Morgan Stanley: The opportunity cost of switching to other suppliers for car manufacturers is high, and it is expected that Contemporary Amperex Technology (03750) will continue to expand its market share.

Morgan Stanley published a research report stating that a recent announcement by a Chinese electric vehicle manufacturer about sourcing batteries from suppliers other than Contemporary Amperex Technology (03750) has once again raised concerns in the market regarding Contemporary Amperex Technology's competitive advantages. The firm believes that while the market has primarily focused on BYD Company Limited's (01211) DMI platform and Xiaopeng Motors (09868) switching to other battery suppliers, Contemporary Amperex Technology's market share continues to rise. Morgan Stanley is confident that Contemporary Amperex Technology will maintain and expand its market share through continuous product innovation and performance enhancements. The firm has given Contemporary Amperex Technology (300750.SZ) a "buy" rating for its A shares, with a target price of 595 RMB, considering it one of its preferred stocks. Morgan Stanley noted that automakers have found the opportunity cost of switching to other suppliers to be very high, and Contemporary Amperex Technology's brand recognition among consumers has significantly improved compared to five years ago, establishing itself as a quality benchmark for electric vehicle buyers. The firm pointed out that reliability issues among second-tier battery manufacturers have become more pronounced over the past three years. Although many automakers are seeking supplier diversification to reduce their dependence on Contemporary Amperex Technology, the actual results seem to fall short of expectations. Some automakers have previously reported quality-related issues, including recalls, warranty costs, and damage to brand value, reflecting a significant opportunity cost in abandoning the industry leader.