It is worth noting that the overall overseas ternary cathode demand outlook for 2026 remains subdued. The U.S. market has been sluggish since the fourth quarter of last year, prompting many overseas manufacturers to place their hopes on the European market.

Geopolitical tensions, and concerns about fiscal policy and central banks, have driven the gold price to where it is today.

TÜV Rheinland InterCert Kft (hereinafter referred to as “TÜV Rheinland”) in Hungary has been officially authorized by the European Commission, becoming the first designated Notified Body (No. 1008) under the framework of the EU Battery Regulation (EU) 2023/1542.

From Jan to May in 2025, the number of electric vehicles registered in countries around the world was approximately 7.520 million units, about 32.4% increase from the same period last year (5.682 mil units).

After facing opposition from Hungary and Slovakia, the European Commission is preparing to proceed with its plan to "fully halt imports of Russian natural gas by the end of 2027" on Tuesday, and will take legal measures to ensure the smooth implementation of the plan. The European Commission had previously formulated an energy roadmap, hoping to end dependence on Russian natural gas through legal means. This is a response to the international situation following the Russia-Ukraine conflict, as well as an effort to enhance its own energy security and promote energy transition. According to CCTV reports, on Monday local time, Hungarian Foreign Minister Péter Szijjártó stated that Hungary and Slovakia jointly vetoed a proposal at the EU Council of Energy Ministers meeting held that day, which called for the European Commission to make progress on the "plan to terminate imports of Russian energy" by June. Szijjártó pointed out that the veto aimed to demonstrate to the EU that the government cannot allow Hungary to bear energy security risks. He added that the EU's plan to require member states to eliminate their dependence on Russian energy would cause a significant surge in domestic natural gas prices in Hungary if implemented. It is reported that the European Commission next plans to stipulate through legal means that the import of Russian pipeline natural gas and liquefied natural gas will be banned from January 1, 2026, although the expiration dates of certain contracts will be later. The European Commission's proposal also mentions that short-term Russian natural gas contracts signed before June 17, 2025, will have a one-year transition period ending on June 17, 2026. Longer-term natural gas import contracts will also be banned, with a deadline of January 1, 2028, which is also the date when the EU will completely cease using Russian natural gas. Dan Jørgensen, the EU's Energy Commissioner, stated on Monday that the EU's ban measures will have sufficient legal force to allow companies to invoke the "force majeure" clause to legally terminate their natural gas contracts with Russia without facing legal risks. Jørgensen claimed: "Since this is an energy ban, companies will not face legal issues as a result. This is force majeure, just like sanctions." Bypassing the Veto Power Slovakia and Hungary have consistently sought to maintain close political and economic ties with Russia, and are still importing Russian natural gas through pipelines. They have stated that switching to alternative energy sources would increase energy costs and economic burdens. They have vowed to block sanctions on Russian energy, which typically require the unanimous consent of all EU member states. EU officials have stated that in order to bypass this issue, the European Commission plans to adopt a new legal procedure that does not require the unanimous consent of all countries, but rather the support of a "qualified majority" of member states and the European Parliament to pass. Although most EU member states have expressed support for the natural gas ban, officials claim that some natural gas importing countries have expressed concerns about the risk of economic penalties or arbitration faced by companies due to breach of contract. "We fully support this plan in principle, with the aim of ensuring that we find the right solution and provide the maximum level of security for companies," French Industry Minister Marc Ferracci said on Monday.

[Two Major South Korean Battery Giants to Deploy LFP Battery Capacity in the US] Recently, Samsung SDI and General Motors agreed to introduce an LFP battery production line for EVs at their joint venture plant in Indiana by 2027. Originally, the plant was only planned to produce ternary lithium batteries with a nickel content exceeding 80%, but now it will produce both types. Previously, Samsung SDI announced that it would raise 2 trillion won (approximately 9.96 billion yuan) through the issuance of new shares to invest in factories and new technologies in the US and Europe. The company will issue 11.821 million common shares at a price of 169,200 won per share. Samsung SDI plans to use the proceeds from the capital increase to invest in its joint venture with General Motors in the US, expand the capacity of its battery plant in Hungary, Europe, and invest in its solid-state battery production line facilities in South Korea.

