In March, production of passenger car in China rebounded to 2.2 million units, up by 5% y/y, with an absolute strong increase compare with the previous month. BEV production was 483 thousand units, 3% y/y, almost same with the output in the middle of the last year, but still 35% less than the peak, at when BEV and PHEV both broke the historical high in December of 2023. PHEV production in March presented stronger market vitality, rebounded to 305-thousand-unit accounting for 87% of the best month.
Just from these three numbers, what can get?
Production. Not surprisingly, China’s automobile production surged rapidly in March. But it is worth noting the rapid growth of plug-in hybrid electric vehicles. The reason is that BYD began to cut prices at the beginning of the year, driving plug-in hybrid electric vehicles to enter the market at low prices and beginning to erode the market share of fuel vehicles. In terms of aluminum consumption, PHEV need more aluminium than BEV. In March, based on NTC calculation, the proportion of aluminum used to produce electric vehicles rose to 11%, even though China aluminium production picked up ahead of general schedule in March. So far, Yunnan smelters almost released 250kt per year, half of planned resumption. China aluminium output reached to almost 3.6Mt, with an increase of 5% y/y and 7% m/m.
Battery demand. Average battery capacity of per PHEV is much than electric cars. Although we saw a significant increase in the number of electric vehicles in March, as the proportion of plug-in hybrids expanded more, the actual demand for electric batteries was slightly lower than during the period of rapid growth of BEV. CRBIR said China power battery production and others was 758Gwh, as a record high, LFP battery output jumped to 51.4GWH, same broke the historical high, which mainly thanks to the rapid expansion of storage battery and exports. However, the installed batteries in March were mere 34.9Gwh.
Raw material. As we mentioned above, the growth of power battery mainly comes from storage battery (LFP material), this’s not second charge battery, compared to power battery, the quality of raw materials they choose is slightly worse.
In next months, what can be clearly foreseen in the coming months are：
1. Production of BEV will rise as well, though the growth of PHEV in H1 may be dramatic, which will bring more vitality to EVs market. At same time, we will see the continued growth of power battery shipments. But considering the restructure of Evs output, we still recommend that anode suppliers not prepare stocks prematurely or significantly improve operations.
2. Before June, smelters in Yunnan will prepare for the complete resumption in rainy season, plus the influence of maintenance and holiday in May, coke and relative material would rise for a short period.