CITIC Securities: High Oil Prices Are Expected to Accelerate the Overseas Expansion of Leading New Energy Vehicle Companies

Citic Securities points out that the US-Iran war is developing toward a long-term conflict, with the “blockade” of the Strait of Hormuz driving crude oil prices to soar. They believe that sustained high oil prices will globally enhance the competitiveness of pure electric and low-fuel hybrid vehicle models. Chinese automakers’ technological advantages are expected to accelerate in capturing global market share. After a deep adjustment starting September 2025, the current upstream costs for lithium carbonate, energy storage, and others have fully priced in the pressure on the sector’s profitability. It is recommended to focus on the reassessment of the domestic high-quality new energy vehicle companies’ overseas expansion driven by high oil prices, especially those with clear incremental overseas growth, as well as leading domestic high-end car manufacturers.

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Automotive | High Oil Prices May Accelerate the Overseas Expansion of Quality New Energy Vehicle Companies

The US-Iran war is developing into a long-term conflict, with the blockade of the Strait of Hormuz pushing crude oil prices sharply higher. We believe that sustained high oil prices will enhance the competitiveness of pure electric and low-fuel hybrid models worldwide. Chinese automakers’ technological advantages are expected to accelerate in gaining global market share. We think that since September 2025, after a significant sector adjustment, upstream costs such as lithium carbonate, energy storage, and others have been fully priced into sector profitability. We suggest paying attention to the reassessment of the domestic high-quality new energy vehicle companies’ overseas expansion driven by high oil prices, with a focus on companies with clear overseas growth potential and leading domestic high-end car manufacturers.

Background: If the US-Iran war develops into a long-term conflict, the blockade of the Strait of Hormuz will push crude oil prices higher.

The Strait of Hormuz is a critical global energy trade route. After the US launched attacks on Iran, shipping through the Strait decreased rapidly, affecting oil production activities in the Persian Gulf. According to Choice data, since Iran announced the blockade in early March, Brent crude oil prices rose from $70 per barrel to a peak of $120, remaining above $100 as of March 16. On March 13, the US continued military strikes on Iran’s key oil node, Kharg Island, avoiding damage to oil facilities but pushing war risk premiums to a historic high of 5%, creating a “shipping insurance vacuum” worldwide. We believe that if the US-Iran conflict becomes prolonged, the blockade could keep crude oil prices at high levels for an extended period.

Rising crude oil costs may boost Chinese new energy vehicle exports.

According to Choice data, the Citic Passenger Car Index saw a significant adjustment from September 2025 to February 2026, mainly due to seasonal sales pressure in January and February, and since Q4 2025, rising costs of copper, aluminum, memory, and lithium carbonate have affected sector profit expectations for 2026. Unlike other upstream costs, rising oil prices directly impact consumer driving costs and purchasing decisions. Just as the 1970s oil crisis increased Japanese car market share globally (Marklines data shows Japanese brands’ US market share rose from 4% in 1972 to 20% in 1980), sustained high oil prices now could increase the share of pure electric and low-fuel hybrid models worldwide. Chinese automakers’ BEV and PHEV technological advantages are expected to accelerate their global market share, with leading companies’ valuations and growth prospects likely to be reassessed positively.

Chinese automakers lead globally in pure electric technology; surpassing Japanese hybrid technology is noteworthy.

According to CAAM data, in 2025, China exported 6.04 million passenger vehicles, up 22% year-over-year, including 2.53 million new energy vehicles (+106%) and 3.51 million fuel vehicles (-6%). The growth rate of new energy vehicle exports far exceeds that of fuel vehicles.

Based on Autohome data, taking BYD’s DMi5.0 technology as an example, models like Qin L and Seal have city fuel consumption of 3.0-3.5L/100km under electric assist, about 1.0L/100km better than comparable Toyota models. On highways, BYD’s electric assist fuel consumption is about 0.5L/100km better. Due to infrastructure limitations in some overseas markets, pure electric vehicles require longer-term efforts to expand, but PHEVs, which can run on both oil and electricity, are expected to achieve faster sales growth overseas thanks to their leading electric assist fuel efficiency.

Most Chinese new energy vehicle companies entering Europe and Southeast Asia initially aim to replace Japanese brands (offering low fuel and electric consumption and high cost performance). Marklines data shows that Japanese brands’ total overseas sales in 2025 approached 20 million units, with 1.5 million in Europe and 3 million in Southeast Asia, indicating a decline in their competitive position.

We forecast that in 2026, China’s new energy passenger vehicle exports could reach 7.15 million units, up 18% year-over-year, with 3.85 million new energy vehicles (+52%) and 3.3 million fuel vehicles (-6%). Especially in oil-price-sensitive markets like Europe and Southeast Asia, Chinese companies are expected to gain market share from Japanese brands more rapidly.

Risk Factors:

• Domestic competition intensifies beyond market expectations
• Incentive policies for trade-in programs underperform
• Upstream raw material prices increase more than expected
• Geopolitical disturbances lead to lower-than-expected overseas sales

Investment Strategy:

At this point, we believe that the negative factors such as rising upstream raw material prices have been gradually priced in, and the market has fully adjusted its 2026 sector performance expectations. We also see that geopolitical factors causing high oil prices could serve as a long-term catalyst for strengthening the overseas expansion logic of high-quality domestic new energy passenger car companies. Companies with clear incremental overseas growth in new energy vehicles are expected to be key drivers of outperformance this year.

(Source: First Financial)