[CPCA Secretary General Cui Dongshu: China's Auto Exports Reach 2.16 Million Units from January to April, with a YoY Growth Rate of 15%] CPCA Secretary General Cui Dongshu stated in an article that from January to April 2025, China's auto exports reached 2.16 million units, up 15% YoY compared to the same period in 2024. In April, China's auto exports reached 620,000 units, up 12% YoY and 36% MoM, showing a generally strong trend in both YoY and MoM growth. The main drivers this year remain the improvement in the competitiveness of Chinese products and the slight increase in the markets of Global South countries. However, the cycle in which international brands in the Russian market under the Russia-Ukraine crisis were comprehensively replaced by Chinese vehicles may come to an end, resulting in a significant reduction. (Finance Link) [Rio Tinto Plans to Invest Approximately $425 Million in the Development of the Salares Altoandinos Lithium Project in Chile] On May 22, Rio Tinto announced that it had been confirmed as the preferred partner by Chile's state-owned mining company (ENAMI) for the Salares Altoandinos lithium project on the salt flats in northern Chile. According to the proposed terms, Rio Tinto will acquire an initial 51% stake in the project, with ENAMI holding the remaining shares. Both parties still need to sign a binding agreement, obtain all regulatory approvals, and meet other customary closing conditions. Rio Tinto stated that it will advance pre-feasibility and feasibility studies to ultimately make an investment decision. Rio Tinto will provide approximately $425 million in cash and non-cash contributions, including its direct lithium extraction (DLE) technology. The cash contributions will be disbursed in phases to fund pre-feasibility and further studies. (Finance Link) [China's First Large-Scale Lithium-Sodium Hybrid Energy Storage Station with 98% Green Electricity Put into Operation] China's first large-scale lithium-sodium hybrid energy storage station, the Baochi Energy Storage Station of China Southern Power Grid, was put into operation in Yunnan today. Covering an area equivalent to five football fields, the Baochi Energy Storage Station has an installed capacity of 400 megawatt hours (MWh) and can regulate 580 million kWh of electricity annually, equivalent to the annual electricity consumption of 270,000 households, with green electricity accounting for up to 98%. (CCTV News) [Two Matters under the EU Battery Regulation Postponed, Providing Buffer for Chinese Lithium Battery Companies' Exports to Europe] Due to adjustments in the global raw material supply chain and insufficient third-party investigation agencies, the EU's planned implementation of due diligence on battery supply chains, originally scheduled for August this year, is proposed to be postponed by two years. The original plan for companies to submit carbon footprint reports, scheduled for February this year, has also been postponed due to the lack of detailed rules, providing Chinese lithium battery companies with a buffer period for their exports to Europe. The postponement of these two matters is good news for China's lithium battery exports to the EU. The EU is China's largest export market for lithium batteries. According to data from China's General Administration of Customs, in the first four months of 2025, five EU countries—Germany, the Netherlands, France, Spain, and Hungary—accounted for nearly 30% of China's lithium battery export value. (Caixin) [Hainan Mining: 20,000 mt Battery-Grade Lithium Hydroxide Project Achieves Full Process Integration with Qualified Products Offline] Hainan Mining (601969.SH) announced that its 20,000 mt battery-grade lithium hydroxide project has achieved full process integration, with the first batch of lithium hydroxide products passing internal laboratory sampling inspections, confirming that product parameters meet design standards. This milestone lays the foundation for subsequent continuous mass production, marking a phased achievement in the company's industrial transformation and upgrading strategy. However, lithium resource price fluctuations may impact the project's economics, and uncertainties remain regarding the timeline for stable production, full production capacity attainment, and customer certification of the products. The company will promptly fulfill its information disclosure obligations. (Cailian Press) [Haisco Pharmaceutical: Solid-State Battery Adhesive Business Yet to Generate Orders] Haisco Pharmaceutical (300584.SZ) issued an abnormal stock