Amid the opportunities and challenges brought by the profound transformation of the global automotive industry, we remain committed to high-quality development, uphold a long-term perspective, and actively fulfill our environmental, social and governance (ESG) responsibilities.
Looking ahead, Chery will continue to drive development through innovation, demonstrate responsibility through action, respond deeply to the expectations of all stakeholders, and work with global partners to build an open, inclusive, collaborative and mutually beneficial industrial ecosystem, jointly writing a new chapter in sustainable development.
Chery Automobile Co., Ltd. ("Chery Auto" or "the Company") values ongoing communication with key stakeholders, including customers and employees. Through customer service and feedback management, closed-loop complaint handling, and monitoring of the percentage of employees represented by independent trade unions or covered by collective bargaining agreements, the Company seeks to understand and respond to stakeholder concerns and continuously improve service quality and the protection of stakeholder rights and interests.
Customer Communication, Service and Feedback Management
I. Customer Communication and Feedback
Guided by user needs, Chery Auto has established a global customer service system. The Company regulates its pre-sales, sales, and after-sales service management through institutional documents including the Sales Service Provider Operations Manual, the Chery Standard After-Sales Process Manual, the Overseas Service Outlet Operations Guidelines, and the User Communication and Service Standards.
The Company provides diversified communication channels, including a 400 hotline, a staffed customer service hotline, online customer service, its official website, the Chery Auto mini program and app, direct user-to-brand platforms, third-party platforms, owner clubs, its official email address, online forums, and complaint platforms. These channels enable users to conveniently submit inquiries, feedback, complaints, and other service requests.
The Chery Auto app incorporates an AI-based customer service chatbot that provides 24/7 real-time responses and intelligent support on matters such as after-sales repair and maintenance and vehicle owner benefits, improving the accessibility and responsiveness of customer communication. In addition to routine service and feedback channels, the Company engages with consumers in person through user engagement events, owner club activities, fan festivals, co-creation activities, and factory visits, enabling face-to-face communication and the collection of user opinions.
The Company has established a Voice of Customer (VOC) system to systematically analyze user feedback collected through different channels, identify recurring service quality issues, incorporate relevant feedback into product and service development where appropriate, and require the responsible departments to implement corresponding improvements.
II. Inclusive Customer Service
The Company considers the service experiences and accessibility needs of different customer groups. For disabled and elderly customers, the Company promotes the provision of wheelchair-accessible routes at sales outlets where conditions permit. Outlet personnel provide basic support, including assistance with seating, service procedures, and explanations of vehicle functions.
To address the practical needs of elderly customers, personnel provide patient explanations of vehicle functions such as large-font instrument displays and user-friendly voice controls and assist customers in completing forms, signatures, and other procedures. These measures help reduce potential barriers associated with mobility, comprehension, and product use and continuously improve the accessibility and inclusiveness of customer service.
III. Customer Complaint Handling and Closed-Loop Management
The Company has formulated and continuously improves the Measures for Closed-Loop Management of Customer Complaints and Roadside Assistance. Customer complaints and feedback received through the 400 hotline and other online channels are handled promptly. Complex cases are incorporated into a project-based management mechanism for continuous tracking until closure.
After customer feedback enters the handling process, the customer service agent determines in real time whether the case needs to be referred to another responsible party and promptly informs the customer of the complaint handling status and expected resolution timeframe. Where the involvement of a sales service provider is required, the relevant work order is reviewed and dispatched to the sales service provider within 10 minutes. The relevant regional manager and business department liaison are notified at the same time.
The Company requires the sales service provider to contact the customer within the prescribed timeframe and advance the case toward closure within two to three days, depending on the type of issue. The handling result is reviewed by the relevant business department and subsequently verified by the User Operations Department, which also conducts a follow-up visit with the customer. The work order is closed only after confirmation that the issue has been resolved.
In 2025, the Company’s customer complaint resolution rate reached 100%. The two-day closure rate for sales-related issues reached 97%, while the three-day closure rate for product quality issues reached 99%.
Employees Represented by an Independent Trade Union or Covered by Collective Bargaining Agreements
In addition to regular customer communication, the Company continuously monitors the percentage of employees represented by independent trade unions or covered by collective bargaining agreements. The Company uses this as an important indicator for assessing employee rights protection and the effectiveness of internal communication.
From 2022 to 2025, the percentage of the Company’s employees represented by independent trade unions or covered by collective bargaining agreements remained at 100%.
Chery Automobile Co., Ltd. (“Chery Auto” or “the Company”) continuously monitors compliance with its Global Code of Conduct and related business ethics requirements. In accordance with the Compliance Management System, Anti-Corruption Policy, Regulations on Complaint and Reporting and Investigation Management, Regulations on the Disposal of Problem Tip-offs for the Sunshine Project, and other relevant policies, the Company identifies potential violations through audits on anti-corruption and business ethics standards, site inspections, named or anonymous whistleblowing reports, and special investigations.
Leads involving compliance issues are centrally received by the Audit Center, while leads involving fraud, corruption, or other matters under the Sunshine Project are centrally received by the Discipline Inspection Office. All reported leads are registered, analyzed, investigated, and handled in accordance with established procedures.
