Lithium miners worry as China's EV market stagnates
Worrying signs are emerging for Australian lithium miners and processors in the wake of China's enormous electrified car market. Industry leader BYD has reported no growth in sales for battery-powered vehicles since October. Simultaneously, the company has recorded a second successive month of weak sales for plug-in hybrids, a popular form of electrified vehicles in China, Japan, and parts of the US, despite a 31% year-on-year increase in November's sales.
October's sales had already seen an 8% rise from September, indicating a loss of momentum for BYD in the past two months. This decline comes at a time when lithium prices have plummeted by 70% to 80% over the past year due to an oversupply of the metal and slowing EV sales growth.
The impact of this price crunch and sales slowdown will likely lead to significant cutbacks in exploration, mining, and processing plans in 2024. While BYD's total passenger NEV sales last month reached 301,378, almost matching October's 301,095, the dwindling interest among Chinese consumers is concerning for the Chinese government, which has championed the NEV sector.
Battery-powered NEV sales (BEVs) remained stable and even increased slightly, with BYD selling 170,150 units in November, up 49.4% year-on-year and 2.8% from October. However, sales of plug-in hybrids (PHEVs) declined for the second consecutive month, with BYD selling 131,228 units in November, up 13.1% year-on-year but down 3.22% from October.
Despite these challenges, BYD aims to achieve its target of 3 million NEV sales, including exports, by boosting December sales to over 317,000 units. In the January-November period, BYD reported selling 2,683,374 NEVs, reflecting a 65% increase compared to the same period in 2022, which was marked by a slowdown due to COVID-19 and a late surge in sales to secure government subsidies that ended on December 31 but were later reinstated. Additionally, BYD exported 30,629 NEVs overseas in November, bringing total exports for the 11 months to over 206,000 units.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.