Greater China Auto, EV and EV battery (H/A): Virtual forum takeaways: EV demand likely bottomed; solid ESS outlook

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Greater China Auto, EV and EV battery (H/A): Virtual forum takeaways: EV demand likely bottomed; solid ESS outlook

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Greater China Auto, EV and EV battery (H/A)

Virtual forum takeaways: EV demand likely

bottomed; solid ESS outlook

Industry Overview

Auto OEMs: weak domestic demand, strong exports 13 July 2026 Corrected

We hosted 40 meetings at our 2026 China Auto and Industrial Virtual Forum over 6-10 Equity

July. Key conclusions were: 1) domestic auto demand remains lackluster while YoY Greater China

growth should improve in 2H26 on easy base; 2) price discounting has narrowed as Autos

major OEMs like BYD, Geely and Chery have destocked channel inventory; 3) most OEM Ming Hsun Lee, CFA >>

such as BYD, Geely, Chery, Leapmotor, Xpeng YTD export sales are stronger than Research Analyst

consensus; 4) cost inflation in 2Q26 is similar to the level increased in 1Q26. Among Merrill+852 3508Lynch5006(Hong Kong)

auto OEMs, we prefer Xpeng on its strong model cycle in 2H26. The auto expert Joey Yang, CFA >>

indicates that BYD’s orders backlog is increasing, and it should see gradual MoM sales Research Analyst

Merrill Lynch (Hong Kong)

growth along with new blade battery capacity. +852 3508 4021

Battery: ESS demand robust, cost pressure manageable FionaResearchLiangAnalyst>>

According to Colton Wang (battery expert at New Energy Consulting Institute (NECI)), +852 3508 4390

global battery production will likely grow 41% YoY to 3.2TWh in 2026, supported by solid Jessie Lo >>

demand from CVs and ESS. Wang also expects lithium carbonate prices to fluctuate Research Analyst

Merrill Lynch (Singapore)

between RMB150-200k/ton in 2H26. Leading battery makers noted that they have been +65 6678 1134

able to smoothly pass through cost pressures in 2Q26.