Huatai Securities: China and EU Reach Understanding on Hybrid Vehicle Trade
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Abstract
On October 9, China and the EU reached an understanding on hybrid vehicle trade, intended to modulate Chinese exports of hybrid and plug-in-hybrid vehicles to Europe while advancing procedures linked to the EV anti-subsidy case. EU calculations suggest related exports over the next four years could fall by more than half versus a no-policy-change scenario, though implementation details remain to be clarified. Huatai Securities views the accord as easing, for now, the risk of escalation in trade friction; drawing on the Japan–EU negotiation precedent, it expects direct export constraints to accelerate Chinese automakers' localized production in Europe. BYD, Chery, Leapmotor, SAIC and Geely are all in a dense phase of European capacity deployment. Institutional holdings in passenger vehicles sit near five-year lows, leaving room for repair. Huatai recommends watching the European Council summit's review of the hybrid scheme on October 15–16, and notes Geely's full-year exports may challenge the 1-million-unit mark. Ratings: Geely Auto (175 HK) Buy, target price HKD 30.51; BYD (002594 CH) Buy, target price RMB 112.42.
Key exhibits
Exhibit 1
