Market attention has been overly focused on the slowing growth of the electric passenger vehicle sector, potentially overlooking the emerging "second growth curve"—the electrification of commercial trucks.

On November 27, according to market sources, Morgan Stanley stated in its latest research report that the electric heavy-duty truck (eHDT) and light-duty truck (eLDT) markets are expanding at an astonishing pace. This growth will effectively counterbalance the weakness in the passenger vehicle market and serve as a core pillar for CATL's business expansion in the coming years.

Morgan Stanley highlighted that truck electrification, particularly in the heavy-duty segment, is demonstrating growth momentum far exceeding that of passenger vehicles. In October 2025, China's electric heavy-duty truck sales surged 144% year-on-year, with penetration reaching 29%.

Meanwhile, the electric light-duty truck market should not be underestimated. Its penetration is projected to rise rapidly from 10% in 2025 to 38% by 2027, corresponding to a surge in battery demand from 30 GWh to 150 GWh—a highly certain incremental market.

Given the strong performance of the truck market, Morgan Stanley forecasts a 23% year-on-year growth for CATL's electric vehicle battery business in 2026. This robust outlook underpins its "Overweight" rating and a 31% upside potential.

**Heavy-Duty Truck Electrification Gains Momentum: Penetration Nears 30%, Could Reach 35% Next Year** The data speaks for itself—the electric heavy-duty truck market is experiencing unstoppable growth.

According to Morgan Stanley's report, China's electric heavy-duty truck sales in October 2025 soared 144% year-on-year. More notably, penetration reached approximately 29%, meaning one in every three heavy-duty trucks sold was electric—a pace far exceeding market expectations.

Based on this trend, the report predicts electric heavy-duty truck penetration will climb further to 35% in 2026, presenting a golden opportunity for battery suppliers with both volume and price growth.

**Light-Duty Truck Electrification Follows Suit: Battery Demand Set to Explode Over Next Three Years** If heavy-duty trucks are the "vanguard," light-duty trucks are the "main force" poised for takeoff. Morgan Stanley noted that electric light-duty truck sales in October 2025 rose 40% year-on-year, while year-to-date cumulative sales jumped 92%.

Although October's penetration dipped to 8.7% from August's peak—partly due to rapid Q3 growth—the report expects electric light-duty trucks to replicate the success trajectory of electric passenger and heavy-duty vehicles. Key projections include:

- **Penetration Forecast**: 10% in 2025, 25% in 2026, and 38% in 2027. - **Battery Demand Forecast**: Corresponding battery demand will rise from 30 GWh in 2025 to 95 GWh in 2026, then to 150 GWh in 2027.

**CATL Stands to Benefit Significantly** A major beneficiary of the truck electrification wave is undoubtedly CATL, the industry leader.

Morgan Stanley emphasized that China's accelerating truck electrification will effectively offset the negative impact of slowing electric passenger vehicle growth next year. CATL's technological innovation and dominant market share position it to fully capitalize on this long-term trend.

The firm expects truck electrification to drive a 23% year-on-year increase in CATL's EV battery business in 2025—a standout projection amid widespread market concerns over growth prospects.

This forms the basis for Morgan Stanley's "Overweight" rating and RMB 490.00 target price for CATL, implying a 31% upside from the report's release price of RMB 372.82.