trading volatility announcement, noting the recent high market attention on solid-state battery concepts. The company's involvement in the solid-state battery sector primarily revolves around its subsidiary Anqing Huichen's joint venture with Saike Power and others to establish Sichuan Luochen, which was incorporated on February 11, 2025, focusing on the development, optimization, and industrialization of adhesive materials for new energy batteries, including solid-state batteries. As of now, Sichuan Luochen is conducting small-scale process development for related adhesive products but has not yet delivered samples to customers or secured orders, with no significant impact expected on the company's annual profits. [Farasis Energy: Second-Generation Semi-Solid-State Battery Expected to Enter Mass Production in H2, Targeting High-Value Applications Like Low-Altitude Economy and Humanoid Robots] Farasis Energy stated on an interactive platform that its first-generation semi-solid-state battery entered mass production and vehicle installation in 2022. The second-generation semi-solid-state battery is expected to achieve mass production in H2, initially targeting high-value applications such as the low-altitude economy and humanoid robots, potentially boosting solid-state battery product revenue. In terms of customer collaboration, the company's solid-state battery products have gained recognition from leading clients across various sectors, including GAC, Dongfeng, Sany, FAW Jiefang, a top US eVTOL customer, a leading domestic flying car manufacturer, Shanghai Shidai, and Geely's Volocopter. (Cailian Press) Related Reading: April Battery Materials Import and Export Data Released: Spodumene and Lithium Carbonate Imports Rise, Latter Sees Surge in Exports! [SMM Special] Cobalt Product Quotes Decline Across the Board: Refined Cobalt Drops by 6,200 yuan, Smelters' Willingness to Sell Increases [Weekly Observation] Spot Price of Refined Cobalt Falls [SMM Refined Cobalt Market Weekly Review] [SMM Weekly Review] Lithium Carbonate Prices Continue to Slide, Short-Term Market Remains Under Pressure [SMM Analysis] Can Iron Phosphate Doped with Titanium Become the Perfect Upgrade for High-End Applications? [SMM Analysis] China's lithium hydroxide exports reached 4,222 mt in April, basically flat MoM [SMM Analysis] Cobalt intermediate product imports increased slightly in April [SMM Analysis] Both China's unwrought cobalt exports and imports surged in April 2025 [SMM Analysis] China's domestic spodumene imports totaled 623,000 mt in April, up 16.5% MoM [SMM Analysis] Both artificial graphite imports and exports increased MoM in April [SMM Data] LiPF6 import and export data for April 2025 [SMM Analysis] Analysis of ternary cathode precursor exports in April [SMM Analysis] Ternary cathode import and export volumes for April released, with imports up 37% MoM and exports up 13% MoM [SMM Announcement] Adjustments to weekly lithium carbonate data points before and after the Labour Day holiday Driven by multiple positive factors! The auto parts sector surged with over 12 stocks hitting daily limits! [Hot Stocks] Refined cobalt quotes slightly recovered, while Co3O4 prices continued to decline. The market awaits the aftermath of the DRC's June ban. [Weekly Observations] [SMM Industry Insights] Global cobalt industry chain changes and Chinese market outlook post-DRC cobalt export ban - Key points from the special speech by Wang Cong, General Manager of SMM Industry Research Tariff suspension spurs lithium carbonate futures to rise over 3%. Can the expectation of a rush in exports help lithium carbonate "stand up"? [SMM Flash News] Passenger vehicle retail sales growth in April hit a decade-high, with auto production and sales exceeding 10 million units in the first four months! [SMM Special Report]

Around May 20, import and export data for cobalt and lithium battery industry chain-related products in April were released. The data showed that in April, China's domestic spodumene imports totaled 623,000 mt, up 16.5% MoM, equivalent to 54,000 mt of LCE. Among them, lithium ore imports from Zimbabwe amounted to 106,000 mt, up 82% MoM. For lithium carbonate, China imported 28,000 mt in April, up 56% MoM and 34% YoY. Among these imports, 20,000 mt came from Chile, accounting for 71% of the total imports. In April, China exported 734 mt of lithium carbonate, up 334% MoM and 213% YoY. SMM has compiled the import and export situation of battery materials as follows: Upstream Lithium Concentrates According to data from the General Administration