China Passenger Vehicles in July: NEV Penetration Hits Record 65% as Exports Rise 85%, Goldman Sachs Says
Goldman Sachs published its July 2026 China passenger-vehicle monthly chartbook.
Goldman Sachs published its July 2026 China passenger-vehicle monthly chartbook.
Domestic passenger-vehicle retail volume fell 20% year over year in July. However, new-energy vehicle (NEV) retail penetration reached a record 65%, up 11 percentage points from a year earlier. The decline in NEV retail sales narrowed to 3% year over year, compared with a 9% decline in June, while internal-combustion-engine (ICE) vehicle retail sales fell 40% year over year.
Exports were the only clear bright spot, rising 85% year over year in July, compared with 80% growth in June. NEV exports rose 163% and ICE exports increased 38%.
BYD's overseas sales surged 124% year over year to 181,000 vehicles, while Leapmotor's total deliveries rose 102% to 101,000 vehicles. Lithium carbonate prices fell 8% from the previous month, and battery costs continued to decline. Inventory months improved, while discounts offered by NEV dealers narrowed sequentially. Cumulative subsidized sales under the trade-in program reached 3.707 million vehicles, indicating a gradual recovery in demand.
Goldman Sachs's one-sentence conclusion was that domestic demand for Chinese passenger vehicles remains weak, but the acceleration in NEV penetration and explosive export growth are structural bright spots. The bank identified overseas expansion by leading automakers as a core earnings engine.
In Goldman Sachs's assessment, BYD and Leapmotor were positive exposures, while the traditional ICE vehicle supply chain was a negative exposure. The note cited target prices of Rmb137 for BYD's A shares, HK$134 for its H shares and HK$50 for Leapmotor. Goldman Sachs said export growth and rising NEV penetration are already partly reflected, but the continued contribution of BYD's overseas earnings engine may be underestimated.
Catalysts identified by Goldman Sachs include the pace at which BYD's new flash-charging models account for about 20% of domestic sales in the fourth quarter of 2026, the sales performance of Leapmotor's A05 model and developments in export tariffs and non-tariff barriers.
Domestic passenger-vehicle retail volume fell 20% year over year in July. However, new-energy vehicle (NEV) retail penetration reached a record 65%, up 11 percentage points from a year earlier. The decline in NEV retail sales narrowed to 3% year over year, compared with a 9% decline in June, while internal-combustion-engine (ICE) vehicle retail sales fell 40% year over year.
Exports were the only clear bright spot, rising 85% year over year in July, compared with 80% growth in June. NEV exports rose 163% and ICE exports increased 38%.
BYD's overseas sales surged 124% year over year to 181,000 vehicles, while Leapmotor's total deliveries rose 102% to 101,000 vehicles. Lithium carbonate prices fell 8% from the previous month, and battery costs continued to decline. Inventory months improved, while discounts offered by NEV dealers narrowed sequentially. Cumulative subsidized sales under the trade-in program reached 3.707 million vehicles, indicating a gradual recovery in demand.
Goldman Sachs's one-sentence conclusion was that domestic demand for Chinese passenger vehicles remains weak, but the acceleration in NEV penetration and explosive export growth are structural bright spots. The bank identified overseas expansion by leading automakers as a core earnings engine.
In Goldman Sachs's assessment, BYD and Leapmotor were positive exposures, while the traditional ICE vehicle supply chain was a negative exposure. The note cited target prices of Rmb137 for BYD's A shares, HK$134 for its H shares and HK$50 for Leapmotor. Goldman Sachs said export growth and rising NEV penetration are already partly reflected, but the continued contribution of BYD's overseas earnings engine may be underestimated.
Catalysts identified by Goldman Sachs include the pace at which BYD's new flash-charging models account for about 20% of domestic sales in the fourth quarter of 2026, the sales performance of Leapmotor's A05 model and developments in export tariffs and non-tariff barriers.