China NEV Production and Sales in April

On May 11, China Association of Automobile Manufacturers (CAAM) said that China’s NEV production in April has plummeted 33% month on month to 312,000 units, while sales for the same month dropped 38.3% to 299,000 units.

Production was affected across several Chinese vehicle makers, who had to halt or slow down production last month due to shortages of auto parts and logistics disruptions caused by lockdown measures to contain the outbreak of coronavirus, contributing to the month-on-month fall.

And even though those numbers were dismal on a monthly basis, and thus potentially not representative of the current situation, the April NEV production and sales numbers were still sharply higher year on year, continuing a trend of sharp acceleration in recent years for China's EV industry.

Production of NEVs in April was up 43.9% from a year earlier, and sales increased 44.6%, data from the China Association of Automobile Manufacturers (CAAM) showed.

NEV sales in China also managed to further expand their market share in the wider automobile industry, making up 25.4% of total domestic vehicle sales in April, according to S&P Global Commodity Insights calculations. For 12 consecutive months now, NEV sales have made up over 10% of total vehicles sold.

Bullish Outlook

China’s car industry will meet its annual target, as homegrown makers increase efforts to return output back to normal, CAAM said.

“Shanghai and Changchun, which contribute around 20 percent of the national vehicle production, are showing an upward trend. Vehicle and auto part manufacturers in Shanghai and Changchun have also been ramping up production since they were allowed to resume operations in mid-April.”

But because of just how big the automotive sector’s supply chains are, sources said it will still take time to reach full-level production. SAIC Motor Corp Ltd, China’s top automobile maker, recently accelerated efforts to get back to work and said it expected production to be back to normal by the end of this month.

Despite concern about rising car prices from automakers and the impact of the coronavirus comeback, market sources have remained bullish on overall NEV sales in China this year.

Lithium Prices and Battery Production

Demand for China’s battery metals will continue to be a battle heading into May even as prices are trending lower, according to market sources.

Prices for the lithium salt in China, one of the raw materials that are necessary for producing power batteries, came under pressure recently due to increasing production from salt lakes and weak demand from the downstream sector. A government drive to keep raw material prices at “rational levels” is another headwind for lithium prices.

Platts has a price assessment for battery-grade lithium carbonate and hydroxide at Yuan 459,000/mt ($68,291/mt) and Yuan 460,000/mt, May 10 on a DDP China basis, respectively, down 8% and 8.2% from a month spot price earlier on S&P Global data.

The production of power batteries in China stood at 29 GWh in April, up 124.1% YoY but down 26.1% MoM, according to the data released by China Automobile Battery Innovation Alliance.