of Customs, in April, China's domestic spodumene imports totaled 623,000 mt, up 16.5% MoM, equivalent to 54,000 mt of LCE. Specifically, Australia, Nigeria, and Zimbabwe were the main sources of imports. Among them, lithium ore imports from Australia amounted to 298,000 mt, down 3% MoM; imports from Zimbabwe amounted to 106,000 mt, up 82% MoM; and imports from Nigeria amounted to 89,000 mt, up 4% MoM. Imports from South Africa amounted to 40,400 mt, down 22% MoM, a significant decrease. In addition, the volume of spodumene concentrates in April was 520,000 mt, accounting for 83% of the total ore imports, mostly from countries such as Australia and Zimbabwe. Data source: China Customs, SMM's processed data based on public information Note: It may not be possible to fully and accurately account for the actual monthly spodumene concentrate imports from customs data, and some data are only reported in terms of the general direction of import volumes. [SMM Analysis] In April, China's domestic spodumene imports totaled 623,000 mt, up 16.5% MoM Returning to the current lithium ore market, on the spodumene side, according to SMM, on the supply side, although overseas mines have a certain willingness to refuse to budge on prices, due to their shipping pressure, their quotes have been adjusted downward. On the demand side, as the current lithium chemical prices are at a relatively low level, the psychological price level of buyers continues to decline, and their purchase willingness for lithium ore priced at CIF US$650/mt or above is not strong. When the current spot and futures prices of lithium carbonate are falling, demand continues to push down prices during negotiations, and the willingness to close deals is relatively moderate. This week's lithium ore import customs data showed that in April, China's domestic spodumene imports exceeded 600,000 mt, with a significant MoM increase, equivalent to over 50,000 mt of LCE. Coupled with the high inventory levels at ports in recent months, traders and mine operators are under certain pressure to sell, enhancing buyers' bargaining power. With lithium carbonate prices remaining low, there is an expectation of weakness in lithium ore prices. As of May 23, the spot quotation index for spodumene concentrates (CIF China) fell to $690/mt, down $127/mt from $817/mt on April 1, representing a 15.54% decline. 》Click to view SMM's spot quotations for new energy products Lithium Carbonate According to customs data, China imported 28,000 mt of lithium carbonate in April, up 56% MoM and 34% YoY. Of this, 20,000 mt was imported from Chile, accounting for 71% of the total imports, and 6,850 mt was imported from Argentina, accounting for 25% of the total imports. From January to April, China's cumulative imports of lithium carbonate reached 79,000 mt, up 27% YoY. In April, China exported 734 mt of lithium carbonate, up 334% MoM and 213% YoY. Reviewing the current lithium carbonate prices, according to SMM's spot quotations, as of May 23, the spot quotation for battery-grade lithium carbonate temporarily held steady at 61,600-64,500 yuan/mt, with an average price of 63,050 yuan/mt, down 11,050 yuan/mt from 74,100 yuan/mt in early April, representing a 14.91% decline. 》Click to view SMM's spot quotations for new energy products Reviewing the lithium carbonate market in April, downstream power demand performed well, but was constrained by the impact of the cancellation of mandatory ESS allocation in China and US tariff policies, limiting the overall increase in demand. Additionally, with the increase in the proportion of customer-supplied raw materials at downstream material plants, their willingness to purchase spot orders weakened. Supply side, the continuous decline in prices led some non-integrated lithium chemical plants to reduce or halt production, but the impact was limited in scale. Lithium carbonate remained in a state of surplus that month, with the surplus scale narrowing somewhat. Looking at the current situation, according to SMM, from the supply side, some enterprises have shown signs of maintenance and production cuts, with weekly output scales weakening. However, under the hedging opportunities presented by the slight rebound in the futures market, some non-integrated lithium chemical plants are expected to resume production or show signs of increasing output. Overall, while the reduction in output due to maintenance has exerted some pressure on the total output of lithium carbonate, overall supply is expected to remain at a relatively high level. Although downstream