Highlights

• The yoy drop in the China PV wholesale shipment rose to 5.7% yoy in August from 0.2% yoy in July, but mom sales growth remained positive at 4.7%.
   
• The authorities reinforced the 60-day payment term policy taking cash from OEMs back to auto parts suppliers, but the realisation remains remote.
   
• CATL’s stock sank on worries of Li Auto’s diversifying into other battery suppliers and scrapping of its deal with Ford. We see it as a buying opportunity.
   
• All of the five OEMs we cover are launching key new models in September. We expect BYD’s Sealion 08, and Geely’s Galaxy TT/Cruiser 700 to drive sales and share prices over the next month.
   
• Maintain MARKET WEIGHT. Top BUYs: BYD, Geely, CATL and Minth. Top SELL: Li Auto. We add CATL into our top BUY list this week.
   

Analysis

• Yoy drop in China PV wholesale expanded to 5.7% yoy in August from 0.2% yoy in July, but mom sales growth remained positive at 4.7%.
   
  • Retail fell for an 11th consecutive month; PEVs’ market share topped record 64.7%. PV retail sales volume in China fell 23.9% yoy but rose 5.4% mom to 1.554m units. ICE-car and passenger electric vehicle (PEV) retail sales volumes fell 39.2%/9.9% yoy and grew 5%/5.7% mom to 549,000 units/1.005m units respectively. The share of PEVs in total PV retail sales volume soared to a record of 64.7%.
     
  • Exports surged 77.4% yoy, accounting for 37.7% of wholesale volume. China’s PV exports surged 77.4% yoy and dipped 3.1% mom to 894,000 units (37.7% of wholesale shipment), of which 519,000 units were PEVs (+154.4% yoy). BYD exported 184,000 units, ahead of Geely’s 70,000, and has raised its 2026 overseas sales target to 1.9m-2.0m units(up 82-91% yoy), vs our estimate of 2.0m units. We continue to prefer leading OEMs with rising overseas exposure like BYD and Geely and globally geared suppliers such as Fuyao Glass, Minth and Nexteer.