BRIEF: DBS sees upside potential for ECARX on growing customer diversification

DBS initiated coverage on digital cockpit maker ECARX Holdings Inc. (ECX.US) this week with a 52-week price target of $2.80, about 24% higher than its current price, citing strong potential for diversification beyond the company’s reliance on parent Geely for a majority of its business.

DBS pointed out that Geely and its various units, including Zeekr, Volvo and Lotus, currently account for about 80% of ECARX’s revenue, according to the note dated Oct. 14. But it sees potential for diversification from a major new partnership with Volkswagen, covering the Volkswagen and Skoda car brands. Volkswagen will begin selling cars equipped with ECARX products in Brazil and India from 2027, with “potential expansion of this contract into Europe as an additional growth lever,” DBS said.

It noted that ECARX currently trades at an enterprise value-to-sales ratio of 0.9, based on its projected sales for 2026, which is below the industry’s median of 1.5. “The discount is partly driven by its high customer concentration with the Geely Group and impact on 2Q25 gross margins,” DBS wrote. “However, with customer diversification accelerating, as well as anticipated gross margin recovery, we believe a re-rating is due for the counter.”

ECARX shares are up about 27% over the last 52 weeks.

By Doug Young

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