According to the China Association of Automobile Manufacturers (CAAM), the passenger vehicle market maintained structural divergence in June 2026. Domestic demand remained under pressure while exports posted robust growth. Sales of fuel vehicles slumped markedly amid volatile high oil prices, whereas new energy vehicles sustained steady growth with their market share further climbing. In June 2026, passenger vehicle output reached 2.373 million units and sales hit 2.402 million units, rising 5.9% and 6.6% month-on-month, yet falling 2.8% and 5.3% year-on-year respectively. For the first six months of 2026, cumulative production and sales of passenger vehicles stood at 12.721 million units and 12.72 million units, down 5.9% and 6% year-on-year.

1. NEVs: Domestic Sales Growth Under Pressure, Exports Surge In H1 2026, global NEV sales reached approximately 10.25 million units, a cumulative 14% YoY increase; China’s NEV sales totaled about 7.4 million units, up 7% YoY cumulatively, with an average penetration rate of around 48%. While total volume kept growing, the mix of domestic sales and exports diverged markedly. In the Chinese market, domestic sales accounted for about 69% of the total, with cumulative volume falling 14% YoY and the monthly penetration rate peaking at 62%. China’s NEV market has entered a high-base mature stage. The rush to buy ahead of the expected subsidy reduction at the end of 2025 pulled forward some demand that would have occurred in early 2026. Pushing the penetration rate beyond 60% is now encountering considerable headwinds—the remaining internal combustion engine vehicle users are mostly those with limited charging access, rigid long-distance travel needs, or high price sensitivity, making their conversion significantly harder than that of early adopters. Domestic demand is in a transitional phase shifting from policy-driven to market-driven growth. Exports, on the other hand, accounted for about 31% of China’s NEV sales in H1 2026, a sharp jump from 15% in H1 2025, with cumulative volume surging nearly 120% YoY. Three drivers fueled this export surge. First, a low base effect magnified the YoY growth: exports in H1 2025 were artificially suppressed by the EU anti-subsidy probe, creating an unusually low base. Second, automakers rushed to export ahead of tariff implementation, opening a temporary export rush window. Third, Chinese NEVs’ product competitiveness in emerging markets such as Southeast Asia and Latin America continued to improve; coupled with rising fuel vehicle operating costs outside China due to shifting international dynamics, this stimulated the release of overseas NEV demand. From a technology perspective, BEV models accounted for about 66%, basically flat from a year earlier. Beneath this “frozen” share, two opposing forces are at play. On one hand, as NEVs penetrate into lower-tier cities, inadequate charging infrastructure makes plug-in hybrid and extended-range models, which can run on both electricity and fuel, still the most practical choice. On the other hand, the popularization of 4C fast charging technology and the expansion of ultra-fast charging networks are gradually addressing the range anxiety weakness of BEVs, building momentum for a rebound in their market share. I. Vehicle Battery Capacity, from January to May the average capacity reached 68.4 kWh, up 34% YoY. The growth drivers were concentrated in three aspects: first, consumption structure upgrades, with the trade-in policy steering demand from A00/A0 to B- and C-class models—larger models carry higher-capacity batteries, and this structural effect lifted the overall average; second, the battery capacity of plug-in hybrid and extended-range models continued to expand, with all-electric driving range rising from 50–80 km to 150–250 km and corresponding battery capacity roughly doubling from 8–18 kWh to 18–40 kWh, while extended-range models grew to over 50 kWh; third, the share of commercial vehicles increased, and the vehicle battery capacity of heavy trucks and logistics vehicles generally exceeded 200 kWh, exerting a notable leverage effect on the overall average. 2. Power Battery Installations: Growth Shift, Bottoming Out in Q2 In H1 2026, China's power battery installations are estimated at around 340 GWh, up 10% YoY. Q1 was dragged by soft domestic sales and subsidy phase-out, keeping growth sluggish; Q2 saw a month-on-month recovery, with May installations reaching 71.9 GWh, a new high for the year, signaling a gradual repair in end-use demand. In the global market, H1 installations are estimated at about 580 GWh, up roughly 15% YoY, with incremental volume outside China mainly coming from the acceleration of electrification in Europe and continued ramp-up in emerging markets such as Southeast Asia and Latin America. Notably, growth outside China has outpaced the Chinese market—Q1 installations outside China reached 117.4 GWh, up 17.4% YoY, and the combined market share of Chinese enterprises in markets outside China rose to 52%. A shift in growth driver—where the Chinese market downshifts and markets outside China take over—is becoming a new feature of the industry’s growth structure. 3. Power Battery Cell Production: Strengthened LFP Dominance and Analysis of the Gap Between Production and Installations In H1 2026, China's total power battery production was about 790 GWh, with cumulative YoY growth of 43%; global power battery cell production totaled about 860 GWh, with cumulative YoY growth of 31%. In the Chinese market, LFP power battery cell share rose to 76% from 66% in the same period of 2025, with production up 64% YoY; ternary power battery cell share was around 24%, basically flat YoY. LFP’s share rose from 66% to 76%, driven by three key factors. First, the electrification ramp-up of commercial vehicles provided the most direct incremental contribution. Commercial vehicles almost entirely adopted the LFP route; heavy trucks, logistics vehicles, and buses place far higher demands on cost and safety than on energy density. The structural growth in commercial vehicle installations directly boosted LFP’s overall share. Second, the penetration rate of LFP in the passenger car segment continued to rise on its own. Extended-range and plug-in hybrid models naturally favor the LFP route, while the maturation of 4C fast-charging LFP solutions effectively addressed the range anxiety shortcoming, further squeezing the market space for mid-end ternary batteries. Third, the explosion in energy storage demand created a siphoning effect on LFP production lines. LFP production lines can flexibly switch between EV and ESS, and the high growth in energy storage orders drove LFP line operating rates significantly higher than those of ternary lines. Strengthened economies of scale further lowered costs, forming a positive feedback loop. There was a notable growth gap between power battery cell production (790 GWh, +43%) and installations (approximately 340 GWh, +10%), but this did not stem from inflated demand. Rather, it resulted from the combined effect of the following factors: First, export diversion—about 30% of production flowed to markets outside China either as complete vehicle exports or direct battery cell exports, and was not included in domestic installation statistics. Second, timing mismatch—some battery cells whose production schedules were accelerated in Q2 were still in inventory or in transit and are expected to translate into installations in H2. In addition, after the destocking cycle in H2 2025, battery cell manufacturers’ finished product inventory cycle was compressed from 2 months to 1.3 months, and there was active restocking in H1 2026. Overall, the high production growth reflected the buoyancy of battery enterprises’ production activity, while the slower installation growth was more affected by export diversion and inventory cycle disruptions. The gap between the two does not represent a substantive deterioration in the supply-demand relationship. 4. Cost Changes In H1 2026, prices of key raw materials for power battery cells rose overall. Unlike the previous cycle of soaring lithium prices, top-tier players’ cost control methods during this price rise were more diverse. As lithium carbonate futures trading matured, battery and cathode material enterprises hedged to lock in procurement costs ahead of time, effectively offsetting spot price fluctuations. Some long-term contract orders adopted formula pricing, allowing for smoother price transmission. Coupled with the ongoing large-scale centralized procurement of auxiliary materials and technological cost reductions, the increase in cost per Wh for mainstream battery cell enterprises remained generally manageable. However, as the industry was still in a price war, involution kept the overall gross margin of the industry at a relatively low level. H2 Outlook Looking ahead to H2 2026, the power battery cell industry is expected to sustain the growth momentum seen in H1, as recovering domestic demand and strong export performance reinforce each other, with the full-year trajectory trending lower in H1 and higher in H2. Sales side, the auto market is likely to stabilize in Q3, followed by the traditional peak season in Q4. Alongside the gradual absorption of the pull-forward effect from 2025, the decline in domestic sales is expected to continue narrowing. On the export front, although tariff policy uncertainty persists, the product competitiveness of Chinese NEVs in markets outside China has become entrenched. Demand in emerging markets such as Southeast Asia, Latin America, and the Middle East continues to accelerate, and proactive restocking by overseas dealers points to a high probability that strong export growth will persist in H2. Installations side, although the growth rate has come down significantly from 2025 levels, absolute incremental volume remains substantial, supported by both rising vehicle battery capacity and the ramp-up of commercial vehicle volumes. H2 installations are projected to rebound markedly from H1, and the structure—passenger vehicles providing the base and commercial vehicles contributing incremental elasticity—will remain unchanged. Notably, the inventory buffer built up from production significantly outpacing installations in H1 will gradually flow into installations in H2, offering additional support to H2 data. Overall, the power battery cell industry in 2026 has left behind the era of systemic growth dividends and officially entered a phase of deep divergence. Sustained high export growth opens new growth avenues for Chinese battery enterprises, but the decisive factor in the second half of the competition will be whether they can truly seize the window of opportunity in overseas markets and secure a firm foothold in the global supply chain.

