China to increase subsidies for city bus upgradation to new energy

China will increase the prescribed amount of subsidies for urban public transport enterprises upgrading city buses to new energy and replacing power batteries, using the ultra-long-term special national debt funds, according to a statement released by the Ministry of Transport and other two departments March 19.

The average subsidy for updating city bus to new energy ones will be Yuan 80,000 ($11,057) for every vehicle in 2025, compared to Yuan 60,000 in 2024. Within this, the subsidy for replacing power batteries will be unchanged from 2024 at Yuan 42,000 for every vehicle, the statement showed.

This will continue to boost the consumption of battery metals and the recycling of metals in 2025, despite lithium salts prices lingering at low levels pressured by increasing supply, industry participants monitoring the market said.

The government at all levels can independently determine the subsidy standards for upgrading city buses and replacing power batteries, according to the demand and quantity ratio of updating.

The subsidy funds for the renewal of city buses and power batteries are shared by the central finance and local finance in accordance with the 90:10 ratio, with the specific sharing ratio being determined by region. Among them, the eastern provinces are shared in 85:15 ratio, the central provinces in 90:10 ratio and the western provinces in 95:5 ratio.

China has allocated Yuan 300 billion ultra-long-term special national debt funds to support the trade-ins for consumer goods and Yuan 200 billion to boost equipment upgrade in 2025, compared to a total of Yuan 300 billion on consumer goods trade-ins and equipment renewals in 2024.

Lithium chemicals prices

Despite the expected growth in domestic NEV sales and lithium-ion battery demand, the outlook on Chinese lithium carbonate market remained depressed due to pressure by supply surplus, market sources said.

Platts, part of S&P Global Commodity Insights, assessed battery-grade lithium carbonate at Yuan 74,500/mt March 19 on a delivered, duty-paid China basis, unchanged week over week but down Yuan 1,600/mt from a month ago.

On the demand side, the long-term contracts and the volume of customer-supplied materials were able to meet production needs, resulting in less liquidity in spot market.

The spot price of lithium carbonate is expected to fluctuate within a range in the short term and market participants are closely tracking the demand from downstream cathode materials manufacturers in April, sources said.