demand also saw some increase in May, due to the currently large proportion of customer-supplied and long-term contracted materials, and with the continuous decline in lithium carbonate prices, downstream material plants are generally adopting a cautious wait-and-see attitude, making it difficult for spot order transactions to support market confidence. From the perspective of the raw material ore side, prices have also continued to decline, and no mines have announced production cuts or halts. With the continuous weakening of cost support, lithium carbonate prices lack upward momentum. Against the backdrop of an unchanged surplus in supply and demand, SMM expects the lithium carbonate market to remain under pressure in the short term. Lithium hydroxide According to customs data, China's lithium hydroxide exports reached 4,222 mt in April, remaining basically flat MoM and decreasing by 61% YoY. Of this, exports to South Korea amounted to 2,047 mt, accounting for 48% of China's total exports, decreasing by 6% MoM and 72% YoY. Exports to Japan reached 1,756 mt, accounting for 42% of China's total exports, decreasing by 7% MoM and 40% YoY. The average export price of lithium hydroxide from China in April was $14,297/mt, up 8% MoM. Since the beginning of 2025, weak overseas downstream demand, coupled with the partial transfer of overseas lithium hydroxide orders for domestic shipments, has led to a sustained low level of exports. Additionally, China's lithium hydroxide imports in the same month amounted to 1,276 mt, decreasing by 35% MoM. Of this, imports from Australia and Argentina amounted to 1,094 mt, accounting for 86%, primarily due to the sales of inventory and output from Chinese-funded smelters in Australia and the production from salt lakes in Argentina. Data source: General Administration of Customs, compiled by SMM 》【SMM Analysis】China's lithium hydroxide exports reached 4,222 mt in April, basically flat MoM Battery materials LFP According to the latest data from the General Administration of Customs, China's LFP exports amounted to 1,151.7 mt in April 2025, decreasing by 16% MoM from March and increasing by 1,724% YoY. In terms of prices, the average export price of LFP in March 2025 was $6,206.9/mt, up $315.55/mt from the average price in March, representing a MoM increase of approximately 5.4%. In the import data of the General Administration of Customs for April 2025, Guangxi Zhuang Autonomous Region remained the top province for LFP exports, with 968.5 mt, all exported to Vietnam. Hubei Province ranked second with 59.454 mt, and Anhui Province ranked third with 30 mt. In terms of country-specific export data for LFP in April 2025, Vietnam remained the top export destination, with a total of 968 mt of LFP exported to Vietnam, accounting for 84% of total exports. South Korea ranked second with 7%, and Taiwan, China ranked third, with 63 mt of LFP exported to Taiwan, China, accounting for 5.5% of total exports. There were also exports to France, Italy, the US, Greece, etc. Additionally, according to China's customs import data, China's LFP imports in April amounted to 8.6 mt, decreasing by 58% MoM, primarily imported from Indonesia, with an average import price of $5,345.6/mt. 》【SMM Analysis】China's LFP import and export situation in April Ternary cathode In April 2025, China's imports of ternary cathode materials (combined NCM+NCA) amounted to 6,158 mt, increasing by 36.73% MoM and decreasing by 17.58% YoY. Among them, NCM imports reached 5,170 mt, up 28.48% MoM and down 16.21% YoY. NCA imports stood at 988 mt, up 105.94% MoM and down 24.07% YoY. In April 2025, China's exports of ternary cathode materials (combined NCM and NCA) amounted to 9,356 mt, up 13% MoM and up 30% YoY. Among them, cumulative NCM exports reached 9,058 mt, up 11.31% MoM and up 30.86% YoY. The recovery in overseas demand was mainly reflected in South Korea, Japan, and Poland. Exports to South Korea in April were 4,725 mt, up 104 mt MoM. Exports to Japan were 1,016 mt, up 349 mt MoM. Exports to Poland were 1,539 mt, up 349 mt MoM. NCA exports were 298 mt, up 90.29% MoM and down 0.71% YoY. 