Thursday, 12 January 2017

Lithium Race Goes Exponential: More Electric Cars Are Sold In China Than In The Rest Of The World Combined.




Reuters reports from the grounds of The Centre of The Lithium Universe. More electric cars are sold in China than in the rest of the world combined! I will not open the very big secret telling you that these cars are not the best in the world yet and sales are driven by the government subsidies, but just imagine what will happen when really best electric cars will be sold at the prices below $30k ... then in a couple of years below $20k? A BMW 2-type car with much better performance, cheaper and with 10% of the running cost of ownership? Multiply it on the opportunity provided by the largest auto market in the world and state level fight for the survival gasping for the fresh air literally. Then just make a few calculations related to coming California Style ZEV mandates...  


We have the major catalyst in the making in China right now. The whole country is leapfrogging into the 21st century with The New Energy Plan. Implications will be very far reaching and Lithium Market is just one of the signs of things to come when bottlenecks in the supply chains are reflecting the returned appetite from the Dragon. This Lithium Race is going into the exponential part of the S-curve now.


Lithium Race: China Electric Cars Sales Going Exponential - Up 56% With Record 43,441 In November.






We have just discussed the BMI Lithium Index showing that lithium prices are strengthening again. Now you know why it is happening. BMI Lithium Index is weighted by volumes of Lithium Carbonate and Lithium Hydroxide and gives you the real picture of the supply chain for high-tech applications like batteries. Lithium Hydroxide is used to make cells for the lithium batteries like Tesla is using made by Panasonic now. International Lithium's Strategic partner Ganfeng Lithium supplies Panasonic and BYD among many other battery makers in the Electric Car space. Now you have the picture ...

BYD backed by Warren Buffet is solidly in the lead in the lithium race in China this year. All in all new record of 43,441 electric cars sold in China in November must be put in the perspective. It took GM 7 years to sell 100,000 Chevy Volts from 2009! Two BYD electric cars are leading the sales in China: BYD Tang with 29,895 and BYD Qin with 21,047 units sold respectively. BYD has 4 of its EVs among the top-selling electric cars in China with BYD e6 18,077 and BY e5 13,219 sold by the end of November. And now we can see what I was talking all this year about. China is the Centre of the Lithium Universe now. BYD already sold 92,375 electric cars by December 2016! What took GM 7 years, will be done by BYD in China in just 1 year. 

We also have a very healthy new dynamic in China EVs sales now: Zotye Cloud EV is taking the first place in sales in November with 5,024 units, followed by Geely Emgrand / Dorsett EV with 3,799. Actually, BYD is not among top 5 best selling electric cars in China in November at all. We have the emerging competition in the EV space when the quality and price metrics will be driving the coming tide. The Switch will happen so much faster than anybody is expecting now. There are 25 companies in China which are making 51 models of electric cars in China now. EV sales in China are going exponential now: up 36% from the last October and 56% year over year, pulling the plug-in market share to a record 1.4%, above the Europe (1.2%) and U.S. (1.1%). 

Now you can better understand what is coming next: China is pushing for Zero Emissions Mandates with EVs reaching 8% of all new cars sales by 2018 and 12% by 2020! The Chinese electric cars market is the largest in the world now and will reach over 350,000 new electric cars in 2016 with total fleet of 650,000 estimated by the year end (The whole world had just 1.3 million on the roads in early 2016), it will be followed by Europe with 630,000 and by the U.S with 560,000. It is very important to note that we are talking here only about electric cars. To be precise EVs include electric buses and other utility vehicles like trucks. We are getting very close to my magic 1 million EVs sold just in 2016 and 2 million units in EV fleet on the world's roads. This is what I call The Switch: last 12 months we have almost doubled the amount of EVs in the world. It took us all our history to make first million of electric cars before 2015 and only 12 months to double that amount now.



Electric rEVolution: BMI Lithium Price Index In December Shows Prices Strengthening.




