the wholesale sales of new energy passenger vehicles totaled 1.446 million units, with a year-on-year increase of 21.3% and a month-on-month decrease of 2.8%, resulting in a penetration rate of 64.2%, a month-on-month increase of 1.3 percentage points. The overall trend for new energy passenger vehicles in July was relatively strong; prior to this, from January to June, the wholesale/retail sales of new energy passenger vehicles saw year-on-year changes of +4.7%/-14.0%. Since April, sales of new energy vehicles have been repaired month by month, and the year-on-year performance significantly improved in July, indicating that car manufacturers began exerting pressure towards their annual assessments in the second half of 2026, and domestic retail began to improve. The full-year sales expectation for 2026 is estimated at 18.56 million units, a year-on-year increase of 13%. The main points from China Securities Co., Ltd. are as follows: According to CAAM In July 2026, the domestic production of NEVs (including commercial vehicles) was 1.576 million units, a year-on-year increase of 26.8% and a month-on-month decrease of 1.4%; sales were 1.561 million units, a year-on-year increase of 23.7% and a month-on-month decrease of 5.0%. According to the CPCA In July 2026, wholesale sales of domestic new energy passenger vehicles were 1.446 million units, a year-on-year increase of 21.3% and a month-on-month decrease of 2.8%; the penetration rate was 64.2%, with a month-on-month increase of 1.3 percentage points. Retail sales were 951,000 units, a year-on-year decrease of 3.9% and a month-on-month increase of 5.8%; the penetration rate was 65.1%, with a month-on-month increase of 2.3 percentage points. Exports reached 540,000 units, a year-on-year increase of 147.8% and a month-on-month increase of 8.1%; the penetration rate was 58.5%, with a month-on-month decrease of 1.0 percentage points. 1) In terms of segments, the retail sales share of A00 and A0 level new energy passenger vehicles slightly increased month-on-month, while the A level new energy passenger vehicle retail sales share slightly decreased month-on-month. The B level and above new energy passenger vehicles maintained a high level of sales share but experienced a slight month-on-month decrease. Among them, B level and above sales were 510,000 units, accounting for 53.5%, with a year-on-year increase of 3.3 percentage points and a month-on-month decrease of 1.0 percentage points; A level sales were 235,000 units, accounting for 24.7%, with a year-on-year decrease of 2.7 percentage points and a month-on-month decrease of 0.5 percentage points; A00 and A0 level sales were 208,000 units, accounting for 21.9%, with a year-on-year decrease of 0.6 percentage points and a month-on-month increase of 1.6 percentage points. The proportion of B level and above models remains high, primarily driven by the continuous release of sales momentum under the vehicle replacement policy in 2026, swaying passenger vehicle sales towards middle to high-end segments. 2) In terms of models, BYD Company Limited's Yuan UP led the market with sales of 63,000 units (month-on-month increase of 16.7%) and a market share of 4.4% (month-on-month increase of 0.7 percentage points). BYD's Song, Tesla's Model Y, and Geely's Xingyuan ranked second, third, and fourth, with sales of 61,000, 60,000, and 55,000 units, corresponding to month-on-month changes of -23.0%, +6.0%, and +8.2%, and market shares of 4.2%, 4.1%, and 3.8%, with month-on-month changes of -1.1 percentage points, +0.3 percentage points, and +0.4 percentage points respectively. 3) In terms of automakers, BYD Company Limited retained its first position with sales of 411,000 units, a month-on-month increase of 3.4% and a market share of 28.4%, with a month-on-month increase of 1.6 percentage points. Geely and Chery ranked second and third, with sales of 157,000 and 122,000 units respectively, showing month-on-month changes of -1.4% and +14.2%, and market shares of 10.8% and 8.4%, with month-on-month changes of +0.1 percentage points and +1.2 percentage points. 4) In terms of exports, the export of new energy vehicles reached 553,000 units (according to CAAM), reflecting a year-on-year increase of 145.8% and a month-on-month increase of 5.7%, maintaining a high growth trend with sustained strong overseas demand. Among these, Tesla exported 66,300 units, a year-on-year increase of 143.2% and a month-on-month increase of 83.4%. Investment Recommendations The overall trend of new energy passenger vehicles in July was relatively strong; prior to this, from January to June, the wholesale/retail sales of new energy passenger vehicles showed year-on-year changes of +4.7%/-14.0%. Since April, sales of new energy vehicles have been month by month recovering, and the year-on-year performance significantly improved in July, indicating that manufacturers began to exert pressure from the annual assessments in the second half of 2026, and domestic retail started to improve. The full-year sales expectation for 2026 is estimated at 18.56 million units, representing a year-on-year increase of 13%. Recommendations include Contemporary Amperex Technology, Xuzhou Handler Special Vehicle, Jiangsu Dingsheng New Materials Joint-Stock, Yunnan Energy New Material, Shijiazhuang Shangtai Technology, Hunan Yuneng New Energy Battery Material, Hubei Wanrun New Energy Technology, Jiangsu Lopal Tech. Group, Fulin Precision, Shenzhen Capchem Technology, Guangzhou Tinci Materials Technology, Jiujiang Defu Technology, Zhejiang Hailiang, Jiangsu Cnano Technology Co., Ltd., Eve Energy Co., Ltd., Guangzhou Great Power Energy and Technology, ZENERGY, Gotion High-tech, Sunwoda Electronic, Do-Fluoride New Materials, Hunan Zhongke Electric, BTR, Shenzhen Kedali Industry, Ningbo Zhenyu Technology, and upstream lithium carbonate, etc. Risk Analysis 1) Downstream production and sales of new energy vehicles do not meet expectations; 2) Raw material prices rise beyond expectations; 3) Key projects in the lithium battery industry chain proceed below expectations.