Where an investigation substantiates a violation, the Company takes disciplinary action against the responsible personnel according to the severity of the violation, including warnings, demotion, or dismissal. Cases involving suspected criminal offenses are referred to the judicial authorities.
In 2025, there were no concluded corruption litigation cases against the Company or its employees. Separately, the Company compiles annual statistics on substantiated internal incidents involving breaches of its Code of Conduct or ethical standards and the corresponding actions taken. The relevant data are presented below.
Reporting Area | FY 2025: Number of Substantiated Incidents |
Corruption or bribery | 5 |
Discrimination or harassment | 0 |
Customer privacy data | 0 |
Conflicts of interest | 23 |
Money laundering or insider trading | 0 |
Chery Automobile Co., Ltd. ("Chery Auto" or "the Company") continues to advance its climate transition in support of its long-term net-zero targets. The Company integrates its climate strategy into business development and value chain management and advances its net-zero targets through clean technology investment, energy mix optimization, operational energy efficiency improvements, product portfolio transformation, and supply chain collaboration. The Company also continues to strengthen its energy management system and enhance energy data monitoring and performance assessment to support the low-carbon transition of its own operations and entire value chain.
Net-Zero Transition Plan
I. Vision and Goals
Chery Auto fully recognizes the urgent challenges posed by climate change and supports the Paris Agreement goal of pursuing efforts to limit the increase in the global average temperature to 1.5°C above pre-industrial levels. The Company has integrated its climate strategy into its core business planning and established long-term targets to achieve net zero in its own operations by 2037 and across its entire value chain by 2047, progressively decoupling business growth from greenhouse gas emissions.
In support of these targets, the Company is advancing the transition to net zero across its own operations while progressively establishing an emissions reduction system covering the entire value chain. Its actions focus on the transition to new energy products, investment in low-carbon technologies, and supply chain decarbonization, continuously strengthening its ability to address climate change and advance the low-carbon transition.
II. Clean Technology Investment
The Company has established a time-bound and quantified clean technology investment target to implement the transition plan. In 2025, the Company invested approximately RMB 4.6 billion in clean technology research and development. For 2026, the Company has set a clean technology research and development investment target of no less than RMB 8 billion. The investment will focus on diversified powertrain technologies, including hybrid, battery electric, and clean fuel technologies, as well as core areas such as batteries, electric motors, and electronic control systems, providing financial and technological support for the implementation of the transition plan.
III. Planned Key Actions and Decarbonization Levers
1. Own Operations (Scope 1 and Scope 2)
Optimizing the energy mix. The Company focuses on expanding the use of renewable energy such as photovoltaic and wind power and advancing the development of factories that are progressively reducing carbon emissions and improving resource efficiency. As of the end of the reporting period, the renewable electricity usage ratio at the Company’s vehicle manufacturing bases reached 52.77%, while the Dalian Plant had achieved 100% renewable electricity use. The Company’s grid-connected photovoltaic capacity reached 281.92 MW. By 2030, the Company plans to increase the renewable electricity usage ratio at its vehicle manufacturing bases to 80%. The Company also monitors developments in emerging clean energy technologies as part of its long-term technology reserve and strategic research, rather than treating them as primary decarbonization levers under the current transition plan.
Improving energy efficiency. The Company implements multidimensional energy-saving upgrades across key production processes, including painting, welding, and stamping. These measures include variable-frequency motor upgrades, compressed air system retrofits, dryer upgrades, boiler operation optimization, and the adoption of high-efficiency LED lighting. In 2025, the relevant energy-saving technical renovation projects saved 16,808.08 MWh of energy, reduced carbon dioxide emissions by 8,852.05 tonnes, and reduced energy costs by RMB 11,580.4 thousand.
Strengthening digital energy management. The Company has established an intelligent energy management system (EMS) platform to collect energy data in real time throughout the production process. Artificial intelligence algorithms and digital twin technologies are used to dynamically optimize energy allocation and conduct predictive scheduling, continuously improving refined energy management.
2. Value Chain (Scope 3)
Advancing the transition to new energy products. Through coordinated development across multiple brands, the Company has established a comprehensive new energy vehicle portfolio covering the mainstream price range of RMB 100,000 to RMB 400,000, including sedans, SUVs, and premium off-road vehicles. New energy vehicles accounted for more than 90% of the new products launched in 2025. Annual new energy vehicle sales reached 826.5 thousand units, accounting for 31.41% of total vehicle sales, thereby accelerating the substitution of high-emission internal combustion engine vehicles.
Deepening eco-design and circularity. The Company has established an integrated automotive carbon footprint data mechanism covering the entire value chain and developed a life cycle assessment (LCA) carbon emissions analysis system. Life cycle carbon footprint accounting has been completed for 100% of models currently on sale, providing a data foundation for identifying emissions hotspots and implementing targeted emissions reduction measures. The Company obtained China’s first certificate for "China-EU Carbon Footprint Data Mutual Recognition." The Company incorporates recyclability and reusability considerations into product development and promotes the use of recycled materials. The overall vehicle material recoverability rate has reached 95%, significantly reducing resource consumption and environmental impacts throughout the vehicle life cycle.