In mid-June 2026, the CAAM and the China Power Battery Industry Innovation Alliance successively released relevant data on the automobile and power battery markets for May 2026. The CAAM stated that in May, auto production and sales rose MoM but edged down YoY. Affected by multiple factors including policy adjustments, changes in market structure, and a macro environment under pressure, the Chinese market continued to show a double-digit decline YoY; meanwhile, exports were strong and sustained rapid growth. .......SMM has compiled the relevant data on the automobile and power battery markets for May 2026, for readers’ reference. Automobile CAAM: May Auto Production and Sales Reached 2.616 Million and 2.629 Million Units, Both Up MoM In May, auto production and sales reached 2.616 million and 2.629 million units, up 1.6% and 4.1% MoM respectively , and down 1.2% and 2.1% YoY respectively. From January to May, auto production and sales totaled 12.235 million and 12.207 million units, down 4.6% and 4.2% YoY respectively, with the declines narrowing further compared with the first four months. CAAM: May NEV Production and Sales Rose 22.4% and 14.4% YoY Respectively; NEV Sales Accounted for 47.5% of Total New Vehicle Sales In May, NEV production and sales reached 1.554 million and 1.496 million units, up 22.4% and 14.4% YoY respectively . NEV sales accounted for 56.9% of total new vehicle sales. From January to May, NEV production and sales reached 5.841 million and 5.802 million units, up 2.5% and 3.5% YoY respectively, and NEV sales accounted for 47.5% of total new vehicle sales. CAAM: NEV Exports More Than Doubled in May and January-May In May, NEV exports reached 446,000 units, up 3.8% MoM and 110% YoY. Of these, passenger NEV exports stood at 435,000 units, up 3.4% MoM and 110% YoY; commercial NEV exports reached 12,000 units, up 21% MoM and 48.1% YoY. From January to May, NEV exports totaled 1.833 million units, up 110% YoY . Of these, passenger NEV exports were 1.792 million units, up 120% YoY; commercial NEV exports were 41,000 units, up 0.6% YoY. The CAAM commented that in May, auto production and sales rose MoM but edged down YoY. Affected by multiple factors such as policy adjustments, market structure changes, and a macro environment under pressure, the Chinese market continued to see a double-digit decline YoY; exports developed robustly, sustaining a rapid growth trajectory. By car model, passenger vehicle sales edged down YoY, commercial vehicle sales maintained growth, and the NEV market stabilized and rebounded. Since the beginning of this year, the auto market has exhibited a pronounced characteristic of "domestic demand under pressure, foreign trade strong." The industry's operations have faced multiple challenges, including insufficient domestic demand, high costs, and external shocks. On the end-user side, policies and market expectations should be stabilized, industry governance deepened, restrictive measures introduced cautiously, and the consumption baseline solidified; on the foreign trade side, it is necessary to deepen international development, effectively address various risks and challenges, and strengthen the stabilizing support role of the international cycle. Meanwhile, the CPCA also released data on the passenger vehicle market for May. From May 1st to 31st, retail sales of passenger vehicles nationwide reached 1.51 million units, down 22.1% YoY, but up 9.2% MoM; cumulative retail sales since the start of the year reached 7.099 million units, down 19.5% YoY. In the NEV segment, May NEV retail sales fell 7% YoY, with domestic brands declining 10%, mainstream joint ventures growing 51%, and luxury brands growing 8%. Domestic retail sales of domestic economy EVs were significantly impacted by the sharp drop in subsidies. Due to strong subsidies for NEV commercial vehicles, the low and mid-end MPV segment experienced a relatively large decline. In terms of NEV exports, passenger NEV exports in May reached 424,000 units , up 112.6% YoY and up 4.4% MoM. These accounted for 54.1% of total passenger vehicle exports, an increase of 9.5 percentage points compared to the same period last year. Among them, BEVs accounted for 59.3% of NEV exports (compared to 66.1% same period last year), with the core focal A00+A0 class BEVs accounting for 53.8% of BEV exports (compared to 50.7% same period last year). Alongside the emerging scale advantages of Chinese NEVs and the demand for market expansion, an increasing number of Chinese-made NEV branded products are going overseas, with their recognition outside China continuously improving. Among NEV exports, narrow-body plug-in hybrid vehicles accounted for 36.2% (compared to 31.9% same period last year), and extended-range EVs accounted for 4.4% (compared to 2.0% same period last year). Although external interference from certain countries has occurred recently, the export of domestic narrow-body plug-in hybrids to developing countries has grown rapidly and shows bright prospects. The CPCA stated that the domestic passenger vehicle market in May 2026 presented an operational dynamic of overall volume under pressure, MoM strengthening, and extreme structural differentiation, without achieving a substantive recovery overall. The slight recovery in the auto market in May was mainly attributed to the evident effectiveness of the industry's "anti-involution" efforts, stabilizing automaker sales promotions and weakening the consumer expectation of price cuts. This, combined with the warmth-boosting effect of the Beijing Auto Show, released some pent-up car purchase demand, forming a phased terminal rebound. It said that the core features of the auto market in May were the collapse of internal combustion engine vehicle domestic sales, the strong dominance of new energy vehicles, and the counter-trend growth of exports. The main cause of the domestic auto market decline was the sharp contraction in fuel vehicle sales under the impact of high oil prices. In May, fuel vehicles accounted for a 37.1% share, but their YoY decline contributed 82% of the total decline in passenger vehicles, dragging down the overall market trend. Factors such as high oil prices and consumption transformation accelerated the "fuel-to-electric substitution" process. This month, the retail penetration rate of new energy vehicles continued to exceed 60%, reaching a historical high of 62.9%. The electrification transformation of joint venture brands accelerated. In May, sales of new energy JV car models grew 51% YoY, while fuel vehicle sales fell 41% YoY. Exports continued to be the industry's core growth engine. In May, the share of new energy in exports hit a new high of 54%, but fuel vehicle exports also showed strong performance with 46% growth, forming an exceptionally strong performance of China's all-round export growth. Characteristics of the passenger vehicle market in May 2026: 1. Overall volume was under pressure, with major structural divergence, and "fuel cold, new energy hot" became the biggest focus. The core reason for the decline in domestic retail was the "fuel collapse," which drove the new energy retail penetration rate to break through 60% to 62.9% (a new high), with the pace of electrification substitution exceeding expectations. 2. The electrification transformation of joint venture brands accelerated. In May, domestic retail sales of mainstream JV new energy vehicles grew 51% YoY, while the overall growth rate of domestic new energy vehicles slowed by 10%. JV brands such as Buick (with new energy accounting for 45%) began to show initial results in their shift to new energy. 3. Exports showed explosive growth, with new energy accounting for 54% (a new high) in exports, driven by both new energy and domestic brands, and going global becoming the core growth engine. 4. Clear characteristics of passive destocking and a relatively rapid decline in channel inventories. Listed dealers suffered overall losses, and dealer survival pressure continued to increase. 5. Independent brands made notable breakthroughs in the high-end segment, with retail sales of passenger vehicles in the 200,000-300,000 yuan, 300,000-400,000 yuan, and above 400,000 yuan price segments all exceeding 50%. 6. Micro EVs were under pressure, A-class cars shrank, entry-level consumption badly needed support, and the launch of economy EV standards was eagerly anticipated. Power Battery Update In April, power and ESS battery sales grew 47.4% YoY. January-May cumulative sales grew 48.5% YoY. In May, China's power and ESS battery sales reached 182.2 GWh, up 11.0% MoM and 47.4% YoY . Among them, power battery sales were 127.0 GWh, accounting for 69.7% of total sales, up 16.6% MoM and 45.2% YoY; ESS battery sales were 55.2 GWh, accounting for 30.3% of total sales, down 0.1% MoM but up 52.7% YoY. From January to May, China's cumulative power and ESS battery sales reached 783.4 GWh, up 48.5% YoY . Of this, cumulative power battery sales reached 527.9 GWh, accounting for 67.4% of total sales, up 34.9% YoY; cumulative ESS battery sales were 255.5 GWh, accounting for 32.6% of total sales, up 87.7% YoY. May China power battery installations up 25.9% YoY, LFP share at 81.2% In May, China's power battery installations reached 71.9 GWh, up 15.2% MoM and 25.9% YoY . Ternary battery installations were 13.4 GWh, accounting for 18.6% of total installations, up 15.9% MoM and 27.3% YoY; LFP battery installations were 58.4 GWh, accounting for 81.2% of total installations, up 14.9% MoM and 25.4% YoY. From January to May, cumulative power battery installations in China reached 259.1 GWh, up 7.3% YoY . Ternary battery cumulative installations were 50.8 GWh, accounting for 19.6% of total installations, up 13.3% YoY; LFP battery cumulative installations were 208.2 GWh, accounting for 80.4% of total installations, up 6.0% YoY. May: Leap Motor dominated among NEV startups; BYD's export growth impressive In early June, May domestic NEV sales/delivery figures were released. BYD continued to lead the global NEV market with sales exceeding 380,000 units. Among domestic NEV startups, Leap Motor's outstanding performance once again ignited market enthusiasm, setting a new monthly delivery record with over 80,000 units! Details are as follows: BYD: According to its announcement, BYD sold a total of 383,453 vehicles in May, including 376,990 passenger vehicles. By brand: Dynasty/Ocean series sold 330,215 units; Fang Cheng Bao sold 30,186 units; Denza sold 16,303 units; Yangwang sold 286 units. From January to May, BYD's cumulative sales reached 1,405,039 units. The company's cumulative NEV sales surpassed 16.5 million units. BYD's sales recovery was mainly supported by exports. Data shows that in May, BYD's overseas sales reached 161,000 units, up 80.4% YoY. NEV Startups: In May, Leap Motor delivered 81,569 vehicles across its entire lineup, up 81% YoY, setting a new historical high for monthly deliveries. The company's NEV sales grew steadily, maintaining its lead. Leap Motor also performed excellently in Italy's pure electric vehicle market, with monthly registrations reaching 4,765 units, up 1,278% YoY, and its pure electric market share reaching a record high of 34.5%. NIO delivered a total of 37,705 new vehicles in May, up 62.3% YoY and 28.4% MoM. Specifically, NIO brand deliveries reached 20,013 units, up 50.8% YoY; Ledao brand delivered 12,029 units, up 91.5% YoY and 124.8% MoM; and Firefly brand delivered 5,663 units, up 53.9% YoY and 13.7% MoM. In the first five months of this year, NIO delivered a total of 150,526 new vehicles, representing a 68.7% YoY increase. To date, NIO's cumulative deliveries have reached 1,148,118 units. Li Auto ranked third among NEV startups with monthly deliveries of 33,350 units this time. As of May 31, 2026, Li Auto's cumulative deliveries reached 1,702,792 units. Li Xiang, Chairman and CEO of Li Auto, said that since Q1 this year, Li Auto's deliveries have entered a growth trajectory, reclaiming the top spot among Chinese brands in the NEV market priced above 200,000 yuan. As of May 31, 2026, Li Auto had 498 retail centers across China, covering 160 cities; and 543 after-sales repair centers and authorized service centers, covering 222 cities. Li Auto has put into use 4,088 Li Auto supercharging stations nationwide, equipped with 22,563 charging piles. XPeng Motors delivered 32,158 new vehicles in May. On May 20, the new technology flagship XPeng GX was officially launched and began deliveries. Within 12 hours of launch, firm orders reached 24,863 units, with the Ultra flagship edition accounting for over 80% of orders. Showroom traffic and test drive volume hit a record high for the same period of any new car launch, making it one of the most popular products among users in the high-end luxury car market and a key step in XPeng Group's brand elevation. In the global market, XPeng maintained strong momentum. In April, overseas deliveries of the P7+ commenced, and monthly overseas sales exceeded 6,000 units for the first time. As of the end of Q1, XPeng had entered over 60 countries and regions worldwide, with 393 overseas sales outlets. Starting from Q2, international business revenue contribution is expected to exceed 20%. In H2 this year, XPeng plans to deliver four global car models, aiming to achieve sustained monthly overseas sales of over 10,000 units in Q4 and more than double full-year overseas sales. Xiaomi Auto's monthly deliveries continued to exceed 30,000 units in May, and its cumulative deliveries surpassed 139,000 units from January to May. On June 13, the latest news, Lei Jun, Chairman of Xiaomi Group, posted on Weibo that Xiaomi Auto attaches great importance to testing, with massive investment and scale. Currently, the testing team consists of over 800 members, of which over 45% are experts with more than 10 years of experience. This team has conducted tests in more than 300 cities and completed over 35 million kilometers of cumulative testing. Xiaomi Auto has 126 laboratories across four cities—Beijing, Nanjing, Shanghai, and Wuhan—covering a total area of over 65,600 m². It has also rented two full-vehicle comprehensive testing grounds in Yancheng, Jiangsu, and Guangde, Anhui. There is a dedicated team of around 500 personnel for extreme environment testing. This team is split into summer testing and winter testing units and is mainly responsible for four major extreme environment tests: Heihe (extreme cold), Turpan (extreme heat), the Kunlun Mountains (high altitude), and Hainan (high humidity). Overall, Cui Dongshu, Secretary General of the CPCA, noted that the key features of the auto market in May were “sluggish domestic sales of internal combustion engine vehicles, strong dominance of new energy vehicles, and YoY growth in exports amid headwinds.” Based on the current industry situation, the CPCA adjusted market expectations, revising the decline in full-year domestic passenger vehicle retail sales to 11%, from the 1% decline forecasted at the start of the year. Cui Dongshu stated that the auto market will gradually stabilize and improve in Q3, return to a growth trajectory in Q4, and the full-year decline in domestic passenger vehicle retail sales is expected to narrow to 11%, with the market still holding recovery potential. If the global situation stabilizes, commodity and oil prices return to reasonable ranges, transportation costs subsequently pull back, domestic consumer confidence in car purchases will gradually recover, and the auto retail market will also see a sustained recovery. Looking ahead to June, the CPCA projects that China’s domestic passenger vehicle market in June 2026 will present a weak recovery pattern of “MoM recovery, YoY pressure,” with the market slowly mending based on its own fundamentals. As a month-end period, June sees automakers pushing for their semi-annual sales targets, with OEMs and end-user stores increasing order replenishment efforts, a key positive factor supporting MoM recovery. There will be 21 working days this month, forming a YoY advantage of one extra working day compared to the base of 20 working days in June last year, providing a positive boost to overall production and sales. However, based on past experience, during months when the World Cup is held, the auto market’s sequential performance tends to be weaker. It fell 7% MoM in June 2018, and by 4% MoM in both June 2010 and June 2014. The negative impacts from the previous reduction in passenger vehicle trade-in subsidies and the cooling of the industry price war have been largely absorbed, marking an end to negative policy factors and providing a foundation for market recovery. End-user pace, the auto market showed a “front-loaded and then stabilizing” trend. Combined with the month-end semi-annual sales push effect, the overall monthly trajectory was relatively steady. Notably, the Dragon Boat Festival holiday fell on June 19 this year, significantly later than its May 31 date last year. The concentrated disruption from holiday foot traffic and diverted consumer spending affected the market this month, slightly suppressing mid-month car ordering enthusiasm and partially offsetting some of the benefits from the semi-annual month-end sales push and extra working days. This emerged as a key seasonal factor influencing the monthly trend. It is worth noting that geopolitical conflicts have driven international oil prices to fluctuate at highs, causing the cost of using fuel vehicles in China to keep climbing. This not only directly suppresses the willingness to purchase fuel vehicles but also adds to residents' expenditure pressure, further weakening overall car purchase consumption power and becoming a core factor constraining significant YoY growth in the auto market. At the same time, however, high oil prices have also been continuously accelerating the transition to vehicle electrification. Coupled with the momentum of pushing for half-year targets at the end of June, automakers have introduced compliant concession policies such as interest subsidies and car purchase gift packages for new energy models. Together with the concentrated delivery of multiple new NEV models, the industry's product portfolio has been continuously improved, and strength on the supply side has increased substantially. Currently, industry inventory is being gradually and orderly digested, the vicious price war has largely subsided, and terminals are clearing inventory through mild sales promotions, making market competition trend toward a benign state. Driven by multiple favorable factors, the passenger NEV penetration rate is expected to remain firmly above 60%, with the electrification process continuing to accelerate, becoming the core pillar supporting the resilience of the auto market. Against the backdrop of sluggish domestic demand, automobile exports have become the core pillar of industry growth, creating a pattern of "weak domestic demand, leading overseas demand." Chinese automakers continue to deepen their presence in overseas markets, focusing on diverse markets such as Latin America and Europe, effectively offsetting the impact of declining demand in the Middle East, with export sales maintaining high growth. Relying on the mature domestic new energy industry chain and high-quality products, automobile exports continue to move upscale and upgrade across all categories, effectively offsetting the growth pressure in the Chinese market and supporting the overall stable operation of the industry. Overall, the Passenger Vehicle Association estimates that the auto market's recovery momentum in June will be limited, structural potential remains large, and the overall weak recovery trend will persist.

