China’s NEV output, sales in Q1 more than halved by Covid-19
The output and sales of new energy vehicles (NEVs) in China tumbled by over 50% year on year in the first quarter of 2020 due to the effects of the Covid-19 virus on operations and end demand.
Chinese manufacturers produced 105,000 NEVs, including pure electric vehicles (PEVs) and plug-in hybrids, in the first quarter of 2020, down by 60.2% from the corresponding months of 2019, while total sales were at 114,000 units over the same three months, down by 56.4% year on year, according to data released by the China Association of Automobile Manufacturers (CAAM).
On an annual comparison, output of PEVs fell by 63.8% to 67,000 units and output of plug-in hybrids decreased by 54.6% to 27,000 units in January-March. Sales of PEVs were down by 60.2% to 73,000 units, and sales of plug-in hybrids totaled 28,000 units, down by 48%.
In March, China produced 50,000 NEVs, down by 56.9% from March 2019. Of those units, 33,000 were PEVs, down by 61.3% from the corresponding month last year, while plug-in hybrids made up 11,000 units, down by 51.3% year on year.
Sales of NEVs also fell on an annual comparison to 53,000 units in March, down by 53.2%. PEV sales fell by 58.8% to 35,000 units, while sales of plug-in hybrids were down by 44.3% to 12,000 units from a year earlier.
Domestic NEV production is gradually recovering following the easing of travel and work restrictions in China since the outbreak of the coronavirus has been brought under control, CAAM said.
But the effects of the virus continue to affect demand, the association added, with parts of the downstream market remaining subdued.
That said, output and sales in March has improved markedly compared with February, according to CAAM.
Output and sales of NEVs in China fell by over 75% year on year in February due to the suspension of operations during the peak of the Covid-19 virus in the country.
CAAM estimated the NEV market in China will recover more rapidly in the second quarter of 2020. The association cited government support policies, combined with the efforts of industry enterprises as being the drivers of the recovery.
CAAM expects NEV sales in the second half of 2020 to return to year-ago levels, although the uncertainty over the progress of virus prevention and control overseas will continue to overhang.
“It is unsurprising that demand for NEVs remained weak in March, it will take time for business and households to rebuild their finances after extended lockdowns,” Fastmarkets head of base metals and battery research William Adams said.
“Indeed we expect that while manufacturing may well be in position to ramp up production to post-Covid-19 crisis levels, the recovery in demand will take a considerable time, unless there are enough government and OEM incentives to get buyers back into buying mood,” he added.
The price of lithium, one of the key raw materials widely used in batteries for NEVs, has softened over the year so far, with the outbreak and global spread of the virus curbing demand further.
“Some lithium raw material prices have fallen to levels that have caused some producers to restrict production,” Adams said.
“But we have also seen some producers have temporarily halted production as governments have declared states of emergencies, so there has been some disruption to supply and there may yet be more to follow, either from the virus or from even lower prices,” he added. “But any production halt will help rebalance the market, which will put it in a stronger position once demand does recover.”
Fastmarkets’ lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was at 43,000-48,000 yuan ($6,099-6,809) per tonne on April 9, unchanged from the previous week, but down from 45,000-51,000 yuan per tonne at the start of 2020.