The production of Q2 electric vehicles is relatively stable compared to March, and the market has fully anticipated it. We are bullish on the Q3 peak season production and expect the industry to stock up for the Q4 peak season during August and September.
Zhongtong Finance App learned that Dongwu Securities issued a research report stating that domestic electric vehicle sales in May were 955,000 units, with a month-on-month and year-on-year increase of +33% / +12%, and a penetration rate of 40%. New forces benefited from new car deliveries and were slightly better than market expectations. The production of Q2 electric vehicles is relatively stable compared to March, and the market has fully anticipated it. On the profit side, Q1 hit bottom, Q2 prices stabilized, and some low-price orders have recovered slightly. With the utilization rate of production capacity, we expect Q2 profits to remain stable. As the supply-side reform slows down, there will be a 25-year certainty reversal.
The main viewpoints of Soochow Securities are as follows:
Domestic electric vehicle sales in May exceeded expectations, while Europe was weaker as expected, and the United States saw a slight recovery in growth.
Domestic electric vehicle sales in May were 955,000 units, with a month-on-month and year-on-year increase of +33% / +12%, and a penetration rate of 40%. New forces benefited from new car deliveries and were slightly better than market expectations. Starting in July, the European Union and Brazil will increase import tariffs, which will have an impact on pure electric exports, but plug-in exports have grown significantly. The growth rate of annual export sales has been revised down to 20%, and due to strong domestic sales, the expected annual growth rate remains at 25%, reaching 11.8 million units.
In May, the mainstream sales in 9 European countries were 169,000 units, with a month-on-month and year-on-year rate of -12% / + 3%, and a penetration rate of 19.6%. The total annual expected growth is 5% to 3 million units. In May, American sales totaled 140,000 units, with a month-on-month and year-on-year rate of + 14% / + 11%, and a penetration rate of 9.7%. It is expected that the total will increase by 16% to 1.7 million units. Although short-term sales growth in Europe and the United States has slowed, the overall trend toward electrification remains unchanged. The European carbon emission assessment is becoming stricter, and 25-year new platforms will be launched in the second half of the year, and we expect sales to increase significantly in 26 years.
Q2 industry production is relatively stable compared to March, and we are bullish on the Q3 peak season production. Some low-priced orders have recovered slightly, and we expect price certainty will reverse in 25 years.
In March, industry production exceeded expectations, was flat in April and May, and slipped slightly in June due to the combination of energy storage and carbonate lithium. However, the capacity utilization rate of leading companies has reached 80%, with Yunnan Energy New Material, Shantai Technology, Bertire, and Zhongke basically at full production. The capacity utilization rate of second and third-tier companies has recovered to 60-70%.
From a profit perspective, the majority of materials in Q1 hit bottom, Q2 prices stabilized, and some low-priced orders have recovered slightly. However, as the industry is still in the process of being cleared, prices remain at a low level. Considering the restrictions on industry financing and profit bottoming out, actual industry expansion is lower than expected. The expected growth rate of effective industry capacity in 25 is expected to increase by 10%+, while the growth rate of dynamic storage demand is expected to be 20%, and we expect a certainty reversal in prices in 25 H2.
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Risk warning: Price competition exceeds market expectations, fluctuations in raw material prices, and a decline in investment growth.