"I will throw a few numbers just to give you a teaser here. The rest is on this blog for those who are ready to learn. The cost of Lithium in your iPhone is $1 dollar, in Tesla's Lithium battery cost of Lithium is 2-3% in the price of the finished product. We are in a generational shift 2 to 7,000: 2 is the number of the batteries in your father's remote control, more than 7,000 is the number of lithium batteries in Tesla Model S. It takes 63 kg of LCE (Lithium Carbonate Equivalent) to build Tesla Model S 70 kWh battery. Every 1% increase in sales of Electric Cars as part of total auto sales brings new demand for 70,000 t of LCE. Total production last year was 160,000 -180,000 t of LCE. During all our humankind history 1,000,000 EVs were sold before 2015. This year alone we can get 1,000,000 electric cars sold. Worldwide we are still close only to 1% of Electric cars in total auto sales. BYD - EV automaker from China where Warren Buffett is holding a 10% stake, will sell this year 100,000 EVs, it took GM 7 years to sell the same amount 100,000 of GM Volts. China is talking now about California style Zero Emissions Mandate: 8% of all news cars to be electric by 2018 and 12% by 2020. Let's digest it for a minute. With sales of EVs now only above 1% mark, we are talking about the factor of 8X in  ... two years time and 12X increase in the number of electric cars produced in China by 2020! Now Goldman Sachs numbers can be really conservative: they are talking about 3 times increase in Lithium Demand by 2025. I am talking about the total disruption of $12 Trillion industries: 4$ Trillion Transportation and $8 Trillion Energy and Utilities. I am talking about all cars being electric very soon. 

Now you will better appreciate the following fact that International Lithium Strategic Partner Ganfeng Lithium has more than doubled its total sales in 2015 in just 9 months of this year!  We are talking here about Energy rEVolution and Lithium is the magic metal at the very heart of it. Only a few experts, as usual, do really know what they are talking about. Joe Lowry, Chris Berry and Andrew Miller from Simon Moores' Benchmark are taking the floor below.







   And The Switch ... The Switch is the coming tide when literally millions of people will be switching very fast (as fast as all those millions of EVs can be made) to the electric cars. GM Bolt will give us the first taste of what is coming. The first two electric cars priced below $40k and with a range of over 200 Miles will change everything. Tesla Model 3 will start the real flood of affordable electric cars which are just better than anything else at the same price from the ICE age. Despite all headlines about Electric Cars on my blog, 99% of all new cars are still powered by the last century technology of controlled explosions and by burning oil in different compositions while killing us all and our planet at the same time. Do you remember the 90s - The World Before The WWW and Information Revolution? Now we have 21st Century and Energy Revolution: The World Just Before The INTERNET. Read more."
 



Reuters:



