Lithium, cobalt see limited boost with fresh new-energy vehicle subsidies

SHANGHAI, Feb 14 (SMM) – China’s new subsidy policy on new-energy vehicles is set to give only limited boost to demand for cobalt and lithium as it was within industry expectations, SMM believes.

Effective from February 12 with a transition period until June 11, the new policy sees a decrease in subsidies up to 50%, according to the government notice.

Market participants believed there would be a destocking process for vehicles with 100-200km of continuous driving mileage but those with 300-400km of continuous driving mileage or above would see more production after June.

The new policy shows the government’s support for the development of high-performance vehicles but also suggests some limits on special-purpose vehicles and trucks.

For passenger cars, the reduced subsidies were broadly in line with market expectations since late last year. We believe demand for batteries would only be shown in the typical high season in the fourth quarter.

As car and battery manufacturers are likely to stick to their original production schedule, SMM believes limited impact would be felt for cobalt and lithium prices after Chinese New Year.

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