China Summit Day 2 focuses on energy storage and NEVs: structural demand is strong, but cycle and cost pressures are rising

Overview

This report summarizes investor feedback from Day 2 of the J.P. Morgan China Summit on energy storage and NEVs. Overall, investors remain cautious on China, mainly because of weak domestic demand, property-sector drag, and limited market beta; however, they remain fairly confident in manufacturing companies with global competitiveness, export orientation, scale advantages, and supply-chain leadership. In energy storage, long-term structural demand is supported by AI power demand and the energy transition, but the market is increasingly focused on capacity expansion over the next 12 months, rising lithium prices, and margin pressure. In NEVs, investor sentiment is more mixed: domestic demand is weak, but overseas demand, product cycles, and a marginally improved competitive landscape are important supports.

Core views

The core views are: first, energy storage demand is strong, but the risk is shifting from insufficient demand to supply expansion and cost inflation, with investors more inclined toward CATL and other scale and cost leaders. Second, Gotion High-Tech emphasized that China's energy storage demand is structurally strong, overseas expansion is a margin lever, and sodium-ion and solid-state batteries are its long-term technology paths, but investors worry that industry demand growth may slow and raw material costs could erode profits. Third, Geely received the most positive feedback, with investors focusing on upside to its overseas shipment target, ASEAN policy support, higher NEV penetration in Europe, and margin and brand validation from Zeekr's premium models. Fourth, discussion of Leapmotor centered on its second-quarter sales guidance, cost pass-through, supplier negotiations, battery pack simplification, Stellantis channels, and CKD production in Europe. Fifth, the long-running debate around BYD has shifted from the domestic market to overseas profit pools and global share leadership.

Analysis framework

The report uses a summit-minutes and investor-feedback aggregation approach, centered on energy storage and NEVs, to compare demand trends, cost pressure, capacity expansion, competitive landscape, overseas expansion, product cycles, and margin elasticity. The analysis is not based on a full financial model, but on management statements made at the meeting, the focus of investor questions, and the J.P. Morgan research team's sector observations.

Methodology notes

• Industry momentum analysisDemand, supply, and cost framework

  Energy storage industry judgment

  Breaks the energy storage investment case into end-demand growth, industry capacity expansion, and changes in raw material costs such as lithium prices to assess whether demand strength can offset margin pressure.

• Automotive industry analysisShipment volume, product cycle, and overseas strategy framework

  Comparison of NEV OEMs

  Compares Geely, Leapmotor, and BYD based on the achievability of sales guidance, new model rollout timing, overseas demand, product-mix improvement, and changes in the competitive landscape.

• Investor sentiment analysisMeeting feedback synthesis

  Summit minutes method

  Uses investor focus areas and feedback during the conference to identify the risks, catalysts, and preference direction the market currently cares about most.

Asset mapping & comparison

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

• CATL

  Preferred name in energy storage and batteries

  Strengths

  It has scale advantages, cost leadership, and industry dominance, aligning with investor preference for leaders during periods of rising cost pressure.

  Weaknesses

  It is still exposed to energy storage capacity expansion, lithium price volatility, and margin pressure.

  Comparison

  Compared with second-tier battery and energy storage companies, CATL benefits more from scale and cost advantages.

  Risks

  Slower industry demand, rising raw material costs, and intensifying competition.

• Gotion High-Tech (002074 CH)

  Company discussed in the energy storage session

  Strengths

  Management emphasized that China's energy storage demand is structurally strong, overseas expansion can improve margins, and the company is positioned in sodium-ion and solid-state battery pathways.

  Weaknesses

  It faces intense domestic competition, lithium-driven cost volatility, and project economics constraints.

  Comparison

  Compared with CATL, investors are more concerned about its ability to withstand cost and margin pressure.

  Risks

  Slowing energy storage demand, aggressive capacity expansion, and raw materials accounting for about 50% of battery cost, which could pressure margins.

• Geely (175 HK)

  More positively received NEV OEM

  Strengths

  There is upside to overseas shipments, supported by ASEAN policy, higher NEV penetration in Europe, Zeekr premium models, and improved product mix.

  Weaknesses

  It is still affected by battery and raw material cost inflation and weak domestic demand.

  Comparison

  Investor feedback shows that, compared with other Chinese OEMs, Geely is viewed more constructively because of its product cycle, domestic and overseas shipments, and valuation.

  Risks

  Overseas demand falling short of expectations, delays in new model rollouts, and cost inflation eroding profits.

• Leapmotor (9863 HK)

  Company discussed in the NEV session

  Strengths

  Management is confident about a second-quarter recovery, domestic competition is stabilizing marginally, and the overseas strategy is supported by Stellantis' distribution network, cooperation, and a European CKD plan.