In mid-May 2026, CAAM and the China Automotive Battery Innovation Alliance successively released data on the auto and power battery markets for April 2026. CAAM stated that in April, auto production and sales declined slightly compared to the same period last year, with the cumulative decline in production and sales narrowing further. Among them, domestic demand still needs improvement and stimulation; exports continued to grow rapidly, providing stable support for the overall market........SMM has compiled relevant data on the auto market and power battery market for April 2026 for readers' reference. Auto Sector CAAM: Auto Production and Sales Reached 2.575 Million and 2.526 Million Units Respectively in April In April, auto production and sales reached 2.575 million and 2.526 million units respectively, down 11.7% and 12.9% MoM, and down 1.7% and 2.5% YoY. From January to April, auto production and sales reached 9.614 million and 9.574 million units respectively, down 5.5% and 4.8% YoY. CAAM: NEV Production and Sales Both Grew in April, with NEV Sales Accounting for 53.2% of Total Auto Sales In April, NEV production and sales reached 1.32 million and 1.344 million units respectively, up 5.5% and 9.7% YoY . NEV sales accounted for 53.2% of total new auto sales. From January to April, NEV production and sales reached 4.285 million and 4.304 million units respectively, with production down 3.2% YoY and sales up 0.1% YoY . NEV sales accounted for 45% of total new auto sales. CAAM: NEV Exports More Than Doubled YoY In April, auto exports reached 901,000 units, up 3% MoM and up 74.4% YoY . From January to April, auto exports reached 3.127 million units, up 61.5% YoY . In April, NEV exports reached 430,000 units, up 16% MoM and up 1.1 times YoY ; traditional fuel vehicle exports reached 472,000 units, down 6.5% MoM and up 49% YoY . From January to April, NEV exports reached 1.384 million units, up 1.2 times YoY; traditional fuel vehicle exports reached 1.743 million units, up 34.6% YoY. CAAM commented that since the beginning of this year, China's economy has started strongly, with major indicators exceeding expectations. China's automotive industry has maintained steady progress in transformation and upgrading, foreign trade has demonstrated strong resilience, and overall competitiveness has continued to improve. The recently concluded Beijing auto show showcased cutting-edge achievements in electrification, intelligence, and cross-industry integration, vividly demonstrating that China has become the core market and innovation hub of the global automotive industry. Regarding the April auto market, CAAM stated that in April, auto production and sales declined slightly compared to the same period last year, with cumulative production and sales declines narrowing further. Specifically, domestic demand still needs improvement and stimulation; exports continued to grow rapidly, providing stable support for the overall market. In detail, the passenger vehicle market declined, the commercial vehicle market maintained growth, and NEVs operated steadily. On April 28, the CPC Central Committee Political Bureau held a meeting to analyze and study the current economic situation and economic work, and made a series of important arrangements. The meeting emphasized the need to fully utilize macro policies, deeply tap domestic demand potential, accelerate the construction of a modern industrial system, and systematically respond to external shocks and challenges. This will help improve the domestic auto market, consolidate foreign trade advantages, and promote stable operation and high-quality development of the industry. CPCA also released data on the April passenger vehicle market. April national passenger vehicle retail sales reached 1.384 million units, down 21.5% YoY and down 16.0% MoM; cumulative retail sales from January to April reached 5.604 million units, down 18.5% YoY. The April national passenger vehicle market exhibited complex characteristics of "total volume under pressure with structural divergence." NEV side, April passenger NEV retail sales reached 849,000 units, down 6.8% YoY and down 0.3% MoM; January-April passenger NEV retail sales reached 2.758 million units, down 17.2% YoY. April conventional fuel passenger vehicle retail sales were 530,000 units, down 37% YoY and down 33% MoM. NEV export side, as the scale advantages of China's NEVs become apparent and market expansion demand grows, Chinese-manufactured new energy brand products are increasingly going global, with overseas recognition continuing to rise. April passenger NEV exports reached 406,000 units, up 111.8% YoY and up 18.3% MoM, accounting for 52.7% of passenger vehicle exports, up 8 percentage points YoY; among which, BEVs accounted for 57.2% of new energy exports (65.5% in the same period last year), and A00+A0 class BEVs as the core focus accounted for 51.2% of BEV exports (46% in the same period last year). CPCA stated that this year's passenger vehicle market, affected by multiple factors including NEV purchase tax policy adjustments, weak consumer confidence, and high oil prices, has exhibited an operating trend of "China slowing down, exports growing rapidly; fuel vehicles contracting, new energy dominating."High oil prices dealt a heavy blow to domestic retail of internal combustion engine vehicles, directly affecting the domestic retail recovery process. From January to February this year, internal combustion engine vehicle retail declined by 740,000 units YoY, accounting for 40% of the passenger vehicle retail decline; in March, internal combustion engine vehicle sales declined by 345,000 units YoY, accounting for 52% of the passenger vehicle retail decline; in April, internal combustion engine vehicle sales declined by 365,000 units YoY, with the decline share further expanding to 84%. Under the atmosphere of cost anxiety, consumer demand is accelerating its shift from internal combustion engine vehicles to new energy vehicles, and the market's "fuel-electric divergence" pattern is becoming increasingly prominent. However, on the export side, the opposite was true: from January to February, internal combustion engine vehicle exports grew by 100,000 units YoY, accounting for 25% of the passenger vehicle export growth; in March, internal combustion engine vehicle exports grew by 100,000 units, accounting for 32% of the passenger vehicle export growth; in April, internal combustion engine vehicle exports grew by 130,000 units, climbing to 38%. Due to the notable effects of recent anti-involution measures in the auto market, the scale of price cuts was small, promotional levels remained stable, and many consumers' expectations of waiting for price reductions gradually faded, with some users in stalemate beginning to make car purchases. The Beijing Auto Show in April has become the world's largest auto show, with enormous industry chain scale and influence, providing a strong boost to auto sales recovery in late April. Characteristics of the passenger vehicle market in April 2026: First, overall volume was under pressure with significant structural divergence, with "cold fuel, hot new energy" becoming the biggest focal point. The core reason for the domestic retail decline was the "collapse of fuel vehicles," with new energy retail penetration rate reaching 61.4% (breaking through 60% for the first time in history), and the pace of electrification substitution exceeding expectations. Second, domestic brand share continued to strengthen, with traditional domestic brands successfully transforming, while joint venture brands lagged in electrification progress, solidifying the "domestic brand dominance" pattern. Third, exports showed explosive growth, with new energy accounting for 52.7% (breaking through 50% for the first time in history), driven by the "new energy + domestic brands" dual engine, making "going global" the core growth engine. Fourth, passive destocking characteristics were evident, with channel inventory declining rapidly, listed dealers suffering comprehensive losses, and dealer survival pressure continuing to intensify. Fifth, dramatic structural changes within new energy occurred, with B-class EVs surging and economy EVs under pressure, showing "high-end rising, low-end struggling." Sixth, new model contribution declined: April producer sales of new models launched in 2026 reached 108,400 units, accounting for 5.1% of total volume, while new models launched in 2025 sold 130,000 units in April 2025, with some classic car models maintaining stable leading sales positions. Power battery segment Power and ESS battery sales up 39.0% YoY in April, up 48.9% YoY cumulatively from January to April In April, China's power and ESS battery sales reached 164.2 Gwh, down 6.2% MoM, up 39.0% YoY . Among them, power battery sales were 108.9 GWh, accounting for 66.4% of total sales, down 5.0% MoM and up 25.8% YoY; ESS battery sales were 55.2 