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 surge. They believe that sustained high oil prices will globally enhance the competitiveness of pure electric and low-fuel consumption hybrid vehicles. Chinese automakers’ technological advantages are expected to accelerate their share of the global market. After a deep adjustment starting in September 2025, the current upstream costs for lithium carbonate, energy storage, and other components have been fully priced into the profitability of the passenger car sector. It is recommended to focus on the reassessment of the domestic high-quality new energy vehicle companies’ overseas expansion driven by high oil prices, with particular emphasis on automakers with clear overseas growth, as well as leading domestic high-end car manufacturers.

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Automobiles | 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 their global market share. We think that since September 2025, after a significant sector adjustment, the current upstream costs for lithium carbonate, energy storage, and other materials have been fully priced into sector profits. We suggest paying attention to the reassessment of the domestic high-quality new energy vehicle companies’ overseas expansion driven by high oil prices, especially those with clear overseas growth potential, as well as 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 have risen from $70 per barrel to a peak of $120, remaining above $100 as of March 16. On March 13, the US continued attacks on Iran’s key oil node, Harek Island, targeting military objectives but avoiding oil facilities. This pushed 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 of the Strait of Hormuz 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, CITIC’s passenger car index saw a significant adjustment from September 2025 to February 2026, mainly due to weak sales in January and February and rising upstream costs for copper, aluminum, memory, and lithium carbonate since Q4 2025, impacting sector profit expectations for 2026. Unlike other upstream costs, rising oil prices directly affect consumer vehicle costs and purchasing decisions. As seen during the first oil crisis in the 1970s, which 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 vehicles 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 DMi 5.0 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. In some overseas markets, due to infrastructure limitations, pure electric vehicles require longer-term efforts to expand, but plug-in hybrid electric vehicles (PHEVs) with superior electric fuel efficiency are expected to achieve faster sales growth abroad.

Many Chinese new energy vehicle companies seek to replace Japanese brands’ dominance in Europe and Southeast Asia, where low fuel and electric consumption and cost-effectiveness are key. Marklines data shows that in 2025, Japanese brands’ total overseas sales 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 capture market share from Japanese brands more rapidly.

▍ Risk Factors:

• Domestic competition intensifies beyond expectations
• Incentive policies for old vehicle replacement underperform
• Upstream raw material prices rise 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 market expectations for sector performance in 2026 are fully adjusted. We also see that geopolitical factors causing high oil prices could serve as a long-term catalyst for the sustained overseas expansion of high-quality domestic new energy passenger car companies. Companies with clear overseas growth potential in new energy vehicles are likely to be key drivers of outperformance this year.

(Source: Yicai)