Goldman Sachs is bullish on Chinese automakers expanding overseas: accelerating growth, manageable pricing risks, with BYD, Leapmotor, and XPeng as top picks

Overview

This is an equity research report on China's mobility technology and automakers expanding overseas. Its core conclusion is that Chinese new energy vehicle exports and overseas market share gains are accelerating, while most overseas markets have not yet experienced broadly worsening price competition. The report views overseas retail sales as a key indicator for assessing the quality of overseas expansion and accordingly favors BYD, Leapmotor, and XPeng.

Core views

The report's core views include: First, Chinese new energy vehicle brands are moving up the rankings in multiple key overseas markets, with overseas market share rising faster than before. Second, compared with internal combustion engine vehicles, new energy vehicles are competitive in terms of energy costs and vehicle size; even where MSRP is higher, their energy-adjusted pricing remains more attractive. Third, overall overseas pricing competition risks remain moderate. Price indices in Thailand and the United Kingdom have risen year to date, while Indonesia and Australia recovered after price cuts in the first quarter. Brazil is still actively cutting prices to reduce the large price premium over relatively mature internal combustion engine vehicles. Fourth, retail growth is a leading indicator of the sustainability of overseas expansion. BYD, Leapmotor, and XPeng have higher-quality overseas expansion than companies relying mainly on export wholesale growth.

Analysis framework

The report cross-validates national new energy vehicle sales, export wholesale volumes, overseas retail sales, price indices, model MSRPs, energy costs, vehicle sizes, localized capacity plans, and company sales targets. Its analytical framework compares both demand and competitive environments across countries and the relationship among company-level export targets, export wholesale volumes, and overseas retail sales.

Methodology notes

• Overseas pricing competition assessmentThree-factor framework for overseas pricing competition

  Market contraction, automaker penetration, excess capacity

  The report assesses overseas price-cutting risks through three questions: Is the auto market contracting? Is penetration by Chinese automakers high? Is excess capacity present? If demand growth is healthy, penetration remains low, and capacity pressure is limited, pricing competition risks are lower.

• Sales quality analysisComparison of export targets, export wholesale, and overseas retail

  Retail sales take priority over wholesale exports

  The report believes that overseas retail sales best reflect underlying demand and future sales momentum. When overseas retail growth exceeds export wholesale growth and management targets, it indicates strong end-market absorption and low inventory risk.

• Product competitiveness comparisonComparison of energy-adjusted prices and vehicle sizes

  Overall value proposition of new energy vehicles versus internal combustion engine vehicles

  The report combines MSRP, energy-use costs, driving range, size, and other metrics, concluding that new energy vehicles in Europe, Thailand, and Brazil are competitive in terms of energy costs and vehicle dimensions.

Asset mapping & comparison

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

• BYD

  Core recommended name, Buy

  Strengths

  Leading overseas sales scale, ranked among the top three new energy vehicle brands in multiple key markets, with competitive pricing, driving range, size, and technology ecosystem. Plans to have approximately 510k overseas capacity by 2026E.

  Weaknesses

  Domestic competition remains intense, and higher overseas profit contribution depends on sustained sales growth and channel execution.

  Comparison

  The report believes BYD ranks among the top three new energy vehicle brands in 8 of the 18 key overseas markets, giving it higher overseas expansion visibility than most Chinese OEMs.

  Risks

  Intensifying overseas pricing competition, trade barriers, slower-than-expected localized capacity construction, and volatility in domestic demand or margins.

• Leapmotor

  Core recommended name, Buy

  Strengths

  Overseas retail is growing rapidly from a low base, with 1Q26 overseas retail up 554% year on year. Its partnership with Stellantis supports European localization and channel expansion.

  Weaknesses

  The overseas scale remains small, and execution depends on the ramp-up of new models, capacity arrangements, and partner channels.

  Comparison

  The report views Leapmotor as one of the more attractive combinations where retail growth exceeds export growth, with a significant valuation discount relative to peers.

  Risks

  Weakening domestic demand, cost inflation, overseas uncertainty, and pressure on sales and cash flow.

• XPeng

  Core recommended name, Buy

  Strengths

  Overseas retail momentum is improving. The report believes XPeng can catch up as four new overseas models are launched in the second half of the year. Its domestic new-model cycle is also expected to drive sales growth over the next three quarters.