》[SMM Analysis] April's ternary cathode import and export volumes released, with imports up 37% MoM and exports up 13% MoM Ternary cathode precursor In April 2025, China's exports of ternary cathode precursors reached 7,511 mt, up 7% MoM and down 60% YoY. From May 2024 to April 2025, China's cumulative exports of ternary cathode precursors (including NCM, NCA, nickel oxides, and NC) were 141,523 mt, down 16.70% YoY. In April, the overall export volume of ternary cathode precursors increased compared to March. Among them, the export volumes of NCM and NC rebounded, while the export volume of NCA decreased significantly. The total NC exports in April were 2,580 mt, up 20.56% MoM and down 33.13% YoY. NCA exports in April were 0 mt. In addition, the total NCM exports in April were 4,931 mt, up 1.69% MoM and down 65.62% YoY. By country, South Korea remained China's main export destination for NC in April, though its share decreased slightly to 90%, with export volume increasing from 1,605 mt the previous month to 2,331 mt. The volume of NCM flowing to South Korea decreased from 4,546 mt the previous month to 4,426 mt. 》[SMM Analysis] Analysis of ternary cathode precursor exports in April Artificial graphite In April 2025, China's imports of artificial graphite were 1,128 mt, up 10% MoM and up 1% YoY. In terms of average import price, in April 2025, the average import price of artificial graphite in China was 66,270 yuan/mt, up 219% MoM and down 8% YoY. Data source: SMM, China Customs In April 2025, China's exports of artificial graphite were 58,170 mt, up 30% MoM and up 19% YoY. In terms of average export price, in March 2025, the average export price of artificial graphite in China was 9,190 yuan/mt, down 13% MoM and down 32% YoY. In April 2025, against the backdrop of domestic coke prices not yet falling to low levels, domestic anode material enterprises showed low production enthusiasm, and domestic supply was slightly tight. As a result, the import volume of artificial graphite increased MoM. On the export side, affected by tariffs, the volume of artificial graphite exported to the US in April decreased by 29% MoM. Except for the US, the import volume of artificial graphite from China by other countries all increased to varying degrees. 》[SMM Analysis] In April, the import and export volumes of artificial graphite both increased MoM. LiPF6 According to data from China Customs, in April 2025, China's cumulative export volume of LiPF6 was 1,217 mt, a decrease of approximately 23% MoM. Among them, China's cumulative import volume of LiPF6 was 0 mt. On the export side, in April 2025, China's export volume of LiPF6 was 1,217 mt, a decrease of approximately 23% MoM from March and approximately 41% YoY. Specifically, 371.404 mt of LiPF6 was exported to Poland, an increase of approximately 48% MoM; 225 mt was exported to Hungary, an increase of approximately 66.7% MoM; 171.212 mt was exported to South Korea, a decrease of approximately 41% MoM; and 107.847 mt was exported to the US, a significant decrease of approximately 78.7% MoM. Overall, there was a certain decrease in the procurement volume of raw materials for lithium batteries by foreign countries in April, and overseas demand for lithium batteries declined. 》[SMM Data] Import and Export Data of LiPF6 in April 2025 Cobalt Cobalt hydrometallurgy intermediate products According to customs data, in April 2025, China's import volume of cobalt hydrometallurgy intermediate products was approximately 18,600 mt (metal content), an increase of 5% MoM. In terms of average import prices, in March 2025, the average import price of cobalt hydrometallurgy intermediate products in China was $15,820/mt (metal content). By country, in March, the DRC remained the main importing country, with an import volume of approximately 18,500 mt (metal content) (calculated based on a grade of 35%), an average import price of $15,857/mt (metal content), and an import share of approximately 99%. 》[SMM Analysis] In April, the import volume of cobalt intermediate products increased slightly. Unwrought cobalt In April 2025, China's import volume of unwrought cobalt was approximately 839 mt (metal content), an increase of 60% MoM and 230% YoY. In terms of average import prices, in April 2025, the average import price of unwrought cobalt in China was $26,831/mt (metal content), an increase of 36% MoM. From January to April 2025, the cumulative import volume was 2,337 mt (metal content), a cumulative increase of 175% YoY. On the export side, in April 2025, China's export volume of unwrought cobalt was approximately 4,086 mt (metal content), an increase of 201% MoM and 556% YoY. In terms of average export prices, the average export price of China's unwrought cobalt in March 2025 was $31,119/mt (metal content), up 28% MoM. The cumulative export volume from January to April 2025 was 7,397 mt (metal content), up 185% YoY. 》[SMM Analysis] Both China's unwrought cobalt exports and imports saw significant growth in April 2025.

