China’s industrial policy, led by the Ministry of Industry and Information Technology, is pretty much calling the shots in the global auto market by cranking their exports and forcing the EV shift.

Globally, International Organization of Motor Vehicle Manufacturers (OICA) data show sales at nearly 99.8 million in 2025, extending the recovery beyond pre-pandemic peaks.

This isn't just a lucky streak. The International Energy Agency (IEA) expects electric vehicles to represent over 40% of global sales by 2030, against just over 20% in 2024. This trajectory means legacy automakers may have to scale up EV production or risk losing relevance.

In China, the IEA indicates that electric vehicles already represent nearly half of new car sales, placing the market at the front end of this global shift. Once adoption hits that threshold, the industry enters a wild S-curve phase - that sweet spot where the tech goes mainstream, sales skyrocket, and finally dropping production costs help the entire market expand at warp speed.

Chery Automobile, a China based passenger vehicle manufacturer with strong export orientation, sits directly in this policy driven expansion, where growth now hinges on mastering this EV scale, going global, and crush the competition on costs.

Margin magic, maybe

Chery Automobile’s Q1 26 tells a slightly confusing story - revenue slipped 3.4% y/y to CNY 65.9bn ($9.7bn) from CNY 68.2bn. The interesting bit is margins, which actually improved. Gross profit jumped 24.9% y/y to CNY 10.6bn from CNY 8.5bn, with margin rising to 16% from 12.4%. That suggests better product mix and cost control and higher-end or export-heavy sales.

Net profit fell 10.3% y/y to CNY 4.2bn from CNY 4.7bn, dragged down by higher R&D and selling expenses. The company is clearly spending hard on electrification and global expansion, which explains the gap.

So, Chery Automobile managed to sell smarter, but not cheaper. The cost of staying competitive is rising faster than the benefits are showing up.

Cheap, not cheerful

Chery Automobile’s stock dropped 8.9% over the current year, not particularly exciting for an auto name, especially when the stock is still well below its 52-week peak of CNY 35. At CNY 28.1, the market seems unconvinced that the recent optimism will stick.

The valuation tells that story more clearly: the stock's FY 26e forward P/E is 6.5x, lower than last year's 8.1x, so investors are paying less for future earnings even as analysts are getting more upbeat. The FY 25 dividend yield stood at 3.1%, although the expected 7.7% by FY 28 suggests the bullish case leans heavily on payouts rather than growth.

Meanwhile, all five out of five analysts have given the stock the green light, with a target price of CNY 35.3 implying 46.1% upside. That’s a big gap, and when the Street agrees unanimously, it’s usually worth asking what the market is seeing that the analysts aren’t. The stock isn’t expensive, but it’s clearly not trusted either.

Growth with a bill

Chery Automobile looks like a company pushing hard to stay relevant in a fast-changing market. The strategy makes sense, although it comes with strain. Rising spending, execution risks in new markets, and the constant need to stay ahead in technology could weigh on returns. If growth slows or expansion misfires, the gap between expectations and reality could quickly become uncomfortable.