Morgan Stanley: SAIC Motor (600104) — Tariff Alternative Opens Room for EU Strategy
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Morgan Stanley views the European Commission's proposed framework allowing Chinese electric vehicle manufacturers to substitute tariffs with minimum price commitments as a potentially favorable development for SAIC Motor. Following the implementation of EU tariffs in 2024, SAIC's proportion of battery electric vehicles in Europe dropped significantly to approximately 30% in 2025. However, the company successfully defended its overall market share by strategically pivoting its export mix toward internal combustion engine and plug-in hybrid vehicles.
Increased flexibility in pricing negotiations could allow SAIC to become more competitive with its BEV offerings, thereby supporting long-term sales volume. Additionally, the inclusion of local European investments by Chinese automakers within the regulatory assessment framework may catalyze SAIC's localization initiatives, which the company has been evaluating for the past two years.
Morgan Stanley characterizes this regulatory update as neutral to modestly positive, complementing its constructive view on SAIC's ongoing consolidation-driven operational recovery. The firm maintains an Overweight rating and a target price of RMB 22.90, offering 49% upside from the closing price of RMB 15.42 recorded on January 12. The valuation is underpinned by a discounted cash flow model with a weighted average cost of capital of 10.4% and a terminal growth rate of 2%.