Changan Automobiles' Strategic Shift and Its Implications for the Global EV Market

Changan Automobiles, a cornerstone of China's electric vehicle (EV) revolution, has embarked on an aggressive global expansion strategy that positions it as a formidable player in the rapidly evolving EV landscape. With a focus on localized production, technological innovation, and strategic partnerships, the company is reshaping its valuation narrative amid China's dominance in the NEV (New Energy Vehicle) sector. This analysis explores Changan's strategic moves, financial performance, and competitive positioning to assess its investment potential in the context of global market dynamics.

Strategic Expansion: Localized Production and Market Adaptation

Changan's 2023–2025 strategy centers on international manufacturing hubs and tailored product offerings. The company established its first overseas NEV plant in Thailand,
achieving a total production capacity of 580,000 units through eight partnerships. By 2025, Changan aims to create 10 regional business entities,
targeting high-growth markets like Europe, Brazil, and Indonesia. At the IAA Mobility 2025 event, the company showcased its CHANGAN DEEPAL and AVATR product lines, including BEVs like the S07 and S05, which
feature over 150 adaptations for European consumer preferences. This localization strategy not only mitigates trade barriers but also enhances brand relevance in diverse markets.

A critical partnership with Haier Group further strengthens Changan's ecosystem. The collaboration
integrates home and vehicle technologies, co-developing smart solutions and a cold logistics network, aligning with the trend of interconnected mobility and domestic appliances. Such alliances underscore Changan's ambition to transcend traditional automotive boundaries, creating a competitive edge in the smart EV space.

Financial Performance: Growth Amidst Industry Turbulence

Changan's financials reflect robust growth in 2025.
H1 2025 sales reached 1.355 million units, with NEV sales
surging 48.8% year-over-year to 450,000 units. International sales hit 300,000 units, a 49% increase, driven by its global footprint. While BYD and SAIC reported higher total sales (2.146 million and 2.053 million units, respectively),
Changan's NEV growth outpaced its peers, signaling a successful pivot to electrification.

However, profitability remains a challenge. Changan's LTM net income stands at $831 million, with a net profit margin of 3.3%
according to multiples analysis. In contrast, BYD's gross profit margin reached 20.7% in Q1 2025, surpassing Tesla's 16.3%
according to clean tech data. This disparity highlights the need for Changan to optimize cost structures, particularly as domestic price wars and inventory adjustments pressure margins
according to market reports.

Competitive Positioning: Navigating Global Challenges

Changan's global ambitions face headwinds, including
EU tariffs of up to 45.3% on Chinese EVs. Yet, its localized production model-mirroring partnerships like Volkswagen's with Xpeng-mitigates these risks.
Chinese automakers, including Changan, leverage shorter product development cycles (18 months vs. 4–5 years for Western rivals) to rapidly adapt to market shifts.

In the domestic market, Chinese brands now hold a
68.8% share of passenger car sales, outpacing Tesla's dwindling 5%. Changan's launch of an advanced driver assistance system in 2025 further cements its tech credentials
according to industry analysis. Meanwhile, Tesla's non-China deliveries fell 13.1% year-on-year, underscoring the competitive intensity of the Chinese EV sector
according to financial data.

Valuation Opportunities: Balancing Metrics and Growth

Changan's valuation multiples appear undemanding relative to its growth trajectory. The company trades at a P/E of 17.5x and an EV/Revenue of 0.3x,
significantly lower than industry benchmarks. These metrics suggest the market may not yet fully price in Changan's international expansion potential.

Market projections add optimism: NEV penetration in China is expected to reach 44.4% by 2025, with plug-in hybrids maintaining a stable 11.1% share
according to market forecasts. As global demand for EVs accelerates, Changan's localized production and ecosystem partnerships could drive revenue diversification. However, investors must weigh risks such as trade tensions, margin compression, and fierce competition from BYD and Tesla.

Conclusion: A High-Growth Bet with Strategic Nuance

Changan Automobiles' strategic shift toward global expansion and technological integration positions it as a key player in the EV transition. While its valuation multiples suggest potential undervaluation, the company's ability to navigate trade barriers, sustain profit margins, and outpace rivals will determine long-term success. For investors, Changan represents a compelling case study of China's EV leadership, offering growth opportunities amid a transformative industry landscape.