China autos and auto parts / EV sector Report Interpretation

Overview

This quick note reviews August 2026 China auto and EV wholesale data and concludes that the sector still lacks a positive demand catalyst. Nomura expects the industry to remain in a transition year after policy-driven demand was pulled forward in the prior two years, while company-level outcomes depend increasingly on new products, capacity execution and overseas expansion.

Core views

Nomura's central view is that China auto demand has not improved materially despite the approach of the traditional peak season. China OEMs released August wholesales on 1 September, and the institution reports no major change in local demand or ordering conditions over the past month. Using preliminary CPCA data, Nomura expects domestic market sales to decline by more than 20% year-on-year in August 2026. It also expects an unexciting September–October peak season: new model launches may attract attention, but customer sentiment is still cautious and no broad sector catalyst is evident. The report attributes the muted outlook partly to demand having been pulled forward by aggressive supportive policies over the preceding two years. On that basis, Nomura continues to characterize 2026F as a transition period for the China auto industry and does not expect major change in the remaining months of the year. The conclusion is sector-wide rather than uniform across companies: individual players can still show distinct delivery trajectories, but the overall domestic market condition remains a concern. BYD delivered 433.4k passenger-vehicle sales in August, up 16.7% year-on-year and 5.4% month-on-month. Overseas sales of 189.5k units, up 134% year-on-year, again supported the total. Nomura calculates local wholesales of 243.9k units, down 16% year-on-year, a deterioration from the 11% year-on-year decline calculated for July. Its new Qin MAX and 27 Seal 06 models with Blade Battery 2.0 are entering the below-CNY120k segment, but Nomura has not yet seen meaningful order improvement. The institution believes that evidence from these launches could shape BYD's remaining-2026 blueprint; although a gradual peak-season improvement is possible, it expects the company to rely mainly on overseas growth in 2026F. Other EV makers showed mixed but often positive delivery growth. Geely's total NEV sales reached 175.9k units, up 19.4% year-on-year and 9.8% month-on-month; Zeekr shipped 37.0k units, up 110% year-on-year, while Galaxy shipped 119k, up 7.6% year-on-year and 10.5% month-on-month. Leapmotor delivered 103.1k units, up 80.7% year-on-year and 1.8% month-on-month, marking its second consecutive month above 100k units. XPENG shipped 39.1k units, up 3.7% year-on-year and 2.8% month-on-month, and Nomura sees scope for further improvement as Mona L03 capacity continues to rise. NIO reported 35.8k August shipments, up 14.5% year-on-year but down 0.3% month-on-month. The NIO brand delivered 21.2k units, up 101% year-on-year and 5.8% month-on-month; Onvo delivered 8.8k units, down 46.4% year-on-year and 13.2% month-on-month; Firefly delivered 5.9k units. Given the difficult market environment, Nomura believes NIO is not rushing to deliver its ES9 backlog and is likely to pursue step-by-step improvement in shipments and financials through the rest of 2026F. Li Auto delivered 37.7k units, up 32.1% year-on-year and 23.7% month-on-month. However, Nomura maintains a cautious view on the company through the rest of 2026F because Xiaomi's SkyNomad N90/N70 EREV models are expected to begin deliveries and competition is likely to intensify. Xiaomi reported more than 30k monthly deliveries, while HIMA reported 42.1k deliveries, down 5.6% year-on-year and 6.5% month-on-month.

Analysis framework

Nomura starts with August OEM wholesale releases, preliminary CPCA domestic-sales data and recent market feedback to assess sector demand and peak-season conditions. It then compares delivery volumes and year-on-year and month-on-month growth across major EV brands, linking company outlooks to overseas sales, new-model orders, production capacity, delivery pacing and competitive launches.

Methodology notes

• Industry AnalysisSupply-demand framework

  Assessment of domestic demand, order trends, seasonality and vehicle deliveries

  The report uses wholesales, delivery growth and market feedback to judge whether demand can improve during the traditional peak season and how that affects the sector outlook.

• Industry AnalysisVolume-price decomposition

  Volume-based comparison of monthly and year-on-year EV shipments

  Nomura compares reported delivery volumes and their year-on-year and month-on-month changes across OEMs to identify diverging company performance within a weak overall market.

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  BYD sum-of-the-parts target-price valuation

  For BYD, Nomura values the auto and related-products segment and BYD Electronics separately, applying FY26F P/E multiples to derive its HKD127.00 target price.

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted-cash-flow target-price valuation for selected US-listed EV makers

  Nomura's disclosed DCF frameworks discount cash flows back to 2026 using stated WACC, market-risk-premium and terminal-growth assumptions.

