Morgan Stanley Says China’s Electric Trucks Will Drive the Next Battery Boom
While global markets continue to fret over a potential plateau in consumer electric vehicle demand, a massive structural shift is occurring in China’s logistics sector that may have been overlooked by the broader market. According to a new research note from Morgan Stanley released on November 26, 2025, the electrification of China’s commercial trucking fleet is accelerating at a pace that is set to offset sluggishness in the passenger vehicle (PV) market—a trend that creates a continued bullish setup for dominate battery suppliers.
For investors tracking the supply chain, the narrative is pivoting from "how many sedans can you sell" to "how many heavy-duty trucks can you electrify." The answer, it seems, is quite a few.
The Heavy-Duty Surge
In the update titled China truck electrification stay strong, Morgan Stanley analysts Jack Lu and Kaylee Xu highlight staggering data coming out of the Chinese market. While the world watches passenger EV adoption curves flatten, China's industrial backbone is switching to batteries.
The report notes a massive surge in the heaviest segment of the market:
"China's electric heavy-duty truck (eHDT) sales stayed strong, up 144% YoY in Oct, with penetration around 29%. We expect 35% penetration next year."
This is not merely statistically significant; it represents a fundamental alteration of the energy demand profile for Chinese logistics. With nearly a third of all new heavy trucks now electric, the infrastructure and battery demand implications are immense.
Light-Duty Trucks Follow the Curve
It isn't just the leviathans of the highway turning electric. The smaller, localized logistics fleets—Electric Light-Duty Trucks (eLDT)—are following a similar, albeit slightly more volatile, trajectory.
"Electric light-duty truck (eLDT) sales rose 40% YoY in Oct (up 92% YTD), though penetration dropped to 8.7% from Aug's high, likely due to rapid growth in 3Q."
Despite the month-on-month blip, the year-to-date growth of 92% signals that the trend remains intact. Morgan Stanley projects a rapid adoption curve for eLDTs that mirrors the historical path of passenger vehicles and heavy trucks, forecasting penetration rates of 10%, 25%, and 38% for the years 2025 through 2027, respectively.
The "Offset" Theory: Why This Matters for CATL
The core investment thesis presented by Morgan Stanley is that this commercial surge serves as a hedge against the slowing growth velocity of electric passenger vehicles (ePV). The bank maintains an "Overweight" rating on Contemporary Amperex Technology Co. Ltd. , arguing that the volume from trucking will sustain double-digit growth.
"We continue to expect truck electrification to offset ePV growth slowdown in China next year, and the company's EV battery growth to reach 23% YoY in 2026."
By anchoring their valuation on the 2026 outlook, Morgan Stanley assigns a price target of RMB 490.00 yuan (US$67.58) per share for the battery giant. For context, the stock closed at RMB 372.82 on November 26.
Valuation and the Geopolitical Shadow
Morgan Stanley’s valuation methodology remains consistent with global peers, assigning a 17x EV/EBITDA multiple to 2026 estimates. This implies a price-to-earnings (P/E) ratio of 25x for 2026, supported by a five-year earnings CAGR of 25%.
However, the report does not shy away from the macro risks that hang over the sector, particularly for a company sitting at the nexus of the global energy transition and US-China tensions.
"Risks to Downside: Weaker EV penetration and ESS application; Potential threats from other battery makers; Geopolitical risks lead to decoupling of battery supply chain; Stall in market share gain."
Bottom Line
The takeaway for professional investors is clear: the EV story in China is finding a second wind in the commercial sector. As 2025 draws to a close, the explosive 144% growth in heavy truck electrification suggests that the demand for gigawatt-hours is far from peaking, providing a robust floor for market leaders like Contemporary Amperex Technology Co. Ltd. even if the consumer car market taps the brakes. Whether geopolitical headwinds allow this thesis to play out fully remains the primary wildcard.