Citi: Smart connected new energy vehicle plan benefits industry consolidation; August domestic NEV passenger car sales up 6% month-on-month.

Citi released a research report stating that mainland China announced the "15th Five-Year Plan" for smart connected new energy vehicles last Friday (the 11th), with key targets including a 70% NEV penetration rate for passenger cars and 40% for commercial vehicles by 2030, along with strict energy consumption caps: pure electric vehicles must not exceed 11.5 kWh per 100 kilometers and average fuel consumption must not exceed 3.3 liters per 100 kilometers, as well as promoting large-scale commercialization of autonomous driving. The bank believes that the era of pure price-driven electrification competition has ended, and automakers must simultaneously master energy efficiency, self-developed artificial intelligence and intelligent driving capabilities, as well as software-defined vehicle architecture; ADAS will shift from optional to a regulatory baseline, and autonomous driving safety must be quantifiably superior to human driving performance; in-vehicle AI and large language models have also officially been elevated to national strategic industry priorities. The bank expects that the policy will promote industry consolidation, and future winners must simultaneously meet energy consumption compliance, self-developed smart connectivity, and possess sufficient capital for sustained R&D. Citi also summarized August insurance retail trends, noting that China's domestic NEV passenger car sales rose 6% month-on-month and fell 11% year-on-year, consistent with the CPCA's pace; NEV penetration rose to 64.3%, with BEV, PHEV, and EREV penetration rising 1.7 percentage points, falling 0.5 percentage points, and falling 0.5 percentage points month-on-month respectively, while fuel vehicle penetration fell to 35.7%. Tesla, Inc.(TSLA.US), LI AUTO-W(02015), Great Wall Motor(02333), CHERY AUTO(09973), XPeng, Inc. ADR Sponsored Class A-W(09868), LEAPMOTOR(09863) and others expanded their NEV market share month-on-month; the top five in the industry had a market share of 52.9%, down 0.6 percentage points month-on-month and down 4.8 percentage points year-on-year. GEELY AUTO(00175) leads the Chinese brand fuel vehicle market with a 32.6% market share. Tesla, Inc.'s China-made insurance retail fell 12% year-on-year and rose 80% month-on-month to 50,047 units, with wholesale volume of 86,166 units, up 4% year-on-year and down 8% month-on-month; exports were 36,119 units, up 39% year-on-year and down 46% month-on-month. The bank estimates that passenger car inventory decreased by 0.1 months month-on-month to 2.9 months at the end of August, NEV inventory fell to 2 months, and fuel vehicle inventory fell to 4.5 months; Chinese brand NEV market share remains at a high of 84.6%, down 1.9 percentage points month-on-month, while American brands accounted for 11.5%, up 2.3 percentage points month-on-month.