CMSC International: Mainland China's electric vehicle exports to the European Union may face a major turning point.

CMSC International released a research report recently stating that the European Union and China have reached a consensus to explore setting a minimum price for electric vehicles manufactured in China, in order to replace the tariff measures implemented by the EU last year. The report points out that amid continued tension in Sino-US trade relations, the entry of Chinese electric cars into the EU market presents a significant opportunity. Furthermore, the report also believes that if China and the EU reach an agreement to open up the electric car market, the EU may propose the transfer of some core electric car technologies to Europe and America to help upgrade its automotive industry, similar to the cooperation model of foreign brands entering the Chinese market during the era of fuel-powered cars. The report predicts that advanced electric and intelligent vehicle companies such as BYD COMPANY (01211) and XPENG-W (09868) will benefit from technology transfer, with BYD Company Limited having the most comprehensive technology in the electric vehicle chain, and XPENG being a leading platform in intelligent technology and having successfully exported technology and models to Volkswagen, while collaborating with Volkswagen's supply chain to reduce costs. The report estimates two trade agreement scenarios, with the first being a minimum price of 30,000 euros and the second being a minimum price of 40,000 euros. In the former scenario, most of China's current exports of electric vehicles to Europe will benefit, with the degree of benefit corresponding to sales volume, namely BYD Company Limited, SAIC Motor Corporation (600104.SH), XPENG, LEAPMOTOR (09863), and NIO (ZK.US). In the 40,000 euro scenario, XPENG has the greatest flexibility, followed by BYD Company Limited, which may gain more market share by building factories in the EU in the medium term and being able to respond flexibly.