  Weaknesses

  Investors question the attainability of the 240-250k second-quarter sales target and are concerned about the impact of battery and lithium costs on margins.

  Comparison

  Compared with Geely, Leapmotor still needs to prove its sales guidance, export pace, and margin improvement.

  Risks

  Export deliveries delayed by about two weeks due to route changes, insufficient cost pass-through, sales missing guidance, and execution risk overseas.

• BYD

  Long-term debate name in NEVs

  Strengths

  Investors are focused on profit support from overseas markets and whether it can establish share leadership in key demand markets.

  Weaknesses

  The domestic market has become less of a focus recently, and the market is still assessing whether overseas profits can become the main source of earnings.

  Comparison

  The discussion framework has shifted to whether BYD could become the next Toyota, meaning a global automaker whose profits mainly come from overseas markets.

  Risks

  Competition in overseas markets, weaker-than-expected demand and share gains in Europe, and weak domestic demand.

• Yunnan Energy (002812 CH)

  Downgraded name tied to battery separators

  Strengths

  It sits in the battery separator supply chain and benefits from long-term battery demand.

  Weaknesses

  Multiple capacity announcements in the industry may limit further price increases.

  Comparison

  Compared with leaders with stronger cost and scale advantages, the separator segment faces more direct supply expansion pressure.

  Risks

  Capacity expansion suppressing prices, margin decline, and a downgrade to Neutral.

Key data

• Global energy storage shipments109% YoY growth in the first 4 months of 2026Used to show that energy storage demand remains strong, while investors focus on whether growth will slow later.
• Gotion's view on energy storage industry demand growth>60% YoYLower than the 109% YoY growth in the first 4 months of 2026, which prompted discussion among investors about demand deceleration.
• Raw materials as a share of battery costabout 50%Rising lithium prices and raw material costs may negatively affect margins and demand.
• Geely's 2026 export targetaround 640k vehicles, with room to exceed about 750k vehiclesManagement believes that high oil prices, policy support, demand in Europe and Southeast Asia, and penetration of premium models could create upside.
• Zeekr model rollout schedule9S to be rolled out in phases starting in Q3, with 8S expected in 2H26Used to support Geely's overseas product-cycle and product-mix improvement logic.
• Leapmotor Q2 sales target240-250k vehiclesInvestors are focused on the attainability of the target against the backdrop of near-term momentum and export delivery delays.
• China auto industry Q2 expectation25-30% sequential recovery for the industryThe report says high-frequency data tracking came in below the market's expectation for 2Q25 industry recovery.

Impact & implications

For investors, the report points to a shift away from simply betting on a China demand rebound and toward selecting companies with global competitiveness, cost advantages, overseas channels, and favorable product cycles. The long-term demand logic for energy storage remains intact, but industry capacity expansion and rising lithium prices may compress medium-term valuation upside, so the market prefers leaders and cost leaders. The NEV segment depends more on overseas growth, product mix upgrades, and easing competition to support margins; Geely is viewed more positively because of its product cycle, export growth, and valuation, while the key watch points for Leapmotor and BYD are sales delivery and global profit generation, respectively.

Risks

• Weak domestic demand in China and property-sector drag may limit overall market beta.
• Aggressive energy storage capacity expansion over the next 12 months could create mid-cycle risk.
• Rising lithium prices and raw material costs may compress margins in batteries, energy storage, and NEVs.
• Domestic NEV competition has eased marginally but could still affect pricing and profitability.
• Overseas expansion depends on policy, channels, delivery routes, local production, and model acceptance, leaving execution uncertainty high.
• High-frequency data fell below market expectations for a 25-30% sequential recovery in China's auto industry in Q2.
• AI/tech and supply-chain leaders are popular, but crowded trades and valuation concerns remain.

What to watch

• Whether global energy storage shipment growth can remain at a high level, and whether it slows from 109% YoY to a lower rate.
• The direction of lithium prices and whether pressure from raw materials making up about 50% of battery cost continues to pass through to margins and demand.
• The pace of capacity expansion by major energy storage and battery companies over the next 12 months.
• Whether Geely can deliver on its roughly 640k export target and whether it can exceed about 750k units.
• Orders, margins, and overseas feedback after Zeekr 9S is rolled out in phases starting in Q3 and 8S is launched in 2H26.
• Leapmotor's Q2 sales target of 240-250k vehicles, export delivery delays, and progress in cooperation with Stellantis channels.
• BYD's overseas market share, performance in Europe, and contribution from overseas margins.
• The impact of new capacity announcements in Yunnan Energy and the battery separator industry on prices and margins.