Seres 'From Adversity to Prosperity' Investment Analysis Report: The Dual Game of Dilemma and Reversal

According to user feedback, Seres (601127) stock price has continued to fall by approximately 30% since the National Day holiday. This trend reflects the market’s multiple concerns about the company:

• Pressure from intensified competition
  : The competition in China’s new energy vehicle market has entered a white-hot stage. The penetration rate of new energy vehicles reached
  59%
  in November 2025, an increase of
  7 percentage points
  compared to November 2024 [1], but competition has become even fiercer.
• Impact of price wars
  : Major manufacturers have cut prices to maintain sales volume. BYD announced significant price cuts in 2025, further compressing profit margins in the industry [2].
• Valuation correction pressure
  : In the absence of substantial performance support, the previously high valuation faces correction pressure.

From the performance of competitors, the market differentiation is obvious:

• XPeng Motors (XPEV)
  : Recorded a cumulative increase of
  +77.18%
  in 2025 with a price-to-earnings ratio of -32.03 [0], gaining market recognition through its technical positioning.
• Li Auto (LI)
  : Fell by
  -29.12%
  cumulatively in 2025 with a price-to-earnings ratio of 15.89 [0], also facing growth dilemmas.
• Tesla (TSLA)
  : Rose by
  +17.83%
  cumulatively in 2025 with a price-to-earnings ratio of 241.92 [0], remaining strong amid expectations of autonomous driving and robotaxi.

Despite the pressure on stock price, the

• AITO M7 sales surge
  : In November 2025, the new generation AITO M7 achieved sales of
  25,264 units
  , ranking among the top in the sales list [1].
• AITO M9’s luxury breakthrough
  : As a flagship model, the AITO M9 has performed prominently in the luxury SUV market with cumulative sales exceeding
  100,000 units
  [3].
• Recognition of product strength
  : The AITO M7 adopts a more rounded design language with a length of 5.1 meters, while the M8 and M9 reach the 5.2-meter class [1].

Seres’ fundamental value lies in its deep binding with Huawei:

• Leading autonomous driving technology
  : Huawei’s ADS (Advanced Driving System) autonomous driving technology is expanding to more than 20 models [4], with an obvious technical moat.
• HarmonyOS smart cockpit
  : Provides an excellent intelligent experience, an advantage that traditional car companies cannot replicate in the short term.
• Brand synergy effect
  : Huawei’s brand influence and channel advantages provide strong market endorsement for AITO.

According to online search results, Seres faces high expense ratio pressure:

• Huge R&D investment
  : As a deep partner in Huawei’s smart selection model, continuous R&D investment is required to maintain technological leadership.
• Rising sales expenses
  : Fierce market competition leads to high marketing costs.
• Economies of scale not fully realized
  : Although sales have broken through, there is still a distance from achieving ideal economies of scale.

From the perspective of expense ratio comparison, Seres needs to learn from Li Auto:

• Li Auto
  has performed relatively well in expense control, and its P/E ratio of 15.89 [0] reflects the market’s profit expectations.
• XPeng Motors
  has a negative P/E ratio (-32.03) [0], but its technical investment has换来 a sharp rise in stock price (+77.18%).

• Market diversification
  : Relying on a single market carries high risks; overseas expansion can diversify risks.
• High-end brand positioning
  : The AITO M9 may have the opportunity to challenge traditional luxury brands in overseas markets.

• Tariff barriers
  : The EU imposes an import tariff of up to
  45.3%
  on electric vehicles made in China [5], seriously affecting price competitiveness.
• Low brand awareness
  : Similar to brands like Hongqi, Chinese brands lack “home field advantage” overseas and need to build brand awareness from scratch.
• Localization challenges
  : European consumers have high loyalty to local brands (Volkswagen, Mercedes-Benz, BMW, etc.) [5].

1. Improvement in sales fundamentals
   : Sales of AITO M7 and M9 prove that product strength has been recognized by the market.
2. Huawei’s technical empowerment
   : Maintains leading advantages in autonomous driving and smart cockpit fields.
3. Industry penetration rate increase
   : China’s new energy vehicle penetration rate has reached 59% [1], and the market space is still broad.
4. Valuation has corrected
   : The 30% drop in stock price may have already digested some pessimistic expectations.

1. Competition continues to intensify
   : Competitors such as Tesla, XPeng, Li Auto, and BYD will not ease up.
2. Price wars drag down profits
   : Price cuts and promotions may further compress gross margins.
3. Difficulties in overseas expansion
   : High tariffs and insufficient brand awareness are major obstacles.
4. Pressure to deliver performance
   : The performance in the fourth quarter and 2025 is crucial.

1. Fourth-quarter sales data
   : Whether the AITO M7 can maintain monthly sales of over 25,000 units.
2. Improvement in expense ratio
   : Whether R&D expense ratio and sales expense ratio show a downward trend.
3. Overseas market progress
   : Whether there are clear overseas market strategies and substantial progress.
4. Change in gross profit margin
   : Whether economies of scale begin to be reflected in gross profit margin improvement.

• Short-term (3-6 months)
  : The stock price may have overreacted to pessimistic expectations, presenting a technical rebound opportunity.
• Medium-term (6-12 months)
  : Depends on whether the fourth quarter and first quarter of 2025 performance can exceed expectations.
• Long-term (1-3 years)
  : Depends on whether overseas expansion can break through and whether Huawei’s smart selection model can continue to output hit products.

• The new energy vehicle price war may intensify further.
• Huawei’s cooperation with other car companies may dilute Seres’ uniqueness.
• Macroeconomic downturn may suppress demand for high-end car consumption.
• Geopolitical risks may affect overseas expansion plans.

• Competitors’ stock price, market capitalization, P/E ratio and other data.

**[1] CleanTechnica - “Record Month for EV Sales in China!”

• China’s NEV penetration rate reached 59% in November, up 7 percentage points year-on-year.
• AITO M7 sales in November were 25,264 units, ranking among the top.
• AITO M7 product features: 5.1 meters in length, adopting a more rounded design.

**[2] Automotive World - “Hongqi rejuvenates image, attempts aggressive EU push”

• Competition in China’s new energy vehicle market intensifies, BYD cuts prices significantly.
• Overseas expansion faces tariff and brand awareness challenges.

• AITO M9 sales exceeded 100,000 units, performing prominently in the luxury SUV market.

**[4] Nikkei Asia - “Huawei’s self-driving tech expands to mass-market vehicles”

• Huawei’s ADS autonomous driving technology will expand to more than 20 models.
• Value embodiment of Huawei’s smart selection car model.

**[5] Automotive World - “EU creates compact EV class to compete with China rivals”

• The EU imposes an import tariff of up to 45.3% on electric vehicles made in China.
• Chinese car companies face severe challenges in the European market.