Strengthening supplier capacity building and evaluation. Through the Global ESG Advisory Group, the Company provides suppliers with technology guidance and consulting services to help address technical challenges associated with the low-carbon transition. Environmental and low-carbon requirements are incorporated into the supplier management system through the Supplier Code of Conduct and other governing documents. The Company has also established a environmental performance evaluation mechanism and applies the results to supplier relationship management. Suppliers with strong environmental performance are given priority in cooperation, while suppliers that fail to meet the relevant requirements are subject to phase-out in accordance with the Company’s supplier management policies.
At the 2025 Supplier Conference, the Company launched the net-zero initiative entitled "Carbon Exploration · Driving the Future — Jointly Building a Green Supply Chain," setting out 12 actions, including goal co-establishment and technology sharing. In 2025, the Company provided carbon management training to 95 suppliers and conducted renewable electricity surveys covering 138 suppliers. By 2030, the Company aims for its core tier-1 vehicle manufacturing suppliers to achieve a renewable electricity usage ratio of no less than 60%.
Optimizing the low-carbon transportation system. The Company continues to increase the use of new energy freight vehicles within its logistics system and has fully adopted electric forklifts, tractors, and other clean energy equipment for in-plant logistics. For waterway transportation, LNG-powered vessels have been piloted on selected routes along the Yangtze River to reduce emissions from conventional waterway transportation. Through its logistics digital intelligence research institute, the Company has developed logistics optimization models to systematically improve transportation modes and organization. The Company also continues to advance road-to-rail and road-to-waterway modal shifts. Railway and waterway transportation currently account for nearly 50% of total transportation volume.
IV. Stakeholder Engagement
The Company establishes a multi-tiered mechanism to gather input and support the achievement of the transition plan across the value chain, industry, and society.
Value Chain. The Company works with supply chain partners through supplier conferences, carbon management training, renewable electricity surveys, and the Global ESG Advisory Group. The Company has also implemented a hybrid technology open-source initiative and established an open innovation incubation system encompassing open-source collaboration, joint research and development, and talent co-development, providing technical and capacity-building support to value chain partners.
Industry Peers or Relevant Associations or Initiatives. The Company actively participates in the development and revision of national, industry, and association standards. Through standard-setting and industry collaboration mechanisms, it works with industry peers and relevant associations and initiatives to advance standardization and the low-carbon transition in key areas such as electrification, intelligent technologies, and decarbonization.
Government, Public Sector or Civil Society. The Company participates in relevant activities organized by the United Nations Global Compact (UNGC) and the International Union for Conservation of Nature (IUCN) and works with international partners to advance Nature-based Solutions (NbS). These activities facilitate dialogue and cooperation on climate transition, emissions reduction, and low-carbon development. The Company supports China’s goals of peaking carbon emissions before 2030 and achieving carbon neutrality before 2060, as well as the climate objectives of the Paris Agreement. The Company’s climate action case was selected for inclusion in the 2025 Corporate (Park) Climate Action Case Collection organized by the Center for Environmental Education and Communications of the Ministry of Ecology and Environment.
V. Assessment of Social Implications
The Company assesses the potential social implications of the low-carbon transition for employees, supply chain partners, and communities. During the reporting period, the Company provided job-transition training for industrial workers and established a cross-business talent mobility mechanism, offering skills development and career support to employees potentially affected by the transition.
Within the supply chain, the Company provides capacity-building programs through the Yunxuefang online learning platform, supplier benchmarking visits, and supplier technology exhibitions. These programs help supply chain partners improve their management and technical capabilities and strengthen their ability to adapt to the low-carbon transition.
Energy Management System and Actions
The Company’s energy management system provides the governance, data, and capacity foundation for the decarbonization actions across its own operations described above. Chery Auto has established a three-tier energy management structure under the supervision of the Board of Directors and formulated governance documents including the Energy Management Manual and the Energy Usage Management Measures to standardize energy use, performance monitoring, and energy-saving technical renovations. As of the end of the reporting period, six vehicle production bases in China had obtained ISO 50001 certification for their energy management systems.
I. Energy Audits and Digital Management
The Company regularly conducts energy audits and energy use assessments. Through its intelligent energy management system (EMS) platform, the Company collects, analyzes, and monitors energy data from production processes. Big data analytics and predictive algorithms are used to identify energy-saving potential and provide data support for energy allocation optimization, implementation of energy-saving projects, and performance tracking.
II. Energy-Saving Targets and Performance Assessment
The Company establishes quantified annual energy-saving targets. For 2025, it set a target to reduce average comprehensive energy consumption per vehicle by 5% against the 2023 baseline. The Company applies the Energy Saving Management and Technical Project Proposal and Implementation Control Procedures to standardize the proposal, implementation, and assessment of energy-saving projects.
The Company incorporates energy efficiency improvement into employee capacity building for energy and environmental management. In conjunction with production requirements and energy-saving practices in production and operations, the Company provides energy conservation and efficiency training to safety and environmental management personnel and frontline employees. The training covers energy use management requirements, identification of key energy-consuming activities, energy-efficient operating practices, and examples of energy-saving improvements. It helps employees understand the relationship between their work activities and energy consumption and strengthens their ability to identify and implement energy-saving opportunities. In 2025, the Company organized nine environmental protection-themed training sessions, continuously strengthening employee awareness of energy conservation and energy consumption reduction.