GWh, accounting for 33.6% of total sales, down 8.5% MoM and up 75.5% YoY. From January to April, China's cumulative power and ESS battery sales reached 601.2 GWh, up 48.9% YoY cumulatively . Among them, cumulative power battery sales were 400.9 GWh, accounting for 66.7% of total sales, up 31.9% YoY cumulatively; cumulative ESS battery sales were 200.4 GWh, accounting for 33.3% of total sales, up 100.4% YoY cumulatively. China's Power Battery Installations Up 15.2% YoY in April, Cumulative Installations Up 1.6% YoY from January to April In April, China's power battery installations were 62.4 GWh, up 10.4% MoM and up 15.2% YoY . Among them, ternary battery installations were 11.5 GWh, accounting for 18.5% of total installations, up 7.6% MoM and up 24.2% YoY; LFP battery installations were 50.8 GWh, accounting for 81.5% of total installations, up 11.0% MoM and up 13.4% YoY. From January to April, China's cumulative power battery installations were 187.2 GWh, up 1.6% YoY cumulatively . Among them, cumulative ternary battery installations were 37.4 GWh, accounting for 20.0% of total installations, up 8.9% YoY cumulatively; cumulative LFP battery installations were 149.8 GWh, accounting for 80.0% of total installations, down 0.1% YoY cumulatively. Leap Motor Continued to "Lead" Among New Forces in April, BYD's Overseas Sales Hit a Record High April sales/delivery data for new automaking forces were released. Leap Motor continued to "lead," delivering 71,387 units in April, up 73.9% YoY. Delivery momentum continued to surge, with back-end production running at full capacity simultaneously. Currently, Leap Motor's A10 factory capacity has exceeded 1,000 units/day. Starting from April, Leap Motor's intelligent features also entered a phase of large-scale popularization. Currently, urban navigation-assisted driving has been made available for experience across multiple Leap Motor car models, and in the future, nationwide urban NAP and parking-space-to-parking-space navigation assistance will be rolled out in batches. Leveraging its full-domain self-developed capabilities, Leap Motor has achieved full coverage of assisted driving from the 100,000-yuan-level A10 to the flagship D19, making smarter and safer advanced intelligent assisted driving no longer a privilege of the few, but an accessible part of everyday travel. Li Auto delivered a total of 34,085 new vehicles in April. As of April 30, 2026, Li Auto's cumulative historical deliveries reached 1,669,442 units. As of April 30, 2026, Li Auto had 511 retail centers nationwide, covering 160 cities, and 550 after-sales repair centers and authorized service centers, covering 223 cities. Li Auto had put into use 4,077 Li Auto supercharging stations nationwide, with 22,509 charging piles. XPeng Motors delivered 31,011 new vehicles in April. As of April, cumulative deliveries of the XPeng MONA M03 exceeded 250,000 units, ranking first among pure electric sedans in the 100,000-200,000 yuan segment for 19 consecutive months. As of April 30, XPeng's charging network covered over 430 cities, with over 3,550 cumulative self-operated charging stations, including over 3,000 self-operated ultra-fast charging stations. To ensure smooth travel during the Labour Day holiday, XPeng completed dedicated inspections and maintenance of charging stations along highways and at popular scenic areas. Xiaomi Auto delivered over 30,000 units in April. On May 6, Xiaomi Auto announced that the new-generation SU7 had received over 80,000 locked orders in just 48 days since its launch. The new-generation SU7 Standard Edition was priced at 219,900 yuan, the Pro Edition at 249,900 yuan, and the Max Edition at 303,900 yuan. NIO delivered 29,356 new vehicles in April, up 22.8% YoY. Among them, the NIO brand delivered 19,024 units; the ONVO brand delivered 5,352 units, up 21.6% YoY; and the firefly brand delivered 4,980 units. In the first four months of this year, NIO delivered a total of 112,821 vehicles, up 71.0% YoY. To date, NIO has cumulatively delivered 1,110,413 vehicles. In April 2026, the all-new NIO ES8 achieved 13,020 new vehicle deliveries. To date, the all-new ES8 has accumulated over 100,000 users and set the record for the fastest delivery of 100,000 units among high-end car models priced above 400,000 yuan in China. In addition, the all-new ES8 has been the sales champion among large SUVs and car models priced above 400,000 yuan for four consecutive months. BYD, China's leading EV maker, recorded auto sales of 321,123 units in April. Exports exceeded 130,000 units, hitting a new all-time high. Cumulative NEV sales surpassed 16.1 million units. On May 9, BYD and China Auto Rental (CAR Inc.) officially signed a Flash Charging China strategic cooperation agreement and a 100,000-unit vehicle procurement framework agreement in Shenzhen. Under the agreement, the two parties will conduct in-depth cooperation around the "Flash Charging China Strategy," deploying BYD flash charging pile facilities at eligible CAR Inc. stores nationwide to build a widely covered, efficient, and convenient charging service network, jointly enhancing user travel experiences. Meanwhile, the two parties signed a 100,000-unit vehicle procurement framework agreement, further consolidating BYD's core position in CAR Inc.'s NEV fleet and supporting its continued expansion of green transportation capacity. The CPCA stated that the current auto market is at a critical stage of smooth transition from "policy-driven" to "market-guided" and "product-driven." Although the market is under pressure in the short term, with multiple heavyweight new car models entering the market around the auto show period, supply-side efforts are expected to gradually drive demand-side recovery, and the overall auto market is expected to see a more robust rebound in Q2. In addition, CPCA Secretary General Cui Dongshu noted that the NEV penetration rate exceeded 60% in April, a "leapfrog" development compared to approximately 52% in March, with a key reason being the sharp decline in internal combustion engine vehicle demand, which in turn pushed up the NEV penetration rate. Recently, some automakers announced raises in optional intelligent driving features pricing, drawing market attention. In response, Cui Dongshu stated that China's auto market currently exhibits significant differentiation in automaker gross margins: high-end automakers maintain relatively high gross margin levels, with many models still sustaining gross margins above 20% supported by pricing, facing relatively small profitability pressure and having no substantive need to raise prices; low and mid-end automakers, however, face notable profitability pressure. Yet as industry competition continues to intensify and the overall market is in a state of volume contraction, broad-based price increases by automakers lack feasibility. Looking ahead to May, the CPCA stated that May this year has 19 working days, consistent with the 19 working days in May 2025. Auto market production and sales are expected to continue the prior gradual rebound trend. From the end-user pace and consumption perspective, the MoM recovery momentum of the May auto market is generally improving. The 2026 truck renewal subsidy standards remain unchanged, while passenger vehicle trade-in subsidies were reduced, and the impact of passenger vehicle sales losses is expected to diminish over time. Sales losses previously caused by the cooling of industry price wars and sales promotions falling short of expectations have been gradually absorbed. The Labour Day holiday combined with local auto shows activated car purchase demand, driving pre-holiday order locking and post-holiday concentrated deliveries, with monthly trends showing strength early and stability later. The surge in fuel prices is an exceptionally significant factor affecting consumption, bringing uncertainty to market sales. Currently, residents' income expectations remain cautious, wait-and-see sentiment toward car purchases persists, and coupled with tightening auto finance and higher credit thresholds, rigid demand is supported only by local subsidies and automaker concessions. China's consumption recovery is mild, with notable structural differentiation. Under the intertwined influence of multiple factors including international oil price fluctuations and intensive new product launches, these will dominate the May auto market performance. The Labour Day long holiday is a dividend driving MoM sales recovery, but consumption shortcomings are difficult to repair quickly, constraining YoY growth. High oil prices have reshaped car purchase preferences and accelerated the electrification transition, while the comprehensive new energy industry chain continues to empower export growth. The overall picture presents a weak recovery pattern of "MoM recovery, YoY pressure, domestic demand differentiation, exports leading, and continuously rising NEV penetration rate."

