China’s lithium prices are plunging faster than expected this year, down 34% in the last four weeks alone, hit by a slump in demand for electric vehicles in the world’s biggest market that has left stocks of the metal piling up.
Five analysts polled by Reuters last month had expected the price would drop to 300,000 yuan by the end of this year. Now EVs are also facing fierce competition from conventional vehicles after carmakers, including SAIC Volkswagen Automotive Co and Geely Automobile, slashed prices on more than 40 brands ahead of stricter emissions rules taking effect on July 1.
The price war in China’s car market, escalating from EVs to internal-combustion-engine vehicles , will potentially last through the second quarter, and the entire supply chain is likely to share the profit losses this year, said Jing Yang, Director of Asia-Pacific Corporate Research at Fitch Ratings.