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Energy vehicles sales in China skyrocket as consumers prove more comfortable with lithium

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2023-09-11

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There was a surprisingly big jump in retail sales of new energy vehicles (NEVS) in China in August to all time highs for a month.

NEV sales jumped to a record 716,000 units in August, surpassing the 700,000-unit mark for the first time.

After July’s sales figures slid from June’s record high, some commentators wondered if China’s growing economic malaise might be dampener on NEV sales.

But the continuing price war, powered in part by the falling cost of lithium carbonate and hydroxide used in batteries, and government subsidies, helped send total sales higher.

Chinese market analysts say every Chinese NEV maker has some sort of discount or subsidy on offer (on top of those from national, prefecture and local governments).

The sales data from the China Passenger Car Association will be welcome news to lithium producers around the world, and especially in Australia which continue to grapple with weak prices for their key battery material.

The data and the preference for BEVs should be seen as positives for lithium demand (and producers and prices) heading into the closing months of the year and early 2024.

August’s record sales were up 34.5% from the same month in 2022 (when sales were depressed by Covid restrictions) and up nearly 12% from July.

Battery electric vehicles (BEVs) accounted for a record 491,000 retail sales in August, or 68.6% of all retail NEV sales, up 23% year-on-year and more than 16% from July.

Plug-in hybrid vehicle (PHEV) retail sales in August were also record 226,000 units in August. This was up 70% year-on-year and up 2.7% from July.

Those share figures are important because they underline just how decisively Chinese consumers are choosing BEVs (and overcoming range anxiety) and their larger consumption of lithium (in their batteries).

The record performance means NEVs took up a high 37.3% of the 1.92 million retail sales passenger vehicles in China last month - including sedans, SUVs and MPVs. the total sales figure was up 2.5% year on year and 8.6% from July.

There are some tax breaks for conventionally-powered car purchases but it is clear that without the record breaking sales performance from NEVS, total care sales in China last month would have fallen short of July’s performance and the same month in 2022 when Covid restrictions suppressed consumer sales.

In the eight months to August, retail sales of passenger NEVs jumped 36% from a year ago to 4.44 million units.

China's passenger NEV exports were 78,000 units in August, up 1.7% year-on-year but down 11.8% from July. BEVs made 93% of China's NEV exports in August, according to the CPCA.

Tesla sold 84,159 China-made vehicles in August, of which 19,465 were exported from its plant in Shanghai.

That plant produces the Model 3 and Model Y vehicles for the domestic and export markets (including Australia, NZ and Canada).

That means Tesla delivered 64,694 vehicles in China in August, up 87.5% from a year earlier and more than double July’s effort.

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