By Jake Spring | BEIJING
More electric cars are sold in China than in the rest of the world combined, but are mainly locally-branded models that are cheaper and have a shorter range than those offered by foreign automakers such as Tesla (TSLA.O) and Nissan (7203.T).
The Chinese-branded electric vehicle (EV) market is propped up by huge government subsidies as part of Beijing's policy to build global leadership in cleaner energy driving.
China has spent billions of dollars on subsidies to help companies including Warren Buffett-backed BYD (002594.SZ) (1211.HK) and BAIC Motor (1958.HK) achieve large-scale production of plug-in vehicles, which are gaining traction among urban drivers as well as taxi fleets and government agencies.
Sales of battery electric and plug-in hybrids increased 60 percent in January-November, to 402,000 vehicles. By 2020, China wants 5 million plug-in cars on its roads.
The domestic EVs don't have the 'wow' factor of a fast, longer-range and luxury-style Tesla. They sell on price.
In Shanghai last year, a two-door battery electric Chery eQ cost around 60,000 yuan ($8,655) after subsidies. Without subsidies, the eQ would cost an additional 100,000 yuan or so. At this week's Detroit auto show, General Motors (GM.N) showed off its latest Bolt EV, which costs around $30,000 after a $7,500 federal tax credit.
"EV cars are very cheap (in China), you'll only spend a little money to buy a car. If you just go to work or use an EV in the city, it's OK ... for using within 100 kms (62 miles)," said Xie Chao, who works for a chemical company in Shanghai.
Xie said he has bought three EVs since 2015 - an Anhui Jianghuai Automobile (600418.SS) iEV4, a BAIC EV160 and a Geely Automobile (0175.HK) Emgrand EV - one for him to use, one for his wife and one he rents out.
Most Chinese electric cars come with similar specifications, so price is the deciding factor, said Dawei Zhang, CEO of EVBuy, a dealer. The eQ has been the top seller in recent months, with decent enough quality at a low price, he said.
"It's a transport tool. It's purely for mobility rather than for showing off, having a big car for all the family, or for any technology factors," he added.
Some EV buyers in Beijing and Shanghai said they primarily bought plug-in vehicles to easily get a license plate. Half a dozen of China's biggest cities tightly control license plates for traditional gasoline cars, but freely award plates that can only be used by plug-in vehicles. 
For those set on buying a plug-in, price is key.
"I only considered BYD and BAIC. I definitely can't afford the 300,000-600,000 yuan price of a luxury-style Tesla or Denza," said Qu Lijian, a 31-year-old government worker in Beijing, who eventually opted for a BYD Qin pure electric car.
Denza is a Chinese brand produced by a joint venture between BYD and Daimler (DAIGn.DE).
SUBSIDY SLOWDOWN
China's cocktail of pro-electric policies is a challenge for global automakers, as foreign manufacturers can access subsidies only via joint ventures with local partners, producing cars under new made-for-China brand names such as Denza. 
But those brands lack the cachet of established foreign marques, and cost more than most local brands even after subsidies.
That's in part because Chinese automakers are more aggressive in lowering their costs regardless of quality, said an executive at a multinational auto parts firm.
"The lowest price wins (the contract). That's the process, no questions asked," said the executive, who declined to be identified to avoid impacting future contract bidding. 
"And when you win, they come back and ask you for another price reduction," the executive added, noting less stringent safety regulations in China also help keep costs lower than in the United States.
The version of the Leaf that Nissan's joint venture with Dongfeng Automobile (600006.SS) offers in China, under the Venucia brand, "isn't selling very well," Nissan's global chief Carlos Ghosn told Reuters in November. Chinese EV buyers don't want to spend much more than $8,000, after incentives, and the Nissan vehicle is too expensive, Ghosn said.
The playing field for foreign brands in China should, though, gradually even out as subsidies are phased out by 2020.
This year, subsidies have been reduced by a fifth, likely adding about 15,000 yuan to the price of a Chery eQ, though official 2017 subsidies for individual models aren't yet clear, notes EVBuy.
Local EV manufacturers have, with the help of subsidies, been able to build economies of scale, pushing down their cost per unit and allowing them to spend more on research and development, Li Yunfei, BYD's deputy chief of branding and public relations, told Reuters.
"By 2020, China will have no subsidies, but your scale has expanded, your costs have come down, and you'll be able to hit a price that consumers can accept," he said.
While China has grabbed early-mover advantage, global automakers plan to quickly ramp up their plug-in offerings in the world's biggest market. GM's local joint venture, for example, promises to spend 26.5 billion yuan ($3.8 billion) on electrification and developing 10 "new energy" models by 2020.
It won't be one-way traffic.
Chinese brands such as GAC Motor and BYD are looking to advance on global rivals' home turf.
GAC Motor, part of Guangzhou Automobile Group (601238.SS), debuted its pure electric GE3 sport utility vehicle, among other models, at the Detroit show on Monday. A spokeswoman told Reuters that the company plans to enter the United States by 2019, delaying from an initial target of 2017, without further explanation.
Shenzhen-based BYD already sells its electric buses in Africa, Europe and South America and has a factory in the United States. The company is preparing "on all fronts" to enter foreign passenger car markets, Li said, without elaborating.
"Because Chinese companies have this large Chinese market, when they have big enough scale and their power grows, their products improve and they increasingly understand foreign markets," he said.
"In the future, they will definitely take the world stage. The potential is huge."
(Reporting by Jake Spring, with additional reporting by Joseph White in DETROIT; Editing by Ian Geoghegan)"