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<Research>UBS: BYD/ CATL/ Li Auto Offer Good Risk-Reward as Oil Price Volatility Makes Total Cost of EV Ownership Attractive
Recommend 27 Positive 54 Negative 19 |
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Some Chinese automotive and new energy stocks staged a rally today. GEELY AUTO (00175.HK) soared by 8.5% to HKD17.44, while CATL (03750.HK) rose by 7.5% to HKD591. The current Iran war is highly similar to the situation in 2022 when the Russian invasion of Ukraine led to spiking oil and lithium prices, UBS commented in its research report. The international oil price and commodities simultaneously pushed up the usage cost of fuel vehicles and the manufacturing cost of electric vehicles (EVs). According to the latest spot price estimates by UBS, the cost of producing a battery EV/ extended range EV/ plug-in hybrid EV/ internal combustion EV will rise by around RMB7,000/ RMB6,000/ RMB5,000/ RMB3,000 compared to autumn 2025. If oil prices remain at current levels, the annual usage cost of fuel vehicles may swell by about RMB2,000. This slightly improves the economic viability of EVs relative to fuel vehicles, partially offsetting the pressure from the withdrawal of stimulus policies and the introduction of new purchase taxes starting in 2026. The current oil price volatility makes EVs more attractive from a total cost of ownership perspective, UBS stressed. Investors should pay renewed attention, as demand may recover faster than their expectations if the market forms inflation expectations regarding the transmission of commodity costs to vehicle prices. UBS believes that BYD COMPANY (01211.HK), CATL (03750.HK), and LI AUTO-W (02015.HK) (all rated Buy) offer good risk-reward characteristics. AAStocks Financial News |
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