“Truck electrification” will offset the slowdown in passenger vehicles and become an important support for CATL’s business.

The market’s attention has been overly focused on the slowing electric passenger vehicle segment, potentially overlooking the explosive “second growth curve”—the electrification of commercial trucks.

On November 27, according to information from Wind Chasing Trading Desk, Morgan Stanley stated in its latest research report that the markets for electric heavy-duty trucks (eHDT) and electric light-duty trucks (eLDT) are expanding at an astonishing speed. This growth will effectively offset the weakness in the passenger car market and become a core pillar for CATL’s business growth in the coming years.

Morgan Stanley said, the electrification of trucks, particularly in the heavy-duty segment, is showing explosive growth momentum far surpassing that of passenger vehicles. In October 2025, sales of China’s electric heavy-duty trucks soared by 144% year-on-year, with a penetration rate as high as 29%.

Meanwhile, the electric light-duty truck market should not be underestimated either. Its penetration rate is expected to rapidly climb from 10% in 2025 to 38% in 2027, with corresponding battery demand surging from 30 GWh to 150 GWh—an almost certain incremental market.

Driven by the strong performance of the truck market, the Morgan Stanley report predicts that CATL’s electric vehicle battery business will grow 23% year-on-year in 2026. This robust expectation forms the key logic supporting its “overweight” rating and 31% upside potential.

Heavy Truck Electrification Is Booming: Penetration Nears 30%, May Reach 35% Next Year

The data doesn’t lie—China’s electric heavy-duty truck market is experiencing unstoppable growth.

According to Morgan Stanley’s report, in October 2025, monthly sales of China’s electric heavy-duty trucks soared by 144% year-over-year.

Morgan Stanley believes that even more noteworthy is the penetration rate. That month, the penetration rate of electric heavy-duty trucks reached approximately 29%, meaning that for every three heavy-duty trucks sold, one is electric. This pace far exceeds market expectations.

Based on these strong trends, the report predicts that the penetration rate of electric heavy-duty trucks will further rise to 35% in 2026. For battery suppliers, this is a golden track for simultaneous growth in volume and price.

Electric Light Trucks Close Behind: Battery Demand Will Explode Over the Next Three Years

If heavy trucks are the “pioneers,” light trucks are an impending “main force.” Morgan Stanley stated that in October 2025, electric light truck sales grew by 40% year-on-year, and cumulative sales since the beginning of the year rose by an impressive 92% year-on-year.

Morgan Stanley mentioned that even though October’s penetration rate fell back to 8.7% from August’s high, this was mainly due to overly rapid growth in Q3. Looking forward, the growth trajectory of electric light trucks is set to replicate the successful paths of electric passenger vehicles and heavy trucks. The report provides clear forecasts:

Penetration rate forecast: 10% in 2025, 25% in 2026, and 38% by 2027.

Battery demand forecast: Corresponding to the penetration rate, battery demand brought by electric light trucks will rise from 30 GWh in 2025, to 95 GWh in 2026, and further to 150 GWh in 2027.

CATL Reaps Significant Benefits

One of the biggest beneficiaries of the truck electrification trend is undoubtedly CATL, which occupies a leading position.

J.P. Morgan clearly points out that the acceleration of truck electrification in China will significantly offset the negative impact of a slowing growth rate in electric passenger vehicles next year. CATL’s leadership in technological innovation and market share will enable it to fully benefit from the long-term trend of truck electrification.

Morgan Stanley expects that truck electrification will help CATL’s EV battery business achieve 23% year-on-year growth in 2025. Against the backdrop of widespread market concerns over future growth, this forecast stands out.

This forms the foundation for Morgan Stanley’s continued “overweight” rating on CATL and its RMB 490.00 target price. Compared to the share price of RMB 372.82 at the time of the report, this represents a potential 31% upside.

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The above wonderful content is from Wind Chasing Trading Desk.

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