China's new energy vehicle output, sales take sharp hit in April on pandemic

China's new energy vehicle production and sales both fell sharply in April, posting double-digit declines as the country's automotive industry took a blow from COVID-19 lockdowns.

China's NEV production in April fell 33% month on month to 312,000 units, while sales in the same month fell 38.3% to 299,000 units, China Association of Automobile Manufacturers said May 11.

Several Chinese vehicle producers were forced to suspend or slow production in April as they faced shortages of auto parts and transportation hurdles caused by the lockdown measures to stop the outbreak, leading to the month-on-month decline.

Even as numbers were dismal on a monthly basis and could be seen as an aberration in the current situation, April NEV production and sales were still sharply higher year on year, continuing to mirror the explosive growth seen by China's EV industry in recent years.

NEV production in April was 43.9% higher year on year, while sales were up 44.6%, according to CAAM data.

China's NEV sales have also managed to extend their market share in the overall automobile sector, accounting for 25.4% of the country's total vehicle sales in April, S&P Global Commodity Insights calculations showed. NEV sales have accounted for more than 10% of total vehicle sales for 12 straights months.

Bullish outlook

China's automobile industry is expected to reach it's full-year target, as domestic producers ramp up efforts to bring production back to normal, CAAM said.

Shanghai and Changchun, which contribute about 20% to national vehicle production, have been seeing a positive trend.

The production capacity of vehicle and auto part manufacturers in Shanghai and Changchun have been rising since their operations restarted in mid-April.

However, it will still take time to achieve full-level production given the size of the automotive industry's supply chains, sources said.

China's leading automobile manufacturer SAIC Motor Corp Ltd recently stepped up plans to resume operations and is expecting production to return to normal by the end of this month.

Market sources remained optimistic about China's overall NEV sales for this year, despite automakers raising car prices and the impacts from the resurgence of coronavirus.

Lithium prices, battery output

China's demand for battery metals will continue to face challenges going into May although prices are trending lower, market sources said.

China's prices of lithium salt -- a key raw material needed to produce power battery -- have been under pressure recently, owing to rising production from salt lakes and weaker downstream demand. A government push to maintain raw material prices at "rational levels" is another factor keeping lithium prices in check.

Platts assessed 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, down 8% and 8.2%, respectively, from a month earlier, according to S&P Global data.

China's output of power battery reached 29 GWh in April, up 124.1% year on year but down 26.1% month on month, according to data from the China Automobile Battery Innovation Alliance.