Good news from China for the global renewable metals sector – demand for EVs (or, as they call them, NEVs) is alive and surviving the Covid lockdowns, while in Europe demand powers onwards.
European auto leader, VW revealed stepped up ambitions on Thursday to become the world’s biggest EV maker in just three years’ time, overtaking Tesla, while BMW is seeing a surge in demand for its luxury EVs and hybrids.
And all those extra sales means extra demand for batteries, for lithium, nickel, copper, cobalt, aluminium, iron ore/steel, tin, PGE metals and rare earths – all the commodities Australia is a major and emerging player.
Get in line Elon Musk.
Despite the weak month, the resilience of demand for electric vehicles in China has been solidly underlined in April.
While China’s overall vehicle sales for April plunged almost 48% from a year ago, sales of electric vehicles held up and led by BYD Chinese brands took share from global rivals.
The news was unexpected amid the gloom for car makers and retailers in China’s current Covid lockdowns.
For lithium miners in Australia and elsewhere, its evidence that fears the industry held of damage to demand and prices, might not happen, or at worst be much less than forecast.
April’s auto production and sales were both around 1.2 million units, a new monthly low for the same period in the last 10 years, the China’s Association of Automobile Manufacturers said
Retail sales of passenger cars alone dropped almost 36% in April.
Overall, vehicle sales in the first four months of 2022 were down 12% from the same period a year earlier in the world’s biggest car market.
But the news for what China calls New Energy Vehicles was much brighter than expected and confirms the underlying demand for EVs is strong.
New energy passenger vehicle sales in April were 280,000 units, up 45% year-on-year. Of this figure, pure electric vehicle sales totalled 212,000 units, up 34.2% year-on-year, and plug-in hybrid sales were 68,000 units, up 94.1% year-on-year.
Overall, China’s NEV production in April was 312,000 units, up 43.9% year-on-year but down 33% from March.
For the January-April period, China’s NEV production was 1.605 million units, up 113.7% year-on-year.
Exports of NEVs in April were 11,000 units, down 53.7% year-on-year and 33.1% from March. That’s mostly due to the absence of Tesla output.
Sales of all vehicles in China were 1.181 million units in April, down 47.6% year-on-year and 47.1% from March, the data showed.
Of these, passenger car sales were 965,000 units, down 43.4% year-on-year and 48.2% less than in March.
Chinese producer, BYD was the biggest winner, posting a 164% jump in sales in the first four months of the year, including April while Tesla was hobbled by supply constraints.
BYD, which also makes EV batteries, accounted for 32% of all batteries installed in electric vehicles in April, trailing CATL, which accounted for 38%
Tesla’s sales plunged 98% in April with exports down to zero, as Shanghai’s lockdown disrupted logistics supplies to its plant.
Reuters reported that Daiwa Capital Markets said in a note this week that it expected major carmakers would “catch up in the coming months to make up for the sales loss in April” with normal production levels in Shanghai this month.
That was also the message from the industry this week.
VW has an important message for the sector – it seems profit margins on DEVs matching those on traditional internal combustion engine (ICE) powered vehicles much faster than previously thought.
VW CEO Herbert Diess said on Thursday:
“We expect that the e-mobility business will be as profitable as the combustion engine business earlier than planned,” Diess said, speaking alongside the rest of the board at the carmaker’s annual meeting.
“Through good crisis management, we are financially robust and have strengthened our resilience.”
Europe’s biggest carmaker had previously expected to match its profit margins from combustion engine vehicles with electric vehicle sales in two to three years.
Now VW is in such a strong financial position it can do it sooner, despite the challenging economic environment. It could be next year, from the tone of the comments, though rising raw material costs will have a major impact on that timing.
Diess wants for Volkswagen to overtake Tesla and become the world’s number-one electric carmaker by 2025, building on its bigger range across luxury and premium cars such as Audi and Porsche, and volume brands like Golf, Skoda and Seat.
Volkswagen delivered some 452,000 battery-electric vehicles globally last year and aims for half of its global output to be all-electric by 2030.
It has plans to build 800,000 fully electric cars worldwide this year and 1.3 million next year.
Prices may need to increase further this year amid rising raw material costs, VW’s procurement chief Murat Aksel said at the meeting.
Diess also told shareholders he thought the timing was ideal for an initial public offering (IPO) of sports carmaker Porsche, which is planned for the fourth quarter of this year (which will help raise billions of euros to help finance the EV future).
Meanwhile, VW’s German luxury car making rival BMW has its own ambitions.
The March quarter saw BMW continue to boost sales of electric vehicles, even as its conventionally powered vehicles experienced softer markets in Europe and China.
BMW said its first quarter sales of electric vehicles (battery and hybrid) surged 27.7% year on the year to 89,669 units, with battery EV sales more than doubling on the year to 35,289 units.
That might be small beer at the moment given the BMW Group delivered 596,907 vehicles to customers in the first quarter of this year.
That was down 6.2% from the all-time record number of deliveries in the first quarter of 2021 – a fall blamed on the continuing shortage key electronic components and large-scale lockdowns in China from late March.
But electric vehicles accounted for 15% of total sales, up from 11% a year ago.
BMW said the BMW iX3 and the MINI Cooper SE were its best-selling EVs in the first quarter, with sales at 11,200 and 8,925 units, respectively.
The company said its BMW i7 luxury sedan, the BMW iX1 and the BMW i3 would expand its BEV range in China over the remainder of this year, though the continuing lockdowns might restrict sales growth.
BMW said BEVs were on track to make up at least 10% of its sales volume in 2022.
BMW sales in 2021 rose 9.2% to a new all-time high of 2,213,795 units. The company more than doubled its sales of fully-electric vehicles in 2021 to 103,855 units (+133.2%). That means this year the company expects that figure to double again.
BMW already has 15 fully electric models in production in 2022, covering around 90% of its current sales segments. The company aims to have more than 2 million BEVs on roads by 2025.
The automaker was upping the pace of its e-mobility ramp up and accelerating the transformation toward sustainable mobility, BMW Group CEO Oliver Zipse said at the results announcement.
BMW is doing well in the booming European market for EVs (both battery and hybrids).
Industry figures say 565,297 new passenger plug-in electric cars were registered in Europe. That’s about 21% of the total volume. Of that figure battery EVs totalled around 320,000, Hybrids, around 110,000.
A breakdown of sales data shows BMW had an 11% share of the European market in March. That was the 4th highest with VW at the top with 17.5%. The two top sellers were the Tesla 3 and Y models and the company leads the year-to-date individual unit sales.
Tesla will sell more this year and next as its big factory near Berlin ramps up. That factory has a nameplate capacity of 500,000 units a year.
As we have just read, VW is looking to overtake Tesla by 2025.