In a research report, CLSA noted that in addition to slowing demand and waning policy support, the recent rise in commodity prices would pose another headwind for automakers, potentially accelerating industry consolidation and adjustments in pricing strategies. Based on spot price estimates for the first quarter (including the impact of hedging operations), raw material costs are expected to increase the average cost per vehicle by approximately RMB 3,000 compared to the second half of 2025, primarily driven by lithium carbonate (around RMB 1,700), memory chips (approximately RMB 800), and non-ferrous metals (about RMB 2,000). CLSA believes that original equipment manufacturers with higher vertical integration, such as BYD (01211.HK), or those with significant external parts sales, like Leapmotor (09863.HK), will be better positioned to absorb this wave of cost pressures.
Moreover, CLSA stated that Geely (00175.HK), with its robust rollout of electric vehicle models and continuously improving profitability, is poised to become one of the leading contenders in the EV sector. The Chinese automotive industry is entering a phase of consolidation, with an increasing share of the market concentrating among top-tier manufacturers.