The share price of "BYD King" hit a new high again. In the morning trading session today, both BYD's A-shares and H-shares strengthened. The A-shares once again broke through 400 yuan per share, hitting a record high of 404 yuan during the session; the H-shares surged over 4% at one point and broke through 460 Hong Kong dollars per share for the first time, also setting a new record, with the intraday high exceeding 464 Hong Kong dollars. As of the close on May 21, BYD's A-shares had risen approximately 40% year-to-date, with a market capitalization reaching 1.22 trillion yuan. Driven by BYD, the A-share automobile sector performed actively. JMC and JAC rose over 6%, while Seres, CNHTC, SAIC Motor, and Foton Motor followed suit with gains. On the same day, Citi once again raised BYD's target price, stating that the export landscape of China's passenger vehicles in the first four months of this year further favored BYD. Analysts including Jeff Chung noted in the report that BYD's market share in pure electric vehicle exports surged from 23% in FY2024 to 38% in the first four months of FY2025. The growth in China's plug-in hybrid vehicle exports has been astonishing, yet a market consensus has not yet formed. Regarding potential price reductions in 2026, BYD has the strongest ability to cope. BYD is on track to achieve its export target of 800,000 to 1 million units in FY2025. Based on the above assessment, Citi raised BYD's H-share and A-share target prices to 727 Hong Kong dollars and 669 yuan, respectively. Previously, Citi had already raised the target price for the stock in February. The day before Citi raised BYD's share price, Guangzhou Shipyard International announced that BYD's seventh car carrier ship—BYD 7000-unit LNG dual-fuel pure car and truck carrier (PCTC) Ship No. 2—had been launched and undocked. It is understood that this ship is the second vessel built by Guangzhou Shipyard International for BYD, namely the sister ship of the previously launched "Hefei" ship. To meet the overseas market sales target of at least 800,000 units this year, BYD has currently assembled a large "ocean fleet." According to industry insiders familiar with BYD, the fleet will consist of eight PCTCs, all planned to be put into operation within the year. This includes the first "Pioneer No. 1" delivered in January last year, the "Changzhou" ship in November of the same year, as well as the "Hefei," "Shenzhen," "Changsha," and "Xi'an" ships launched in January, March, and April this year, respectively. Industry sources revealed that BYD's Denza Z9GT is expected to be launched in Hong Kong, Macau, and Southeast Asian markets (including Malaysia, Thailand, Indonesia, etc.) in Q3 this year, and will land in Europe in Q4, with plans to open more than ten stores in Europe before the end of the year. In addition to vehicle exports, overseas bases have also become an important fulcrum supporting BYD's target of 800,000 overseas sales. On May 16, Li Yunfei, General Manager of Branding and Public Relations at BYD Group, announced on social media the opening of BYD's European headquarters in Budapest, Hungary. Péter Szijjártó, Hungary's Minister of Foreign Affairs and Trade, revealed on the same day that the total investment in the project was 100 billion Hungarian forints (approximately €248 million), with the Hungarian government planning to provide 20 billion Hungarian forints in support. Szijjártó stated that the project would create 2,000 jobs. According to information released by BYD, the European headquarters will undertake three core functions: sales and after-sales service, vehicle certification and testing, and localized car model design and feature development. Prior to this, in 2023, BYD had already established its first new energy passenger vehicle factory in Europe in Szeged, Hungary, and had built production sites in several countries, including Thailand, Brazil, Indonesia, and Uzbekistan. Among them, the Thailand factory has an annual production capacity of 150,000 units, serving the ASEAN region; the Brazil factory has an annual capacity of 300,000 units, comprehensively covering the Latin American market; and the base under construction in Indonesia has an annual production capacity of 150,000 units, expected to be completed by the end of 2025, targeting the Australian market. The production and sales report shows that from January to April this year, BYD's overseas market sales reached 285,170 units, up 105% YoY; its share of the new energy passenger vehicle market increased from 14.83% last year to 20.99% this year. It is worth noting that, excluding overseas sales of 79,086 units in April, BYD's domestic sales for the month saw a slight MoM decline for the first time this year.

