context: Lithium prices rose nearly 74 percent from 1 Jan to 18 Mar 2022, imposing huge cost pressures on the NEV (new energy vehicle) industry via battery price hikes. The industry is also about to face subsidy withdrawal.

Sales of new energy passenger vehicles reached 445,000 units in March 2022, up nearly 140 percent compared to the same month in 2020, per data released by CPCA (China Passenger Car Association). As the fuel car market is quite blocked due to the pandemic and high oil prices, the NEV’s market penetration rate in China has increased significantly, writes 21st Century Business Herald. More people are choosing to buy new energy passenger cars to avoid public transport during the pandemic, so the NEV market continued to grow strongly in April, comments Cui Dongshu 崔东树 CPCA secretary-general.

The wholesale market penetration rate of NEV manufacturers in March 2022 was 25 percent, up almost 15 percent y-o-y, CPCA data show. Independent Chinese NEV companies are showing especially strong market competitiveness and are in a leading position in the industry. For independent enterprises’ vehicle sales, NEV market penetration grew more than 40 percent in March 2022; NEV market penetration by luxury vehicle brands is lower, accounting for less than 5 percent of mainstream JV brands, Herald reports.

Since March 2022, more than 20 domestic NEV companies announced price increases in response to imminent subsidy withdrawal and the rising prices of nickel, lithium and other battery materials. However, the NEVs’ market penetration rate has not yet been impacted for four main reasons, according to CPCA analysis: many vehicle orders were placed before prices increased; high oil prices are driving consumers towards NEVs; NEV consumers are not overly price-sensitive; rising NEV prices tend to drive indecisive consumers to place orders earlier.