Asset mapping & comparison

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

• BYD (1211 HK)

  Covered EV manufacturer; overseas growth is supporting total deliveries while domestic wholesales remain weak.

  Strengths

  August PV sales of 433.4k units and overseas sales of 189.5k units, up 134% year-on-year.

  Weaknesses

  Estimated domestic wholesales fell 16% year-on-year and new low-price models have not shown meaningful order improvement.

  Comparison

  Nomura notes BYD may rely mainly on overseas growth during 2026F.

  Risks

  More intense competition could pressure margins or market share; overseas expansion or technology-platform demand effects could disappoint.

• XPENG (XPEV US)

  Covered EV manufacturer; delivery improvement is linked to Mona L03 capacity ramp-up.

  Strengths

  August shipments were 39.1k units, up 3.7% year-on-year and 2.8% month-on-month.

  Weaknesses

  Year-to-date deliveries were down 10.5% year-on-year in the reported table.

  Comparison

  Nomura sees potential for further delivery improvement in coming months as capacity improves.

  Risks

  Production capacity may fail to meet rising demand, new models may not gain further share, and operating-expense improvement may disappoint.

• NIO (NIO US)

  Covered EV manufacturer; Nomura expects a gradual rather than aggressive recovery in shipments and financials.

  Strengths

  The NIO brand delivered 21.2k units, up 101% year-on-year and 5.8% month-on-month.

  Weaknesses

  Onvo deliveries fell 46.4% year-on-year and 13.2% month-on-month; total shipments were slightly lower month-on-month.

  Comparison

  Nomura believes NIO is not in a hurry to deliver its ES9 backlog in the challenging market environment.

• Li Auto (LI US)

  Covered EV manufacturer; August delivery improvement is offset by concern about coming EREV competition.

  Strengths

  August deliveries rose 32.1% year-on-year and 23.7% month-on-month to 37.7k units.

  Weaknesses

  Nomura remains cautious for the rest of 2026F despite the August improvement.

  Comparison

  Xiaomi's SkyNomad N90/N70 EREV launches are expected to intensify competition.

  Risks

  Competition in China EVs, weaker new-model momentum and EV/smart-vehicle supply-chain disruption are disclosed downside risks.

Key data

• China domestic auto sales outlookMore than 20% year-on-year decline in Aug-26Nomura estimate based on preliminary CPCA data.
• BYD PV sales433.4k units+16.7% year-on-year and +5.4% month-on-month in Aug-26.
• BYD estimated local wholesales243.9k units-16% year-on-year in Aug-26 versus -11% in Jul-26; overseas sales were 189.5k units, +134% year-on-year.
• Geely NEV sales175.9k units+19.4% year-on-year and +9.8% month-on-month in Aug-26.
• Leapmotor deliveries103.1k units+80.7% year-on-year and +1.8% month-on-month; second consecutive month above 100k units.
• XPENG shipments39.1k units+3.7% year-on-year and +2.8% month-on-month in Aug-26.
• NIO shipments35.8k units+14.5% year-on-year and -0.3% month-on-month in Aug-26.
• Li Auto deliveries37.7k units+32.1% year-on-year and +23.7% month-on-month in Aug-26.

Impact & implications

Nomura's view implies that stronger company delivery results do not by themselves signal a broad recovery in China auto demand. It expects relative performance to depend on overseas expansion, new-model reception, manufacturing capacity and the ability to navigate increasingly fierce competition, while sector sentiment remains cautious through 2026F.

Risks

• For BYD, more intense competition could hurt margins or market share, overseas expansion could underperform, and technology-platform upgrades may provide less demand benefit than expected.
• For Li Auto, China EV competition could intensify, new L-series momentum could disappoint, and EV or smart-vehicle supply-chain disruption could occur.
• For XPENG, capacity ramp-up, new-model market-share gains or operating-expense improvement could fall short of expectations.

What to watch

• Whether domestic China auto sales decline by more than 20% year-on-year in August as Nomura expects.
• Order reception for BYD's Qin MAX and 27 Seal 06 models using Blade Battery 2.0 in the below-CNY120k market.
• Whether September–October peak-season demand improves beyond Nomura's cautious expectation.
• BYD's overseas sales contribution and the pace of its domestic wholesales.
• Mona L03 capacity progress at XPENG and NIO's shipment and financial improvement path.
• The delivery rollout of Xiaomi's SkyNomad N90/N70 EREV models and its competitive effect on Li Auto.