Chery Automobile Co., Ltd. ("Chery Auto" or "the Company") advances the circular economy through waste prevention and reduction at source, resource circularity, product management, and responsible raw materials sourcing. The Company integrates resource efficiency and environmental impact management throughout product design, manufacturing, supply chain management, product use, and end-of-life recovery and disposal, and continuously improves resource efficiency across the product life cycle.
Waste Management and Resource Circularity
I. Management System and Waste Audit Mechanism
Chery Auto strictly complies with the Environmental Protection Law of the People's Republic of China and other applicable laws and regulations in China and overseas and incorporates waste management into its environmental management system. The Company has established policies and procedures including the Solid Waste Pollution Prevention and Control Management Procedure, the Hazardous Waste Management Measures, and the Hazardous Waste Storage Safety Management Measures to standardize the generation, classification, storage, transportation, disposal, and record-keeping of waste. As of the end of the reporting period, 100% of the Company's vehicle manufacturing bases in China were certified to ISO 14001.
The Company has established a waste audit and continuous improvement mechanism covering waste generation, classification, storage, and disposal. Waste is identified and classified in accordance with requirements including the National Catalogue of Hazardous Wastes and the Identification Standards for Solid Wastes. Storage facilities are constructed in accordance with applicable standards, including the Standards for Pollution Control on the Storage and Disposal Site for General Industrial Solid Wastes and the Standard for Pollution Control on Hazardous Waste Storage. The Company maintains a solid waste management ledger and uses on-site inspections, record reviews, and periodic audits to identify key waste-generating processes and waste reduction opportunities and to record information including waste type, quantity generated, transportation method, and treatment method.
Based on audit and inspection findings, the Company implements waste reduction measures through production process optimization, modification of specialized equipment, and the recovery and reuse of residual materials. These measures include applying low-temperature drying technology to industrial sludge and adopting the B1B2 compact painting process without intermediate coating to reduce waste generation at source. The Company has also introduced intelligent weighing equipment for hazardous waste, enabling automatic label generation and accurate data collection and reducing the risk of storage beyond permitted time or quantity limits.
The Company uses its "Integrated Safety and Environmental Platform" to strengthen waste data management. The platform integrates six business modules, namely system management, fire safety, work safety, public security and traffic management, health promotion, and environmental protection, as well as 86 management elements. It covers all production bases in China and enables 100% online management of relevant operations. Through the platform, the Company classifies waste-generation data and conducts trend analysis to support decisions on waste reduction and resource recovery. In 2025, the Company generated 264,204.94 tonnes of waste, comprising 20,796.33 tonnes of hazardous waste and 243,408.61 tonnes of non-hazardous waste.
II. Quantified Waste Reduction Target and Investment in Innovation and R&D
The Company has established a quantified and time-bound waste reduction target. By 2026, it plans to reduce hazardous waste generated per unit of product by 2% from the 2025 level while continuing to increase the waste recycling and utilization rate. To support this target, the Company continues to invest resources in R&D and innovative applications for waste reduction.
In 2025, the Company invested RMB 1.8 million in dedicated R&D for waste reduction and completed the development and application of a high-efficiency evaporation treatment process. The process uses low-temperature evaporation and an energy recovery system to reduce treatment-related energy consumption and recover resources from wastewater for circular use.
For waste mineral oil regeneration, the Company cooperates with Ruiyuan International Resources Investment Co., Ltd. ("Ruiyuan International") to operate a full-chain circular utilization system spanning collection, regeneration, and application. Through pretreatment, dehydration, catalytic purification, refining, and blending, waste mineral oil is regenerated into lubricating base oil. The comprehensive utilization rate of waste mineral oil has reached 96%, the base oil recovery rate has reached 74%, and the program has cumulatively avoided 9,667 tonnes of crude oil extraction or imports.
For power battery circularity, the Company has established a full-life-cycle traceability management system and repurposes recovered retired power batteries for applications including starter batteries and energy storage cabinets. In 2025, the Company recovered a total of 630 tonnes of retired power batteries and produced echelon-utilization products with a total battery capacity of 62,126 kWh.
For packaging reduction, the Company continues to optimize packaging structure design by combining Computer-Aided Engineering (CAE) simulation analysis with data from physical packaging tests, thereby reducing over-packaging and associated material consumption. In 2025, the Company's total R&D investment amounted to RMB 14.715 billion, including approximately RMB 4.6 billion in clean-technology R&D, supporting circular-economy innovation in areas including waste reduction and resource circularity.
III. Waste Reduction Training and Capacity Building
The Company incorporates waste reduction into its environmental management training system and continuously strengthens employees' waste-management awareness and professional capabilities. In 2025, the Company organized nine specialized environmental protection training sessions covering cleaner production, waste reduction and landfill diversion, the operation of waste gas treatment facilities, and wastewater treatment processes. Participants included safety and environmental management personnel, personnel in key environmental positions, and general employees.
