Although carbon credit scarcity will decline as new energy vehicle penetration increases, Chinese automakers' per-vehicle carbon credit revenue in Europe may outperform market expectations under current stringent carbon emission requirements. Chinese automakers are currently experiencing rapid growth in plug-in hybrid vehicle sales in Europe, and Chinese plug-in hybrid models are expected to continue benefiting during the EU carbon emission assessment transition period. Key companies to watch include BYD (002594.SZ), SAIC Group (600104.SH), and GEELY AUTO (00175).

Key Investment Views:

Chinese Automakers' Carbon Credit Revenue in Europe May Exceed Expectations

Beyond EU carbon emission regulation penalties, the UK also has strict requirements for automakers' zero-emission vehicle sales ratios. Non-compliant automakers face carbon credit demand in both the EU and UK markets. Using the partnership between Leapmotor and Stellantis as an example, under different scenarios, each pure electric vehicle from Leapmotor can help Stellantis reduce penalties by approximately €8,900. Despite declining carbon credit scarcity as new energy penetration increases, Chinese automakers' per-vehicle carbon credit revenue in Europe may outperform market expectations under current stringent carbon emission requirements.

Economy Vehicles Key to European New Energy Vehicle Penetration Growth

Multiple driving factors suggest this round of European new energy vehicle penetration growth may be sustainable. Currently, D/E/F luxury vehicle segments have achieved nearly 50% new energy penetration, while B/C segments, particularly B-class SUVs, have large sales volumes but low new energy penetration rates, representing the key to this round of European new energy vehicle penetration growth. Unlike the previous five-year cycle when luxury brands like Mercedes-Benz and BMW led electrification progress, this cycle may see mass-market brands like Volkswagen and Renault achieving above-average electrification growth rates.

Continued Optimism for Chinese Automaker New Energy Vehicle Exports to Europe

Chinese automakers are currently experiencing rapid plug-in hybrid vehicle sales growth in Europe, with Chinese plug-in hybrid models expected to continue benefiting during the EU carbon emission assessment transition period. Companies to watch include BYD, SAIC Group, GEELY AUTO, and Chery Automobile. Chinese automakers' pure electric vehicle progress in Europe lags behind plug-in hybrids. Considering EU tariff impacts, automakers with local EU production capacity and plans to launch multiple economy models will experience faster growth, including Leapmotor and BYD.

Investment Recommendations: For automotive stocks, focus on Leapmotor, BYD, SAIC Group, GEELY AUTO, XPeng Motors, and NIO. For European new energy vehicle supply chain, consider Weichai Power, Minth Group, Farasis Energy, Shenzhen Sinexcel, and Full Truck Alliance.

Risk Warnings: Overseas investment progress below expectations; automotive export volumes below expectations; deteriorating overseas automotive market competition; rising cost risks; foreign exchange risks.