Recycling Industry Events This Week (December. 29-31)

Recently, the People's Government website of Nanpiao District, Huludao City, Liaoning Province, released the first public notice regarding the "Automobile Dismantling and New Energy Vehicle Battery Dismantling and Comprehensive Utilization Project" planned by a local ecological environmental protection company. According to the public notice, the company intends to construct a production line capable of dismantling 50,000 end-of-life fuel vehicles annually, a production line for dismantling 50,000 end-of-life new energy vehicles annually, a production line for dismantling and comprehensive utilization of new energy vehicle batteries, and a production line for producing 100,000 tons of recycled aluminum annually, all within the Nanpiao Circular Industrial Park.

In mid-March 2026, CAAM and the China Automotive Power Battery Industry Innovation Alliance successively released relevant data on the auto and power battery markets for February 2026. According to CAAM’s analysis, auto production and sales declined YoY under the combined impact of multiple factors, including policy transition adjustments, front-load demand release, the timing shift of the Chinese New Year holiday, insufficient willingness to consume, and a high base in the same period last year. Among them, the passenger vehicle market and NEV market both declined YoY, while the commercial vehicle market continued to improve, and auto exports grew rapidly. .......SMM compiled the relevant data on the auto market and power battery market for February 2026 for readers’ reference. Automobiles CAAM: February Auto Output and Sales Reached 1.672 Million and 1.805 Million Units, Respectively In February, auto output and sales totaled 1.672 million and 1.805 million units, down 31.7% and 23.1% MoM, and down 20.5% and 15.2% YoY, respectively. From January to February, auto output and sales totaled 4.122 million and 4.152 million units, down 9.5% and 8.8% YoY, respectively. CAAM: February NEV Sales Reached 765,000 Units; January-February NEV Output and Sales Reached 1.71 Million Units In February, NEV output and sales totaled 694,000 and 765,000 units, down 21.8% and 14.2% YoY, respectively. NEV sales accounted for 42.4% of total new vehicle sales. From January to February, NEV output and sales totaled 1.735 million and 1.71 million units, down 8.8% and 6.9% YoY, respectively. NEV sales accounted for 41.2% of total new vehicle sales. CAAM: Auto Exports Continued to Grow in February; NEV Exports up 1.1x YoY In February, NEV exports were 282,000 units, down 6.6% MoM, up 1.1x YoY ; traditional fuel vehicle exports were 391,000 units, up 2.8% MoM and up 26.2% YoY . From January to February, NEV exports were 583,000 units, up 1.1x YoY; traditional fuel vehicle exports were 769,000 units, up 22.2% YoY . Regarding the auto market in February, CAAM said that this year’s Chinese New Year fell in mid-to-late February, and the holiday was extended. As a result, there were only 16 effective working days in February, which had a certain impact on enterprise production and operations, and overall market activity declined. Judging from industry performance from January to February, auto production and sales declined YoY under the combined impact of multiple factors, including policy transition adjustments, front-load demand release, the timing shift of the Chinese New Year holiday, insufficient willingness to consume, and a high base in the same period last year. Among them, the passenger vehicle market and NEVs declined YoY, while the commercial vehicle market continued to improve and auto exports grew rapidly. This year’s government work report explicitly proposed to stimulate the endogenous momentum of household consumption and advance consumption-promoting policies in parallel, continue to amplify the effect of the policy package, further rectify “involution-style” competition, and foster a sound market ecosystem. It is believed that, as detailed local subsidy measures are fully implemented after the holiday, spring auto show sales promotions begin, and automakers roll out new models one after another, this will help boost consumer confidence, energize the auto market, and promote the healthy and stable operation of the industry. Subsequently, the CPCA also released data on the passenger vehicle market for February 2026. From February 1 to 28, retail sales in China’s passenger vehicle market reached 1.034 million units, down 25.4% YoY and down 33.1% MoM. Cumulative retail sales since the beginning of the year totaled 2.578 million units, down 18.9% YoY. As market factors have become more complex, the pattern of “low at the beginning and high at the end” in annual sales has become more evident in recent years. Affected by disruptions such as Chinese New Year, February retail sales have seen wild YoY swings over the years, for example: 2019 (-19%), 2020 (-79%), 2021 (373%), 2022 (5%), 2023 (10%), 2024 (-21%), and 2025 (26%). Therefore, the -25.4% in 2026 was at the lower-middle end of the range of sharp fluctuations in February growth rates over the years. NEVs, retail sales in the passenger NEV market were 464,000 units in February, down 32.0% YoY; from January to February, retail sales in the passenger NEV market were 1.06 million units, down 25.7% YoY. Retail sales of conventional fuel passenger vehicles were 570,000 units in February, down 19% YoY. In February, passenger NEV producer exports were 269,000 units, up 124.7% YoY and down 7.0% MoM; from January to February, passenger NEV producer exports were 559,000 units, up 114.7% YoY, while exports of conventional fuel passenger vehicles were 290,000 units in February, up 21% YoY. NEV exports, as the scale advantages of China’s new energy vehicles become more apparent and market expansion demand grows, more and more China-made new energy brand products are going outside China, and their recognition outside China continues to improve. Among them, PHEVs accounted for 38% of NEV exports (38% in the same period last year). Although they have recently been affected by some disruptions from external countries, exports of independently developed PHEVs to developing countries have grown rapidly, with bright prospects. In February, passenger NEV exports were 269,000 units, up 124.7% YoY and down 7.0% MoM. They accounted for 48.5% of passenger vehicle exports, up 14.8 percentage points YoY; BEVs accounted for 58% of NEV exports (59% in the same period last year), and A00- and A0-class EVs, the core focus, accounted for 55% of BEV exports (56% in the same period last year). The CPCA stated that after the NEV purchase tax exemption policy, which had been implemented since September 2014, was formally phased out at the end of December 2025, the NEV market in 2026 entered a recovery period amid adjustments to tax subsidies. Some consumers brought forward purchases to 2025 to benefit from the policy, resulting in a certain pull-forward effect in January-February this year. This was an expected short-term fluctuation and does not represent the market’s long-term trend. However, with Chinese New Year falling later this year, making it a major consumption year, growth in the auto market diverged, and NEVs did not perform strongly, indicating that more policy support is still needed. Key features of the passenger vehicle market in February 2026: 1. In February, passenger vehicle producers’ daily average exports hit a record high for the month, fully demonstrating the steadily improving competitiveness of China’s automotive industry in the global market and continued robust demand outside China; 2. The retail pullback after the expiration of the vehicle purchase tax exemption was evident, but structural changes were also clear, namely a higher share of high-end NEVs and a lower share of entry-level consumption, which is conducive to the industry’s transition toward high-quality development; 3. New vehicle launches were steady in 2026, and together with the advance of anti-involution efforts curbing disorderly price cuts, NEV sales promotions stayed at 10.4% in February, remaining around 10% for six consecutive months. No vicious volume discount competition emerged, helping maintain market order; 4. The historical pattern of internal combustion engine vehicles outperforming NEVs before Chinese New Year continued again. In February, retail sales in China of internal combustion engine vehicles fell 19% YoY, while pure electric vehicle retail sales fell 35% YoY, range-extended vehicles fell 16% YoY, and PHEVs fell 31% YoY. As time goes by, consumers are expected to gradually adapt to the normalization of NEV taxation, and the NEV market is expected to return to a track of positive growth; 5. This February was still a pre-Chinese New Year consumption phase dominated by internal combustion engine vehicles. NEV penetration rate in retail sales in China was 44.9%, and export penetration rate was 48.5%, which was a relatively good performance; 6. In February 2026, exports of