Extreme Pessimism over NEV Sales Has Passed

The market's most pessimistic expectations on sales have passed. 1) Local governments support the consumption of new energy vehicles according to local conditions. Combined with recent price cuts by car companies, the market’s confidence in the sales performance of new energy vehicles in 2023 has picked up, which is in line with the previous opinion on the market’s overestimation of the risk of sales pressure but underestimation of downward revision of sales performance. 2) We maintain the domestic new energy passenger vehicle (retail + export, wholesale) sales forecast of 9 million units in 2023. It is expected that the biggest variables will still be the pandemic, the pricing strategies of car companies, and the price fluctuations of upstream raw materials. 3) The risk of annual decline/downward revision of performance of the industrial chain may gradually ferment. It is expected that industry competition will intensify, and the trend of concentration may further emerge. 4) In 2023, we are optimistic about leading independent new energy car companies with strong plug-in hybrid and export layout + strong industrial chain cost control capability + strong sales and performance realisation capabilities, and new force car companies with differentiated positioning based on user portraits, as well as parts companies with increased market share + diversified business. BYD and NIO are worth attention.