Morgan Stanley stated that the market for electric trucks in China is rapidly expanding. In October 2025, sales of electric heavy-duty trucks increased by 144% year-over-year, with a penetration rate of 29%, expected to rise to 35% by 2026; the penetration rate of electric light-duty trucks will increase from 10% in 2025 to 38% in 2027, with battery demand surging from 30GWh to 150GWh. This will effectively offset the weakness in the passenger vehicle market and drive CATL's electric vehicle battery business to grow by 23% in 2026.
The market's attention has been overly focused on the slowing growth of the electric passenger vehicle market, potentially overlooking the explosive 'second growth curve' — the electrification of commercial trucks.
On November 27, according to the Storm Chasing Trading Desk, 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 rate, which will effectively offset the weakness in the passenger vehicle market and become $CATL (03750.HK)$ a core pillar of business growth in the coming years.
Morgan Stanley noted that the electrification of trucks, especially in the heavy-duty segment, is demonstrating growth explosiveness far surpassing that of passenger vehicles. In October 2025, sales of electric heavy-duty trucks in China surged 144% year-over-year, with penetration reaching as high as 29%.
At the same time, the electric light-duty truck market is also not to be underestimated, with its penetration expected to rapidly increase from 10% in 2025 to 38% in 2027, corresponding to a surge in battery demand from 30 GWh to 150 GWh, marking a highly predictable incremental market.
Based on the strong performance of the truck market, Morgan Stanley's report forecasts that CATL’s electric vehicle battery business will achieve a 23% year-over-year growth in 2026. This robust outlook is a key rationale supporting its 'Overweight' rating and a projected upside potential of 31%.
The momentum of heavy-duty truck electrification is fierce: penetration approaching 30%, and likely to reach 35% next year.
Data does not lie; the electric heavy-duty truck market is undergoing an unstoppable wave of growth.
According to data from Morgan Stanley's report, in October 2025, monthly sales of electric heavy-duty trucks in China achieved an astounding year-over-year growth of 144%.
Morgan Stanley believes that more noteworthy is its penetration rate. During that month, the penetration rate of electric heavy-duty trucks had already reached approximately 29%, meaning one out of every three heavy-duty trucks sold was electric. This pace far exceeds general market expectations.
Based on this strong trend, the report forecasts that the penetration rate of electric heavy-duty trucks will further increase to 35% by 2026. For battery suppliers, this represents a golden track characterized by both volume and price growth.
Electrification of light-duty trucks follows closely behind: Battery demand is set to experience explosive growth over the next three years.
If heavy-duty trucks are the 'pioneers,' then light-duty trucks are the 'main force' poised for an imminent surge. Morgan Stanley noted that in October 2025, electric light truck sales increased by 40% year-over-year, while year-to-date cumulative sales growth reached as high as 92%.
Morgan Stanley stated that although the penetration rate in October fell back to 8.7% from the peak of 8% in August, this was mainly due to rapid growth in the third quarter. Looking ahead, the growth trajectory of electric light trucks will mirror the successful paths of electric passenger vehicles and heavy-duty trucks. The report provides clear forecasts:
Penetration Rate Forecast: 10% in 2025, 25% in 2026, and reaching 38% by 2027.
Battery Demand Forecast: Corresponding to the penetration rate, battery demand driven by electric light trucks will grow from 30 GWh in 2025 to 95 GWh in 2026, and further rise to 150 GWh by 2027.
CATL stands to benefit significantly.
One of the biggest beneficiaries of the wave of truck electrification is undoubtedly CATL, which holds a leading position in the market.
JPMorgan explicitly pointed out that the acceleration of truck electrification in China will effectively offset the negative impact brought by the slowdown in electric passenger vehicle growth next year. CATL's leading position 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 achieve a 23% year-on-year growth in its EV battery business in 2025. Against the backdrop of widespread market concerns about growth prospects, this forecast stands out as particularly notable.
This also forms the cornerstone for Morgan Stanley’s decision to maintain an 'Overweight' rating on CATL with a target price of RMB 490.00, implying a potential upside of 31% compared to the stock price of RMB 372.82 at the time of the report’s release.
Editor/Liam