Aluminium use in China’s NEVs to surge by 2030, but challenges exist

The aluminium market in China was expected to come under massive demand from the new energy vehicle (NEV) sector in the years ahead, but the aluminium industry still faced various challenges in the application of the metal in NEVs, Fastmarkets has learned

Roughly 10 million tonnes of aluminium will be used in producing NEVs in China by 2030, thanks to the massive development of the NEV sector in the country, market participants told Fastmarkets in the week ended Friday June 21. This would compare with consumption of the light metal in 2023 of around 2 million tonnes.

“Production and sales of NEVs [in China] have increased significantly in recent years, against the background of carbon emissions peaking by 2030 and achieving carbon neutrality by 2060,” a trader said.

China produced 940,000 NEVs in May 2024, up by 31.9% from 712,660 NEVs produced in May 2023, according to data released by the China Association of Automobile Manufacturers (CAAM).

With that volume produced, 955,000 NEVs were sold in May, up by 33.3% from 716,430 NEV sales a year earlier. The market share of NEVs in China reached 39.5% in May, out of a total of 2.42 million cars sold in the country, according to data released by CAAM.

China’s production and sales of NEVs will increase

Trade sources said that China’s production and sales of NEVs will continue to increase, and they expected the NEV share of the car market to increase to around 50% by 2025 and 70% by 2030.

“The promising development of NEVs in China will bring a significant demand increase for the light metal, considering NEVs’ requirement for light weight,” a second trader said.

Market sources said that NEVs were usually heavier than vehicles with internal combustion engines (ICEs). Consequently, NEVs had a stronger incentive for lightweighting, to extend the driving range.

In an NEV, aluminium is used in the vehicle body and chassis, and in the three electric systems – motor, power battery and electronic control systems. At the moment, those three units were mainly made from steel or a combination of steel with some aluminium and other metal materials, sources said.

According to the Energy Saving and NEV Technology Roadmap, issued by China’s Society of Automotive Engineers (SAE), by 2030 an NEV will use more than 350kg of aluminium, compared with around 190kg in 2020.

“By 2030, the use of aluminium will increase in car bodies, and materials for chassis and electric systems will be mainly made from aluminium,” the second trader said.

“The increase in the use of aluminium in NEVs is clearly foreseeable,” a third trader said. “Together with development of the solar energy and energy storage sectors, I would expect China’s consumption of aluminium to keep increasing, despite the weaker housing sector.”

Some market sources said, however, that although China’s aluminium imports have decreased recently, due to a closed import arbitrage window, the country needed to import more aluminium in the long term, considering the aluminium capacity cap of 45.5 million tonnes per year.

The monthly average of the aluminium import arbitrage showed a loss of $284.27 per tonne for May, compared with a loss of $246.72 per tonne for April.

China imported around 157,874 tonnes of aluminium in May 2024, down by 28% from 218,525 tonnes in April but up by 114% from 73,931 tonnes in May 2023, according to data released by Chinese customs.

Aluminium challenges exist

There were still several challenges to the use of more aluminium in NEVs, market sources said.

“Aluminium is expensive,” a fourth trader said. “Though the overall trend is to use more aluminium, I hear some voices asking whether we should keep using steel to reduce costs.”

Market sources told Fastmarkets that the cost for steel in the automotive sector was around 10-15 yuan ($1.37-2.06) per kg, compared with 20-25 yuan per kg for aluminium.

“In the Chinese market, mid-to-high end NEVs [with sales prices of more than 200,000 yuan, about $27,500] use more aluminium, while manufacturers choose to use more steel for low-end NEVs,” the fourth trader said.

Market sources said that it was important to have the low-end NEVs also use more aluminium, and that car makers would find a balance between use of the light-weight material and the production cost.

But the aluminium sector also had to deal with the technological challenges, market sources said.

The formability of aluminium plate was not as good as that of steel plate, making it difficult to make automotive parts with complex structures in aluminium materials, they said.

The significant research and development investment into NEV parts, and the long payment periods granted to consumers, were also challenging for aluminium product makers.

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