According to an analysis of 2024 data by independent research providers MERICS and Rhodium Group, despite Chinese companies increasingly avoiding the UK, Germany, and France, China's direct investment in Europe saw its first growth in seven years in 2024, driven by EV and battery projects in Hungary. The data showed that China's total foreign direct investment (FDI) in the EU and the UK surged by 47% last year, reaching 10 billion euros. This figure broke the previous downward trend that had persisted for several consecutive years. Max Zenglein, chief economist at MERICS, said that the EU remains attractive to Chinese investors. China's direct investment in Europe is primarily driven by large companies. CATL, Tencent, Geely, Envision Technology, and battery maker Gotion High-tech accounted for nearly half of the total investment. Overall, in the face of increasing political scrutiny and trade tensions, Chinese companies have shifted their focus from mergers and acquisitions (M&A) to greenfield investments in recent years. Greenfield investments, also known as new-build investments, refer to enterprises established by investment entities such as multinational corporations in the host country, where all or part of the asset ownership belongs to foreign investors. Such investments directly lead to an increase in the host country's production capacity, output, and employment. The data showed that China's greenfield investments in Europe last year increased by 21% compared to 2023, marking the third consecutive year of growth. Although M&A investments reached 4.1 billion euros last year—a sharp increase of 114%—their base was relatively low. The report revealed that seven out of China's top ten investments in Europe last year involved the EV and battery supply chain. Four of these involved Hungary. The largest investment remains CATL's 7.5 billion-euro battery factory in Hungary, announced in 2022 (which is accounted for in greenfield investments in batches during the construction period). The report stated, "CATL once again became the largest investor in 2024, accounting for 16% of the total investment, primarily from its battery plant under construction in Hungary." It added that the battery giant has been China's largest investor in Europe over the past five years. Hungary has been China's closest partner in Europe in recent years , attracting 31% of China's investment in Europe last year, easily surpassing traditional European powers Germany, France, and the UK. These three European powers collectively accounted for 20% of all Chinese investment in Europe last year, down from the 52% average of the previous four years. Last week, the Hungarian government also signed a strategic cooperation agreement with BYD. BYD announced that it will open its European headquarters and R&D center in Hungary and expand its existing assembly plant in the Central European hub. In terms of mergers and acquisitions (M&A), the most representative investment was undoubtedly Tencent's acquisition of Polish video game developer Techland for 1.5 billion euros. However, it is expected that overall M&A activities will remain sluggish. As Chinese enterprises' R&D capabilities have strengthened, the motivation for M&A has weakened. Yan Dong, the Vice Minister of Commerce of China, stated on May 9 that by the end of 2024, EU enterprises had cumulatively invested over $150 billion in China, while China had cumulatively invested nearly $110 billion in direct investments in Europe. China-EU investment cooperation has entered a "two-way fast lane," with great potential for the future. Yan Dong pointed out that currently, the world is undergoing accelerated changes over a century, with multiple risks and challenges overlapping. Unilateralism and protectionism are severely impacting international rules and order, making the strategic significance and global influence of the healthy and stable development of China-EU relations even more prominent. China is willing to work with the EU to implement the important consensus reached by leaders of both sides, promote the improvement of bilateral trade and investment efficiency, properly handle economic and trade differences through dialogue and consultation, maintain the security and stability of industrial and supply chains, expand cooperation in green and digital fields, jointly uphold multilateralism and free trade, strengthen coordination on multilateral issues such as climate change and WTO reform, inject more stability and positive energy into China-EU relations, and contribute to global economic recovery.