self-owned-brand internal combustion engine passenger vehicles reached 247,000, up 21% YoY, while exports of self-owned-brand NEVs reached 231,000, up 110% YoY. NEVs accounted for 48.4% of self-owned-brand exports. In particular, the high growth of NEV exports in Europe, Southeast Asia, and other regions marked the expanding influence of China’s NEV brands in the international market, laying a solid foundation for future export growth. Power Battery In February, China’s cumulative sales of power and ESS batteries reached 113.2 Gwh, up 25.7% YoY In February, China’s sales of power and ESS batteries reached 113.2 Gwh, down 23.9% MoM, up 25.7% YoY . Of this, power battery sales were 74.5 Gwh, accounting for 65.9% of total sales, down 27.4% MoM and up 11.4% YoY; ESS battery sales were 38.6 Gwh, accounting for 34.1% of total sales, down 16.2% MoM and up 67.3% YoY. From January to February, China’s cumulative sales of power and ESS batteries were 262 Gwh, up 53.8% YoY . Of this, cumulative power battery sales were 177.2 Gwh, accounting for 67.6% of total sales and up 36.5% YoY; cumulative ESS battery sales were 84.8 Gwh, accounting for 32.4% of total sales and up 108.9% YoY. From January to February, cumulative power battery installations were 68.3 Gwh, with LFP installations accounting for 77.9% In February, China’s power battery installations were 26.3 Gwh, down 37.4% MoM and down 24.6% YoY. Of this, ternary battery installations were 5.7 Gwh, accounting for 21.7% of total installations, down 39.1% MoM and down 11.4% YoY; LFP battery installations were 20.6 Gwh, accounting for 78.3% of total installations, down 36.9% MoM and down 27.5% YoY. From January to February, cumulative power battery installations in China were 68.3 Gwh, down 7.2% YoY. Of this, cumulative ternary battery installations were 15.1 Gwh, accounting for 22.1% of total installations and up 0.6% YoY; cumulative LFP battery installations were 53.3 Gwh, accounting for 77.9% of total installations and down 9.2% YoY. More Than 60% of A/H-Share Automakers Achieved YoY Growth, March Auto Market Production and Sales Will See Rapid MoM Growth Earlier, CLS compiled the January-February sales performance of 14 A/H-share listed automakers, of which 9 achieved YoY growth, accounting for more than 60%, and 3 automakers recorded February sales outside China exceeding those in the Chinese market. Among emerging EV makers, Leap Motor still firmly held the top spot in deliveries, with 28,067 units delivered in February, up 10.99% YoY; cumulative deliveries in 2026 reached 60,126 units, up 19.16% YoY. While releasing its February delivery figures, Leap Motor said its March car purchase incentives had gone live, with discounts of up to 46,000 yuan for in-stock vehicles. Li Auto delivered 26,421 units in February, up 0.6% YoY. Cumulative deliveries in 2026 reached 54,089 units, down 3.74% YoY. As of February 28, 2026, Li Auto’s historical cumulative deliveries totaled 1.594 million units. Li Auto said that as of February 28, 2026, it had 539 retail centers nationwide, covering 160 cities; 548 after-sales repair centers and authorized service centers, covering 223 cities. Li Auto had put into use 4,054 Li Auto supercharging stations nationwide, with 22,447 charging piles. NIO delivered 20,797 new vehicles in February, up 57.65% YoY. Cumulative deliveries in the first two months of 2026 reached 47,979 units, up 77.34% YoY. To date, NIO has delivered a total of 1,045,571 new vehicles. At 22:33:18 on February 6, NIO completed its 100 millionth battery swap; during the 2026 Chinese New Year holiday, NIO provided a cumulative 2,073,500 battery swapping services, with daily average services up 29.4% YoY versus the Chinese New Year holiday last year. From February 15 to February 23, NIO Energy's cumulative highway charging and battery swapping volume exceeded 25.28 million kWh, accounting for 15% of the national highway charging and battery swapping total. Starting from February 18 (the second day of the Chinese New Year), NIO battery swapping set new single-day service records for five consecutive days. XPeng Motors delivered a total of 15,256 new vehicles in February, bringing cumulative deliveries in the first two months of 2026 to 35,267 units, down 42% YoY. In February, the all-new XPeng G6 launched in the UK, with the entire lineup equipped as standard with an 800V high-voltage platform and a new-generation LFP battery, while introducing an all-wheel-drive performance black edition for the first time. The XPeng G6 has now been exported to more than 40 countries and regions worldwide, covering Asia-Pacific, Europe, the Middle East and North Africa, and Latin America, and continues to win favour among an increasing number of overseas consumers. As for Xiaomi Auto, its deliveries exceeded 20,000 units in February, while January deliveries exceeded 39,000 units, bringing cumulative deliveries in the first two months of 2026 to 59,000 units. Notably, the Xiaomi YU7 continued to rank first in sales in February and has now held the top spot for six consecutive months. In February 2026, Xiaomi YU7 sales reached 20,196 units, ranking among the top three passenger vehicle models nationwide for the month. As for BYD, China's "EV king," February sales reached 190,190 units, retaining its position as China's NEV sales champion. In January-February 2026, BYD Group's cumulative sales reached 400,241 units, while cumulative overseas sales of passenger vehicles and pickups totaled 200,160 units, and cumulative new energy vehicle sales exceeded 15.5 million units. On March 5, BYD unveiled the second-generation blade battery. Wang Chuanfu, Chairman of BYD Group, said that the second-generation blade battery can charge from 10% to 70% in 5 minutes, and from 10% to 97% in just 9 minutes. The second-generation blade battery offers 5% higher battery energy density than the first-generation blade battery. Car models equipped with the second-generation blade battery include the Yangwang U7, Denza N9, Fangchengbao Tai 3, Seal 07, Datang, Sea Lion 06, Song Ultra, Fangchengbao Tai 7, Denza Z9GT, and Yangwang U8L, among which the Denza Z9GT has a driving range of 1,036 km. Regarding auto industry sales in February 2026, Cailian Press quoted an executive at a new carmaker as saying, "Affected by the longest-ever nine-day Chinese New Year holiday in February, the auto industry's effective production and sales period was significantly shortened, making it a typical off-season for auto consumption. Combined with the phased reduction in the vehicle purchase tax incentive, the auto industry as a whole remained subdued and full of challenges.” Looking ahead to the passenger vehicle market in March, the CPCA said that March this year had 22 working days, one more than the 21 working days in March 2025. As industries across the board rapidly returned to normal operations after the Chinese New Year holiday, production and sales growth in March is expected to rise sharply MoM. The post-Chinese New Year period is an important window for new product launches, and many producers rolled out a large number of new vehicles. Driven by national pro-consumption policies, many provinces and cities introduced corresponding measures to stimulate consumption, while the full resumption of offline activities such as auto shows will also accelerate the return of foot traffic. As prices of lithium carbonate, copper, and other materials have remained high recently, coupled with the continued anti-involution trend, producers are expected to launch relatively few new energy car models offering better-than-expected value for money, leaving limited potential for an explosive rebound in auto consumption. Although the recent Middle East crisis caused some transportation disruptions, China’s complete vehicle enterprises shifted from “chartering vessels and waiting for shipping space” to “building ships and controlling transport,” with rapid expansion of their own fleets, greater autonomy and control over shipping capacity, and significant optimization in cost and efficiency. Our sales support capabilities are stronger than those of other international automakers, and if the crisis does not last long, export transportation will not be significantly affected. As the national trade-in policy is fully implemented, the consumer potential for replacement and upgrade purchases will be gradually released, helping the auto market strengthen steadily in March. In 2026, policy subsidies and structural optimization in the auto industry will become key factors in leveraging overall market prosperity and accelerating the premiumization of new energy vehicles. Although the 2026 consumer goods trade-in subsidy fund of 250 billion yuan was down 50 billion yuan from 2025, the 100 billion yuan in special fiscal and financial coordinated funding to boost domestic demand can reduce financing costs for residents’ car purchases and automakers through loan interest subsidies and financing guarantees, effectively stimulating endogenous consumption