On the face of it, the January New Energy Vehicle (NEV) sales figures from China were always going to see a slide after most purchase subsidies ended on December 31.
And indeed the January sales by BYD, the industry leader in China, did fall – but not as badly as some forecasts had predicted.
This is good news for lithium producers here and in South America.
While we haven’t had data from Tesla, other Chinese makers led by BYD say their January sales fell from December, but were much higher than in January 2022.
This week, BYD reported sales numbers for the first month of the year. The world’s second largest maker of battery-electric vehicles did well, selling 150,164 passenger vehicles, including 71,338 battery-electric vehicles and 78,826 plug-in hybrid vehicles.
The January numbers were down 35.6% compared with December’s when BYD sold 235,197 units – and all due to the ending of most purchase subsidies.
But they were up 62.4% from 93,168 units in January, 2022.
Other EV makers saw similar drops to start the year. EV sales from NIO, XPeng and Li Auto all slid – down a combined 40% to 28,865 units in total.
Investors knew January weakness was coming. While January is a seasonally weak period for car sales the ending of the various government incentives for EV purchases in on December 31 saw a pull forward of deals – that’s why BYD sold more than 200,000 NEVs in each of the final four months of 2022.
Over the past year, BYD sold around 940,000 battery electric vehicles and the rest were plug-ins (with an ICE engine).
Tesla is the world leader but, in China, BYD is about twice its size. BYD sells lower-priced EVs, one way it has managed to capture more market share and it is the world’s second biggest battery maker after Chinese giant CATL.
Tesla cut prices in China in early January, before slashing them in other markets around the world. In his remarks last week following Tesla’s earnings report, CEO Elon Musk said, “We are seeing orders at almost twice the rate of production.”
And Reuters reported on Wednesday that Tesla was planning a big boost to production. Quoting a memo from the Shanghai operation, Reuters said the company planned to boost weekly production to 20,000 units.
Reuters said January’s price cut early last month had had a noticeable effect on boosting demand.
The plant cut production and hours in December to help move a backlog of unsold vehicles which was assisted by two price cuts and an insurance subsidy from the company to buyers.
The Shanghai plant produced 710,865 vehicles in 2022 or 54% of the company’s total global figure of just over 1.31 million. Some of the output is exported into Asia and the Pacific to countries like Australia and NZ, Singapore, India.
Producing an average of nearly 20,000 vehicles a week means monthly production will exceed 80,000, which would be comparable to September 2022, when the plant produced 82,088 Model 3 and Model Y vehicles.
Reuters’ Tesla story appeared the same day as the Shanghai local government said it would continue a $US1,500 purchase subsidy for NEVs. The subsidy started last May during the first lockdowns in the city and was due to end on December 31.
The Shanghai government said this week that the city will promote the consumption of products including cars and home appliances and will renew trade-in subsidies that encourage the purchase of NEVs.
Individual consumers who scrap or transfer their Shanghai-registered vehicles and purchase purely electric vehicles by June 30, 2023, will receive a financial subsidy of 10,000 yuan ($US1,500) per vehicle.
The plan started on February 1 and is valid until December 31 this year.
BYD said this week that it expects its 4th quarter profit to be more than $US1 billion, 10 times more than a year earlier and 17% higher than in the September quarter.
Full year 2022 earnings will be around $US2.3 billion to $US2.5 billion, up more than 400% on 2021.