  Weaknesses

  Further new-model execution is still needed to close the gap between current export wholesale volumes and management targets. Overseas scale and brand recognition remain under development.

  Comparison

  Compared with BYD and Leapmotor, XPeng's overseas delivery depends more heavily on subsequent new-model launches, but Goldman Sachs still ranks it among the names with the highest overseas expansion visibility.

  Risks

  New-model sales below expectations, slower-than-expected overseas channel expansion, domestic competition, and gross margin pressure.

• GAC/SAIC

  Relatively negative comparison names in the report, Sell

  Strengths

  Established export base and overseas brand presence.

  Weaknesses

  The report points out that export wholesale growth exceeds overseas retail growth, potentially reflecting insufficient end-market demand or inventory accumulation.

  Comparison

  Compared with the strong end-market absorption of BYD, Leapmotor, and XPeng, GAC/SAIC's overseas growth quality is weaker.

  Risks

  If overseas retail does not improve, export growth could slow and inventory and margin pressures could increase.

Key data

• Overseas share of Chinese automakers10%Chinese OEMs' share of global markets excluding China and the US increased by 3 percentage points to 10% over the past year.
• 1Q26 growth in Chinese new energy vehicle exports+63% yoyHigher than +6% in 1Q25 and +21% in 2025.
• 2026E-2030E Chinese passenger vehicle export forecast7.8 million to 10.0 million unitsThe report raised its forecast by 6%-11%, corresponding to approximately 17% market share outside China and the US.
• Forecast overseas new energy vehicle penetration49% to 70%The report expects new energy vehicle export penetration to rise, corresponding to a 26% CAGR.
• Key overseas market size1.3 million unitsThe combined size of the 18 largest new energy vehicle markets by sales outside China and the US was 1.3 million units in 3M26, up 39% year on year.
• Number of markets where Chinese brands ranked in the top three8 countriesAs of 3M26, Chinese brands ranked among the top three new energy vehicle brands in 8 of the 18 key overseas markets, up from 6 at the end of 2025.
• Pricing risk in ThailandDecliningThai passenger vehicle demand grew 32% year on year in 3M26, while average price indices for Chinese and non-Chinese automakers rose approximately 1%-2% year to date.
• Pricing adjustment in BrazilAverage Chinese automaker MSRP down 9% year to dateThe report believes these price cuts are mainly intended to narrow the price gap with relatively mature internal combustion engine vehicles and drive higher new energy vehicle penetration.
• Overseas localized capacityApproximately 2.1 million units in 2026EMajor Chinese OEMs are expected to establish approximately 2.1 million units of overseas localized capacity by the end of 2026, corresponding to a localization rate of approximately 28%.
• Leapmotor target priceHK$50The report excerpt discloses a 12-month DCF target price of HK$50.

Impact & implications

For investors, the report reframes Chinese automakers' overseas expansion from simple export growth to a comprehensive competition involving end-market demand, channel absorption, pricing discipline, and localization capabilities. If overseas retail continues to outperform export wholesale, the earnings and valuation cases for BYD, Leapmotor, and XPeng could gain greater certainty. If Brazil-style price cuts spread or overseas capacity is deployed too rapidly, margins could come under pressure.

Risks

• Overseas pricing competition could spread from Brazil to more markets, putting pressure on margins.
• Trade barriers, tariffs, approvals for localized production, or supply chain construction could progress more slowly than expected.
• Overseas retail could remain weaker than export wholesale, leading to inventory accumulation and weakening future export momentum.
• Intensifying domestic new energy vehicle competition could affect sales and earnings recovery for BYD, Leapmotor, and XPeng.
• Changes in energy prices, exchange rates, subsidies, and regulation could alter the relative value proposition of new energy vehicles versus internal combustion engine vehicles.

What to watch

• Whether overseas retail growth for BYD, Leapmotor, and XPeng continues to exceed export wholesale growth.
• Whether price indices in Thailand, the United Kingdom, Indonesia, Australia, and Brazil indicate that the price war is spreading.
• European localized capacity projects, including factory construction, acquisitions, or leasing progress in Spain, Germany, Hungary, and other locations.
• Whether Chinese passenger vehicle exports progress within the report's raised forecast range of 7.8 million to 10.0 million units.
• Whether BYD's domestic retail recovery, XPeng's new-model cycle, and Leapmotor's monthly delivery ramp materialize as expected.