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Global electric vehicle (EV) sales have surged despite the auto chip shortage, outperforming the passenger vehicle segment. We believe demand for EVs will continue to grow, thanks to new green measures and policies announced by governments in the US, Europe, and China. DBS Group Research believes China’s auto sector is geared to ride the global EV trend.
The acceleration of vehicle electrification in the major auto markets is expected to benefit Chinese auto parts and components players. The Chinese government’s push towards new energy vehicles (NEVs) is also expected to further drive demand domestically, giving local EV automakers a boost.
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Automotive parts and components
We like Chinese auto parts and components players, especially those with EV-related products and overseas exposure such as Minth Group.
Its strong EV-related products and wide customer reach across major markets are catalysts to margins expansion as production increases, taking advantage of the new facilities overseas to support fresh demand.
EV automakers
We are positive on EV automakers as we expect China’s NEV market to log strong sales growth in 2H21 and grow 25-30% between 2022 and 2025.
We like Geely as sales should strengthen post the acquisitions of certain critical business units to rapidly broaden its operating scale.
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