China demand remains sluggish, but major auto stimulus still not on the horizon
Industry demand in China remains weak, with August retail sales tracking down >10% y/y and the China SAAR stuck in the 20.0-21.0 MM range. And while the govt’s recent proposal to loosen purchase restrictions in major cities is encouraging, meaningful auto stimulus remains unlikely.
Will the decline in interest rates support demand?
Based on the decline in benchmark rates we expect Auto loan rates to decline by 75 bps, driving lower monthly payments. If US economic growth merely slows, and does not enter recession, this could serve as a significant support for demand.
Tesla China purchase tax exemption more evidence of strong relationship with gov’t
For the first time, imported Tesla’s can take advantage of one of China’s policies to spur EV adoption, helping to partially offset the import duty hike scheduled for Dec 15.