Demand for NEVs is expected to pick up in the second quarter as lithium carbonate prices stabilize, according to analysts at CITIC Securities.
Chinese consumers' wait-and-see sentiment when it comes to buying new energy vehicles (NEVs) is expected to ease significantly in the second quarter, which will facilitate a recovery in demand for the sector, local analysts said.
In the first quarter, China's overall NEV sales growth slowed as demand was overdrawn before subsidies for NEV purchases were withdrawn late last year, coupled with strong consumer wait-and-see sentiment, said CITIC Securities analyst Yuan Jiancong's team in a research note today.
For consumers, the sharp drop in lithium carbonate prices and price cuts by automakers have fueled their wait-and-see, according to the team.
In the second quarter, demand for NEVs is expected to pick up as lithium carbonate prices stabilize, the team said.
China's state subsidy for NEV purchases expired at the end of last year. To take advantage of the subsidy, some consumers who had planned to buy vehicles in 2023 may have advanced their purchase plans, leading to weak NEV sales in the first quarter.
Retail NEV sales in China were about 1.32 million units in the first quarter, up 23.72 percent year-on-year, but down 26.62 percent from the fourth quarter, according to the China Passenger Car Association (CPCA).
In addition to the withdrawal of subsidies, the price of lithium carbonate, a key raw material for batteries, has continued to fall since the end of last year, with some electric vehicle companies beginning to cut prices and subsequently seeing a price war across the auto industry.
As of April 21, the price of battery-grade lithium carbonate had not seen a single-day gain this year, falling 65 percent from the beginning of the year.
After that, the price of lithium carbonate has largely stabilized, and as of today, battery grade lithium carbonate has risen for the eighth day in a row.
($1 = RMB 6.9266)