The Company also conducted specialized training on the "Zero Waste to Landfill Management System". The training systematically explained management requirements for waste classification, compliant disposal, and recycling and incorporated the 7R principles of Refuse, Reduce, Reuse, Recycle, Recovery, Recognition, and Regulation. It clarified the responsibilities and implementation requirements of each role in waste management and supported capacity building for waste-free factories.
IV. Recycling Programs, Waste Diversion and Performance
The Company has established a waste recycling and resource recovery system covering design, production, recycling, and regeneration. Non-hazardous waste is collected separately and, in accordance with the principle of prioritizing resource utilization, is directly reused where possible or entrusted to third parties for recycling and treatment. For hazardous waste, the Company has set 100% compliant disposal as its management objective and engages qualified third-party organizations for transportation and disposal.
For end-of-life vehicle recycling and dismantling, the Company promotes refined dismantling and parts remanufacturing. Products and materials actually reused or recycled accounted for 97%, and the Company's various recycling programs generated cumulative revenue of RMB 559,849,700.69.
For power battery recycling, the Company has established recycling outlets at 618 Chery Auto sales and service 4S stores nationwide and implements full-process information collection and traceability management for retired power batteries. For waste oil regeneration, the Company completed the comprehensive utilization of 196 tonnes of waste mineral oil. For reusable packaging, the Company continues to scale the use of reusable logistics containers, with applications expanded to overseas markets including Spain and Malaysia.
In 2025, the Company recycled and utilized 247,909.32 tonnes of waste, achieving a waste recycling and utilization rate of 93.8%. During the reporting period, the Company received "Diamond Level" Zero Waste to Landfill certification and was recognized by Wuhu City as a "Waste-Free Factory".
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Product Classification and Management
I. Definition and Management Scope of Sustainable Products and Services
To systematically identify, manage, and expand its sustainable products and services portfolio, Chery Auto has established a sustainable product definition and classification system with reference to the EU Taxonomy. The system identifies business activities, products, and services that make a substantial contribution to climate change mitigation, the transition to a circular economy, and low-carbon transport, and incorporates product life-cycle environmental impacts into management.
The Company's sustainable products and services portfolio includes new energy vehicles (NEVs), low-carbon mobility products, vehicle models that have undergone product carbon footprint verification or obtained low-carbon certification, power battery recycling and circular utilization services, and products related to low-carbon materials and clean technologies.
II. Classification Principles and Eligibility Criteria
With reference to the EU Taxonomy Regulation and the relevant Delegated Acts, the Company maps its internal products to relevant economic activities, with a particular focus on automotive-related activity categories such as low-carbon transport, clean-technology manufacturing, the circular economy, and improved resource efficiency.
The Company applies three fundamental principles when determining whether a product is sustainable. First, under the principle of Substantial Contribution, a product or service must make a substantial contribution to at least one environmental objective. The Company focuses on climate change mitigation, the transition to a circular economy, the development of low-carbon transport, and the application of renewable energy. Second, under the principle of Do No Significant Harm (DNSH), a product must not cause significant harm throughout its life cycle to other environmental objectives, including climate change adaptation, water protection, pollution prevention and control, and biodiversity protection. Third, under the Minimum Safeguards principle, the relevant business activities must comply with requirements including the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.
In the eligibility assessment, the Company considers whether a product meets the Technical Screening Criteria applicable to the relevant economic activity; whether it satisfies applicable emissions thresholds or technical requirements, including specific CO2 emissions requirements under the Worldwide Harmonised Light Vehicles Test Procedure (WLTP); whether it makes a clear and measurable contribution to a low-carbon transition, the circular economy, or improved resource efficiency; and whether it complies with applicable environmental and chemicals requirements, including the REACH Regulation, the End-of-Life Vehicles (ELV) Directive, and the Restriction of Hazardous Substances (RoHS) Directive. Relevant products must also complete the Company's internal review process and any applicable external verification.
III. External Verification and Dynamic Updating
The Company uses external certifications, product carbon footprint verification, eco-labels, and low-carbon certifications as important evidence for validating products' low-carbon attributes and sustainability contributions. The Company has conducted product life-cycle carbon footprint accounting for its on-sale models and uses product carbon footprint certificates, low-carbon certifications, and relevant external verification results to support sustainable product eligibility assessments. In 2025, the Company obtained China's first certificate for "China-EU Carbon Footprint Data Mutual Recognition", providing external recognition of its product carbon footprint data and life cycle assessment capabilities.
The Company has established a dynamic update mechanism for its sustainable product classification system. It continuously monitors changes to the EU Taxonomy and its Technical Screening Criteria, climate-related regulations, industry trends in low-carbon technologies, market and customer demand, and the Company's product strategy and R&D progress. The Company periodically reviews and adjusts its sustainable product definitions, product-to-activity mappings, and internal eligibility criteria.
IV. Capital Expenditures, Operating Expenditures and Resource Allocation
The Company continued to allocate capital expenditure (CAPEX) and operating expenditure (OPEX) to sustainable-product infrastructure and low-carbon manufacturing capacity to increase its sustainable products and services portfolio. In 2025, the Company invested RMB 121.45 million in environmental projects including pollution prevention and waste reduction. This investment was primarily used to improve the environmental performance of production and operations and to support pollution prevention, waste management, and improved resource efficiency in the manufacture of sustainable products.
