China's new energy car sales soar in June, signaling robust near-term demand

China's new energy passenger car production and sales continued at a record pace in June, a trend which is expected to remain strong over the coming months, industry sources told S&P Global Commodity Insights.

China's wholesale new energy passenger cars sales reached 571,000 units in June, rising 141.4% year on year and 35.3% month on month, according to data released by the China Passenger Car Association, or CPCA, July 8.

New energy passenger cars are hybrid and pure electric vehicles. EVs delivered to big car showrooms are considered as wholesale sales.

Meanwhile, China's passenger car retail sales reached 1.94 million units in June, increasing 22.6% year on year and 43.5% month on month, CPCA data showed.

Production recovery following the pandemic and government policies were among the key factors that boosted June vehicle sales, the CPCA said.

China's passenger car production in July may see a year-on-year increase of about 20%, as output at domestic automakers rebounds, according to the association.

China Association of Automobile Manufacturers, another major automobile industry body, said it was confident that China's NEV sales would likely hit the target of 5 million units in 2022, up 47% from a year ago.

S&P Global has estimated China's EV sales to reach 6.4 million units in 2022, more than double from 2021 levels. Some industry sources also expect similar volumes of China's NEV sales at about 6 million units this year.

Lithium prices

As EV sales are expected to remain robust, it would lead to elevated domestic lithium chemicals prices, sources said.

The Chinese domestic lithium market was little changed in the week ended July 8, with sources saying that demand recovery was still below expectations. However, lithium prices remain at record highs.

Battery-grade lithium carbonate was assessed at Yuan 470,100/mt ($70,128/mt) July 8 on a delivered, duty-paid China basis, stable on the day but down Yuan 4,900/mt on the week, according to the Platts assessment from S&P Global.

Lithium hydroxide and carbonate prices diverged on varying downstream demand from nickel-manganese-cobalt, or NMC, and lithium iron phosphate, or LFP, battery markets.

Demand for NMC batteries, one of the many types of batteries deployed in EVs, remained weaker than LFP batteries despite bullish demand and a recovery in the overall Chinese EV market. Demand for other battery applications also saw a similar trend to the NMC version.

Battery-grade lithium hydroxide was assessed at Yuan 460,100/mt, unchanged on the day but down Yuan 4,900/mt on the week.