Surge in Chinese electric vehicle sales bodes well for battered local lithium miners

Electric vehicle sales in China rose 58 per cent year-on-year in April, a positive sign for struggling WA lithium miners with the battery commodity’s price running low on juice.

The April sales figures are 2 per cent higher than March’s numbers and takes the total year-to-date EV purchase growth in the Middle Kingdom to 51 per cent.

Retail discounts have driven the speedy growth, according to Morgan Stanley, but there could be headwinds on the horizon.

“Our China Autos team remain watchful for signs of sub-seasonal demand turning into a broader price war as order intake moderates,” Morgan Stanley stated.

“They note the Shanghai Auto Show last month failed to impress as some key EV launches had already occurred, and some highly anticipated models were absent with launch dates now in June or July.”

Prices of the spodumene concentrate produced by WA miners to power electric vehicle batteries are yet to show signs of improvement.

The prevailing price is currently $US665 a tonne, according to Shanghai Metals Market, down about $US150/t in the space of a month and continuing a broad decline over the past two years.

A rapid rise in lithium mine output from African countries like Zimbabwe, Rwanda and Nigeria has partly fuelled the supply glut.

Morgan Stanley believes there is still pain ahead but prices should improve to $US1330/t by 2030.

“Our commodities team have a balanced view and see upside capped as the cost curve moves lower, driven by cost cutting and supply growth coming through,” it stated.

“We think prolonged prices below levels required to support new projects could impact supply modelled to come online over the next few years.”