In terms of renewable energy infrastructure, the Company continues to develop distributed photovoltaic power-generation systems. As of the end of 2025, its cumulative grid-connected photovoltaic capacity had reached 281.92 MW, and renewable electricity accounted for approximately 52.77% of electricity used at its vehicle manufacturing bases, supporting the production of NEVs, low-carbon vehicle models, and core components.
For product life-cycle circular-utilization infrastructure, the Company has established power battery recycling outlets at 618 Chery Auto sales and service 4S stores nationwide and continues to improve its full life-cycle circular-utilization system for battery electric vehicles. The Company is also advancing the development of an ESG digital platform. By integrating it with the Manufacturing Execution System (MES), Enterprise Resource Planning (ERP) system, and Energy Management System (EMS), the Company enables automated calculation and real-time tracking of carbon emissions throughout the product life cycle and provides data support for optimizing resource allocation in production.
For logistics infrastructure, the Company improves the utilization efficiency of transportation resources by redesigning its logistics network, optimizing relay-hub locations, and applying intelligent load-consolidation algorithms. At the Changzhou relay hub, the milk-run model reduced transport mileage by approximately 32%, increased the actual vehicle load rate by 7.7%, and reduced dispatch frequency by 26%, thereby reducing resource consumption and carbon emissions from product manufacturing and transportation.
V. R&D Resources and Product Innovation
The Company continues to invest R&D resources in the development and iteration of NEVs, low-carbon materials, power batteries, electric drive systems, and core components. In 2025, total R&D investment amounted to RMB 14.715 billion, including approximately RMB 4.6 billion in dedicated investment in clean technologies. The Company had 20,366 R&D personnel in China, representing approximately 54% of its non-production employees. The Company plans to increase clean-technology R&D investment to more than RMB 8 billion in 2026 and has planned cumulative dedicated R&D investment of more than RMB 10 billion in frontier technologies including all-solid-state batteries.
In 2025, the Company launched eight new NEV models, including the iCAR V23 and Chery Fulwin A9L, covering battery-electric and high-efficiency models. In low-carbon materials and core new-energy technologies, the Company's recycled aluminum technology won the China Championship in the Sustainable Materials category of the United Nations Industrial Development Organization (UNIDO) Global Call 2025 and was named Global Runner-Up in the Sustainable Product category at the 2025 Altair Enlighten Award. The thermal efficiency of the Kunpeng Tianqing hybrid-dedicated engine exceeded 48%. The Rhino S solid-state battery module achieved an energy density of 400 Wh/kg and continues to advance toward the target of 600 Wh/kg, with initial vehicle integration testing planned for 2027.
The Company has designated comprehensive low-carbon transition, clean-technology breakthroughs, product life-cycle decarbonization, and circular utilization as priority areas of its ESG strategy and continues to support the R&D and iteration of core sustainable products, including battery electric vehicles, batteries, and electric drive systems.
VI. Internal Training on Sustainable Design Principles and Capacity Building
The Company integrates sustainable design principles into product R&D and innovation processes and uses systematic training to strengthen employees' sustainable design awareness and professional capabilities. In 2025, average training hours per employee in China reached 55.9 hours, and total annual training expenditure amounted to RMB 32.27 million.
The Company appoints ESG specialists in key functional departments including R&D, manufacturing, procurement, and the Digital Intelligence Center to promote the implementation of sustainable design requirements throughout the product development process. Through the "Ruihua Global Talent Development Institute" program, the Company also provides core managers with specialized training on ESG strategy and compliant operations.
In addition, through ESG strategy briefings, the Chery Global Innovation Conference, and other platforms, the Company continues to strengthen R&D teams' capabilities in low-carbon design, product life-cycle decarbonization, circular utilization, and clean-technology breakthroughs. This helps ensure that the development of battery electric vehicles and core components follows sustainable design principles and supports the implementation of the R&D philosophy of "Technology with Warmth, Products with Responsibility".
Responsible Raw Materials Management
I. Raw Materials Management Policy
Chery Auto has established a raw materials management system covering raw materials sourcing and use. Through policies and governing documents including the Responsible Procurement Statement, the Supplier Code of Conduct, the Biodiversity Policy Statement, and the Zero-Deforestation Statement, the Company sets requirements for raw materials sourcing, use, and supply chain management. The Sustainability Management Committee oversees these policies, and major impacts and work progress are reported to the Committee. The Company ensures that the policies are effectively implemented internally and regularly monitors and reports progress.
Through eco-design, lightweighting technologies, and hazardous-substance substitution and control, the Company reduces the negative environmental and social impacts associated with raw materials extraction and processing. The Company collaborates with suppliers, industry associations, and research institutions to advance best practices and standards for sustainable raw materials. It also advances Nature-based Solutions (NbS) through participation in relevant activities organized by the United Nations Global Compact (UNGC), the International Union for Conservation of Nature (IUCN), and other organizations.
The Company encourages suppliers to obtain relevant third-party certifications and commits to prioritizing the procurement of sustainable raw materials verified by third-party organizations while strengthening full-chain traceability. Recycled metals, including recycled aluminum and recycled steel, have been used in body structural components, while recycled polypropylene has been used in vehicle interior and exterior trim components. The Company's self-developed "100% Recycled Aluminum + Heat Treatment-Free + Integrated Die Casting" technology was named Global Runner-Up in the Sustainable Product category at the 2025 Altair Enlighten Award and can reduce carbon emissions by approximately 3.27 tonnes per vehicle.
