China's NEV retail penetration remains around 63%, exports up 80% yoy

Overview

This report is Goldman Sachs' monthly China passenger vehicle chartbook, focusing on June 2026 passenger vehicle and NEV sales, penetration, inventory, price discounts, battery prices, and the performance of key companies. The core conclusion is that domestic demand remains weak, but NEV penetration stays high, export growth is significantly stronger than domestic sales growth, and key domestic and new-energy vehicle manufacturers continue to have structural opportunities.

Core views

China's passenger vehicle retail sales fell 23% yoy and rose 6% mom in June; NEV retail sales fell 9% yoy and rose 6% mom, while ICE vehicle retail sales fell 39% yoy. NEV retail penetration reached 62.9%, up 10 percentage points yoy, indicating that product supply and new model launches continue to drive structural substitution. Export performance was stronger, with total exports up 80% yoy in June and NEV exports up 178% yoy. At the company level, BYD's overseas sales rose 95% yoy and its domestic NEV market share increased to 21.8%; Leapmotor deliveries grew mom and its overseas target has upside potential; XPeng is supported by MONA M03, GX, and subsequent new model cycles.

Analysis framework

The report combines monthly industry data tracking with analysis of key company metrics, covering retail sales, wholesale sales, penetration, inventory months, price discounts, MSRP adjustments, battery raw material prices, OEM market share, model launches, and company sales performance, and uses DCF to provide 12-month target prices for key companies.

Methodology notes

• Valuation methodsDCF

  Discounted cash flow valuation

  The target prices for BYD, Leapmotor, and XPeng are all based on a 12-month DCF methodology; BYD uses a WACC of 10.8% and a long-term growth rate of 2.0%, while XPeng uses a WACC of 11.8% and a long-term growth rate of 3.0%.

• factor_profileGS Factor Profile

  Goldman Sachs factor profile

  Goldman Sachs compares the investment characteristics of covered stocks using growth, financial returns, valuation multiples, and composite percentiles. Higher growth and financial returns generally indicate stronger fundamental quality, while higher valuation multiples indicate higher pricing.

• market_trackingmonthly chartbook

  Monthly industry tracking

  High-frequency indicators such as passenger vehicle and NEV sales, penetration, inventory, price discounts, battery prices, and OEM market share are used to assess industry momentum and companies' competitive positions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BYD Co. (002594.SZ / 1211.HK)

  Key covered company; Buy rating maintained

  Strengths

  Strong overseas sales growth, domestic NEV market share increased to 21.8%, and multiple fast-charging models support a sales recovery.

  Weaknesses

  Domestic sales are still declining yoy, and competition remains intense.

  Comparison

  Compared with most automakers, BYD remains a leader in NEV scale, market share, and export growth.

  Risks

  Intensifying EV competition, slower-than-expected overseas expansion, and lower-than-expected sales of batteries to external customers.

• Zhejiang Leapmotor Technology (9863.HK)

  Key covered company; Buy rating maintained

  Strengths

  June deliveries grew mom, new and refreshed models drove sales, and the overseas sales target has upside potential.

  Weaknesses

  Growth delivery depends on a recovery in domestic demand, overseas expansion, and execution of the Stellantis partnership.

  Comparison

  Compared with traditional automakers, Leapmotor is more driven by new model cycles and the operating leverage of overseas partnerships.

  Risks

  Weaker-than-expected Chinese demand, competitive pressure on market share, raw material cost pressure, uncertainty surrounding the Stellantis partnership, and overseas policy and tariff risks.

• XPeng Inc. (XPEV / 9868.HK)

  Key covered company; Buy rating maintained

  Strengths

  MONA M03 and GX supported June deliveries, while the upcoming Mona L03, Mona L05, and G9L provide new model catalysts.

  Weaknesses

  Sales growth still depends on orders and delivery ramp-up following new model launches.

  Comparison

  Compared with the industry average, XPeng has greater near-term exposure to model-cycle and intelligent vehicle catalysts.

  Risks

  Lower-than-expected sales, worsening price competition, and weaker-than-expected market demand.

• China's NEV industry chain

  Industry theme asset

  Strengths

  Penetration remains around 63%, exports are growing strongly yoy, and battery prices are stable or declining mom.

  Weaknesses

  Domestic demand is weak, with total passenger vehicle retail sales declining yoy.

  Comparison

  NEVs are performing significantly better than ICE vehicles, whose retail sales are declining more deeply yoy.

  Risks

  Subsidy reductions or policy changes, renewed intensification of price wars, overseas trade barriers, and raw material price volatility.

Key data

• June passenger vehicle retail sales-23% yoy / +6% momOverall market demand remained weak.
• June NEV retail sales-9% yoy / +6% momThe yoy decline was smaller than that of ICE vehicles.
• June ICE vehicle retail sales-39% yoyICE vehicle demand remained under pressure.
• NEV retail penetration62.9%Up 10 percentage points yoy and down 0.1 percentage points mom.
• NEV wholesale penetration62.0%Up 12.2 percentage points yoy and 1.6 percentage points mom.
• June total export growth+80% yoyFurther accelerated from May's 73% yoy growth.
• June NEV export growth+178% yoySignificantly stronger than ICE vehicle export growth.
• BYD overseas sales175k units, +95% yoy / +9% momOverseas sales continued to accelerate in June.
• BYD domestic sales221k units, -23% yoy / +2% momDomestic sales improved mom in June.
• BYD NEV market share21.8%Higher than 20.9% in 6M26.
• Leapmotor total deliveries9.3k, +14.5% momDriven by the A10, D19, and refreshed C10/C11/C16 models.
• Leapmotor exports21k units, +4.1% momGrowth was supported by overseas retail sales and global partnerships.
• XPeng total deliveries34.7k, +6.0% momMONA M03 contributed approximately 35%, while GX contributed approximately 19%.
• Battery-grade lithium carbonate priceRmb168.3k/ton, +178% yoy / -9% momDeclined mom in June.
• LFP prismatic cell priceRmb0.35/Wh, +8% yoy / +0% momFlat mom.
• NCM prismatic cell priceRmb0.47/Wh, +10% yoy / +0% momFlat mom.

Impact & implications

For investment purposes, aggregate industry pressure remains, but structural substitution of ICE vehicles by NEVs, export expansion, and new model cycles remain the primary sources of opportunity. Narrower price discounts and declining inventory months should ease concerns about price wars and channel pressure; however, weak domestic demand, intensifying competition, and uncertainty over overseas policies and tariffs may still affect sales and earnings delivery.

Risks

• Continued weakness in China's overall passenger vehicle demand could weigh on industry sales and profits.
• Intensifying NEV competition could trigger a more severe price war.
• Overseas expansion faces uncertainty over tariffs, policies, and local execution.
• Raw material price volatility could affect battery and vehicle profitability.
• New model launches, order conversion, and delivery ramp-up at key companies may fall short of expectations.

What to watch

• Weekly order and monthly sales trends.
• Whether NEV retail and wholesale penetration continue to remain elevated.
• Export sales, particularly NEV export growth.
• The sustainability of BYD's domestic market share and overseas sales.
• Leapmotor's overseas sales and progress toward its 2026 target.
• Orders and delivery performance following the official launch of XPeng's Mona L03 on July 16.
• XPeng's 3Q26 humanoid robot demonstration and progress on passenger-carrying Robotaxi pilot operations.
• Changes in dealer discounts, the number of MSRP adjustments, and inventory months.
• Price trends for battery-grade lithium carbonate, LFP cells, and NCM cells.