momentum and expanding new room for domestic demand. Huachuang Securities pointed out that since March, the passenger vehicle retail market has begun to improve, with foot traffic and transactions gradually recovering, mainly due to the digestion of deferred wait-and-see demand from last year and the launch of new models. Attention should be paid to market acceptance of new vehicles after price increases and to dynamic adjustments by automakers. Although the subsidy amount per vehicle declined this year, coverage may expand. Combined with the low base in H2 last year, industry retail sales growth in H2 is expected to turn positive, with full-year retail growth expected at 1%, including +5% for EVs. Export data for January-February exceeded expectations, and full-year exports are expected to surpass 7.1 million units, boosting wholesale growth by about 3%, including +8% for EVs. In February, due to weaker demand during the Chinese New Year, the new energy penetration rate remained firm at 48%. Current total channel inventory is about 3.4 million units, an increase of about 600,000 units compared to the same period last year. Rising Prices of Memory Chips and Precious Metals, Some Automakers Warn of Cost Pressure It is worth noting that as memory chip and precious metal prices have fluctuated upward recently, some automakers in the market have begun trying to respond to supply chain cost pressure through “price increases.”Monitoring data from TrendForce showed that since H2 2025, prices of DDR4 memory used in automotive-grade DRAM have risen by more than 150% cumulatively, while DDR5 memory prices have surged by 300%. Data provided by UBS showed that over the past three months, automotive-grade DRAM prices as a whole increased by 180%. According to incomplete statistics, since the start of 2026, multiple automakers, including NIO, Li Auto, VOYAH, Xiaomi, and Zeekr, have issued warnings or been reported to be facing cost challenges brought by chip price increases. In a livestream, Deepal Chairman Deng Chenghao said that current production costs have risen by several thousand yuan compared with earlier levels, with the pressure mainly coming from wild swings in power battery and in-vehicle memory chip prices; Li Auto Vice President of Supply Chain Meng Qingpeng even warned that the supply fulfillment rate for automotive memory chips in 2026 may be less than 50%; Xiaomi Chairman Lei Jun mentioned in a livestream in January that the new Xiaomi SU7 is facing memory cost pressure that is jumping quarter by quarter, with memory cost per vehicle expected to increase by several thousand yuan. However, according to the latest news from NIO on March 11, NIO founder and chairman Li Bin said that rising prices of memory and other raw materials have impacted the cost of high-end new energy car models by 3,000 to 5,000 yuan respectively, with the total impact nearing 10,000 yuan. At present, NIO’s existing system can support the pressure brought by rising costs, and the company currently has no plan to adjust prices. At the Q4 and full-year 2025 earnings call, Li Auto President Ma Donghui said that in response to the impact brought by the current increase in parts prices, Li Auto will strengthen coordination with supply partners and sign long-term LTA agreements with relevant suppliers to lock in prices or allocations in advance. If there is a price adjustment mechanism, it will be strictly implemented in accordance with the contract; where there is no price adjustment mechanism, the company will also share costs with suppliers. It will absorb as much of the pressure from external price increases internally as possible, including through its self-developed range extender and self-developed chips. “Li Auto will comprehensively consider parts costs and user value in determining the pricing of new car models, and is confident that through a series of measures it can keep the impact of raw materials within a reasonable range,” Ma Donghui said. UBS warned that chip shortages may begin disrupting global auto production as early as Q2 this year, with EV manufacturers that are highly dependent on advanced chips expected to be affected the most.

Shanghai has announced its 2026 allocation plan (third batch) for energy conservation and emission reduction special funds and ultra-long special treasury bonds. The funds will support national vehicle scrappage and replacement programs, covering both fuel vehicles and new energy vehicles, with a total of 43.232 million yuan allocated from the municipal energy conservation and emission reduction special funds.

Shenzhen announced a vehicle replacement subsidy on February 28, 2026. Individual consumers who trade in their old passenger vehicle for a new energy vehicle (NEV) or a fuel vehicle (2.0L and below) are eligible. The subsidy is 8% of the vehicle price (max RMB 15,000) for NEVs and 6% (max RMB 13,000) for fuel vehicles.

On February 26, local time in the US, the third round of indirect negotiations between the US and Iran took place in Geneva, Switzerland, mediated by Oman. The talks went through two stages with a break of several hours in between, and a new round of negotiations is expected to take place next week. On February 27, Beijing time, the Ministry of Foreign Affairs advised Chinese citizens in Iran to evacuate as soon as possible. The external security risks facing Iran have significantly increased, with multiple countries issuing advisories for their citizens to leave. Given the current security situation in Iran, the Ministry of Foreign Affairs and the Chinese Embassy and Consulates in Iran reminded Chinese citizens not to travel to Iran and advised those already there to strengthen safety precautions and evacuate as soon as possible. The Chinese Embassies and Consulates in Iran and its neighboring countries will provide necessary assistance for the evacuation of Chinese citizens via commercial flights or land routes. On February 27, platinum and palladium showed a significant rise, with platinum's weekly gain reaching 19.29%, making it a standout in the precious metals futures sector. Market uncertainties brought about by US tariffs and geopolitical risks continue to support the performance of precious metals. Fundamentals side, tight supply provided fundamental support for platinum. Coupled with many market participants' bullish outlook, some suppliers held prices firm, providing sentiment support for the rise in platinum and palladium. As of around 3:58 PM on February 27, the main platinum contract rose 5.34% to 623.75 yuan/gram, with a weekly gain of 19.29%; the main palladium contract rose 2.77% to 464.85 yuan/gram, with a weekly gain of 10.86%. The A-share market responded in kind, with the precious metals sector closing up 3.55% on February 27. On February 27, spot platinum was quoted at 606~610 yuan/gram, with an average price of 608 yuan/gram, up 3.67% from the previous trading day. The post-holiday rise in platinum, besides being supported by macro factors and safe-haven demand, also benefited from tight supply, positive market expectations, and some suppliers holding prices firm. Due to some suppliers' optimistic outlook, they were unwilling to sell at low prices, making it difficult to find low-priced goods in the market. However, the supply-demand relationship has not changed significantly since before the holiday. The post-holiday rise was more driven by optimistic sentiment, with downstream players adopting a wait-and-see attitude. It is expected that platinum prices will continue to fluctuate in the short term. Future developments will need to focus on changes in the demand side. Throughout February 2026, platinum and palladium prices experienced a roller-coaster ride amid macroeconomic shocks and geopolitical risks. For the whole month, macro sentiment dominated the pace of fluctuations, with supply-side events reinforcing support, and the structural feature of "strong platinum, weak palladium" continued. At present, geopolitical and macro situations strongly support precious metals: the tense Middle East situation directly boosted safe-haven demand; the downward revision of US GDP coupled with stubborn inflation highlighted gold's value preservation function; the legal battle over tariff policies weakened the US dollar's credibility, and expectations for US Fed interest rate cuts, along with global central banks' gold buying spree, collectively provided a solid bottom for precious metal prices. Fundamentals side, the expansion elasticity of platinum and palladium supply is relatively weak. Since platinum's demand structure is less dependent on traditional fuel vehicle consumption compared to palladium, the supply-demand pattern for platinum is tighter, and it is expected to have strong upward momentum, while palladium is likely to follow platinum in a weaker trend. Risk Warning: US Economic Resilience Exceeds Expectations, US Tariff Adjustments on Platinum and Palladium Exceed Expectations, Geopolitical Risks in Major Production Areas, etc.