The Company incorporates biodiversity conservation requirements into raw materials management. Under its Zero-Deforestation Statement, the Company requires suppliers of raw materials such as rubber and timber to commit that their products are not associated with deforestation, illegal logging, or ecosystem degradation. Through its Biodiversity Policy Statement, the Company also incorporates ecological conservation into its strategic planning and operational management.
II. Raw Materials Management Program
The Company has established a raw materials management program covering the assessment of priority raw materials, traceability to origin, management of environmental and social impacts, and targets for recycled raw materials.
For priority raw materials assessment and traceability, the Company uses a dedicated questionnaire aligned with the EU Deforestation Regulation (EUDR) to collect information from upstream natural rubber suppliers. It integrates zero-deforestation compliance requirements into the procurement process to systematically prevent non-compliant procurement. Where risks are identified, the Company works with suppliers to implement risk mitigation or remediation measures, including training and capacity building and, where necessary, replacement of the relevant material supplier. The Company also verifies rubber processors' due diligence management practices, social-impact declarations, and relevant forest plots. In parallel, the Company has established a full-chain raw materials traceability system to ensure the traceability of raw materials.
In managing environmental and social impacts, the Company focuses on potential impacts arising from the cultivation, extraction, production, processing, and use of raw materials including natural rubber, aluminum, steel, and plastics. Through zero-deforestation management, the use of recycled materials, and collaboration with suppliers, the Company progressively reduces the associated negative impacts.
For natural rubber, the Company advances zero-deforestation information collection and supplier engagement to reduce at source the risk that its procurement may contribute to damage to forest resources, land-use change, or adverse impacts on community rights. The Company recognizes that forest ecosystem services, including carbon sequestration, water retention, biodiversity conservation, and soil conservation, underpin the stability of agricultural communities. Intact forest cover helps stabilize regional climates and reduce the impacts of extreme weather on the production activities and livelihoods of agricultural communities. Maintaining water-retention capacity supports the water needs of upstream and downstream agriculture and industry, as well as urban and rural communities, and reduces the risk of community conflict caused by water scarcity. Conserving biodiversity strengthens ecosystem resilience and supports the long-term livelihoods of communities that depend on natural resources. Soil protection and erosion control directly maintain land productivity, supporting sustained agricultural output by smallholders and stable yields in food-producing regions. The Company regards zero-deforestation management as an integrated environmental and social responsibility practice that reduces negative ecological impacts while helping safeguard the livelihood security of agricultural communities, smallholders, and nature-dependent groups in producing regions.
For aluminum, steel, plastics, and other materials, the Company promotes the use of recycled aluminum, recycled steel, and recycled plastics to reduce dependence on virgin resources and mitigate environmental impacts associated with raw materials production and processing, including energy consumption, greenhouse gas emissions, waste generation, and pollutant emissions.
For recycled aluminum, Chery Auto's Materials Research Institute has independently developed a high-strength and high-toughness material system based on "100% Recycled Aluminum + Heat Treatment-Free + Integrated Die Casting". Compared with conventional technologies, the use of 100% recycled aluminum reduces carbon emissions at the raw materials stage by more than 80%, while the innovative heat-treatment-free integrated die-casting process reduces manufacturing energy consumption by up to 95%. The material system also addresses challenges associated with impurities and the mechanical properties of recycled aluminum, enabling recycled aluminum to be used in safety-critical automotive structural components for the first time and providing key support for improving the driving range and energy efficiency of NEVs.
For recycled plastics, Chery Auto has established a credible climate-action framework for recycled plastics. By connecting post-consumer plastic collection, materials R&D, component manufacturing, vehicle application, and carbon accounting across the value chain, the framework enables source traceability, verifiable material performance, health protection, and quantifiable carbon reductions. To date, the Company has recovered more than 10,000 tonnes of post-consumer plastic waste. In 2024, the recycled plastic content of representative components used in mass-produced models reached 100%. The Company also obtained the industry's first traceability certification under a pilot assessment for the closed-loop recycling of recycled plastics.
Automotive applications are subject to some of the manufacturing sector's most stringent requirements for material safety, durability, and health performance. A circular-material system that passes automotive validation can provide a reference for the application of recycled materials in other industries. By validating recycled materials in actual product applications, Chery Auto seeks to encourage participation across the value chain and help move circular materials from individual corporate practices toward broader industry consensus.
Through supplier communication, training and capacity building, risk tracking, and corrective measures where necessary, the Company encourages suppliers to continuously strengthen their capacity to manage the environmental and social risks associated with raw materials and improve their raw materials management systems.
For internal capacity building, the Company provides its procurement teams with specialized training on their roles related to sustainable raw materials, including supply chain ESG management, due diligence, and zero-deforestation requirements. The training strengthens procurement personnel's ability to identify, assess, and manage compliance and environmental and social risks associated with raw materials.
Conflict Minerals Due Diligence Process
Against the backdrop of the global automotive industry's continuing transition toward sustainable development, Chery Auto regards responsible mineral supply chain management as a core aspect of its ESG governance. As a vehicle manufacturer, neither Chery Auto nor most of its tier-1 suppliers directly engage in mineral extraction, smelting, or refining. Instead, parts containing key materials, including 3TG conflict minerals comprising tin, tantalum, tungsten, and gold, are sourced through complex, multi-tier upstream supply chains. The automotive industry faces inherent challenges arising from complex supply chain tiers, the absence of direct contractual relationships with sub-tier suppliers, and the difficulty of tracing materials to the mine of origin, all of which constrain comprehensive traceability.
In response to these challenges, Chery Auto seeks to extend its responsible minerals efforts beyond tier-1 suppliers where it can exercise influence. The Company strictly follows the Five-Step Framework for Risk-Based Due Diligence in the Mineral Supply Chain set out in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Within the scope of its influence, the Company seeks to improve supply chain visibility, investigate alternative materials and sources other than conflict minerals, identify and mitigate related ESG risks, and support the transition toward responsible, transparent, and conflict-free mineral supply chains.
To support the effective implementation of its management requirements, Chery Auto has established a three-tier governance structure comprising decision-making, management, and execution functions, creating a closed-loop management system from strategy formulation to implementation. The Supply Chain Sustainability Management Committee serves as the decision-making body and is responsible for approving responsible minerals management strategies and objectives and overseeing the effectiveness of the due diligence management system. The Responsible Minerals Management Task Force is responsible for developing the management system, coordinating resources, providing training support, and regularly reporting implementation progress and risk management matters to the decision-making body. At the execution level, a dedicated professional team implements the responsible minerals due diligence process through regular risk assessments, issue identification, and implementation of response measures. Through clearly defined responsibilities and coordination mechanisms, the Company integrates strategic decision-making, process oversight, and operational implementation and continues to strengthen the compliance and sustainability performance of its responsible minerals management.
Chery Auto has also established a supply chain ESG due diligence management system that includes conflict minerals management. The Company sets out its position through the Responsible Procurement Statement and the Responsible Minerals Statement. The Supplier Code of Conduct is included as an appendix to Chery Auto's procurement contracts, and suppliers are required to acknowledge and comply with its provisions, which specify their responsibilities and applicable standards for conflict minerals management. Through its due diligence tools and practices, the Company implements its commitment not to procure mineral resources that finance armed conflict and requires suppliers to cascade Chery Auto's responsible procurement standards upstream through their supply chains.
As part of its due diligence process, the Company uses the Conflict Minerals Reporting Template (CMRT) and the Extended Minerals Reporting Template (EMRT), together with customized issue-specific questionnaires, as its principal survey tools to systematically collect supply chain data, including information on smelters and refiners (SoRs). In 2025, 606 suppliers completed CMRT reporting. The Company has set a target of increasing the number of suppliers completing CMRT reporting to 650 in 2026 and will continue to expand the scope of its surveys. Based on the information collected, Chery Auto applies a risk matrix to conduct dynamic risk assessments and tiered risk management covering suppliers and relevant SoRs. The Company cross-checks information against publicly available international conformance lists and conducts supplementary investigations concerning high-risk supply chain entities and entities for which information is incomplete.
To further strengthen risk controls, the Company has established and implemented a risk management plan and uses an audit mechanism as a key risk management measure. Chery Auto has formed a professional team with expertise in environmental management, safety, labor rights, and other relevant areas and may engage third-party audit organizations where circumstances warrant. The Company has established short-, medium-, and long-term action plans to mitigate conflict minerals-related risks. In the short term, the Company focuses on strengthening dynamic risk monitoring of tier-1 suppliers, risk communication, audits, and oversight of corrective actions. In the medium term, it seeks to improve the transparency of upstream SoR information and strengthen supply chain due diligence capabilities. In the long term, the Company plans to further improve mineral supply chain transparency by participating in industry organizations, supporting third-party audit programs, and conducting upstream field research.
Chery Auto also recognizes the important role of stakeholder oversight. The Company has formulated and published the Supply Chain Grievance Statement, which sets out the channels for submitting grievances and the procedures for handling them. The grievance mechanism accepts concerns and grievances from stakeholders regarding the extraction, trade, handling, and export of minerals from conflict-affected and high-risk areas. As an important policy document for responsible supply chain management, the Statement communicates the Company's commitments and requirements concerning compliant supply chain operations to all stakeholders.
Looking ahead, Chery Auto recognizes that responsible minerals management is a long-term process requiring continued investment and ongoing improvement. The Company will uphold its commitment to maximizing supply chain transparency within the scope of its business influence and continue to strengthen the effectiveness of its three-tier governance structure. It will broaden and deepen the application of its due diligence tools, strive to further expand CMRT reporting coverage in 2026, and progressively transform supply chain data from information collection into risk insights. Over the longer term, Chery Auto will go beyond basic compliance by continuing to participate in industry initiatives and support upstream capacity building to develop a more resilient and credible supply chain ecosystem. The Company seeks to make responsible minerals management an important component of its sustainable development capabilities and contribute Chery's approach to the responsible transition of the global automotive industry.