LITHIUM CONF: Govt push for EV output to shift from subsidies to regulation
Published: Tuesday, 11 June 2019
Government incentives for electric vehicle (EV) production, which up until now have mostly been subsidies, are slowly starting to shift into supportive legislation for the sector, market participants said at Fastmarkets’ 11th Lithium Supply and Markets Conference on Monday June 10.
Regulations on carbon emissions are becoming stricter and will
contribute to the boost in EV production in the coming decades,
sources said, Concurrently, government funding for automakers
is fading away, with the most obvious example being in China,
"Chinese subsidies have so far been equal to or surpassing
production costs, but from next year and going forward, they
will be minimum to none," the chief executive officer for
electrochemical cathode materials producer Pulead Technology
Industry, Yuan Gao, said.
"As EVs move to mass production and while
government’s face fiscal constraints, subsidies
cannot last long outside of China," Adam Panayi, managing
director at research firm Rho Motion, said. "Governments will
have more impact through legislation."
Most EVs producers in China may struggle to make a profit
following the subsidy decline, the lead consultant for ESK
Consulting, Jaime Alée, said. For now, the companies aim
to increase the EV share of the auto market while generating
losses most of the time, Alée added.
The China 6 emission regulation is a clear example of a
government pushing for environmentally friendlier solutions in
the vehicle industry via its legislation. This new legislation
will further cut the maximum carbon and nitrogen oxide
emissions per unit and will be implemented in two phases
– one in July 2020 and the other in July 2023.
"The China 6 requirements are going to be more difficult to
meet than the latest Euro 6, which were already hard," Kevin
Riddell, senior manager for consultancy LMC Automotive, said.
"There’s a focus on lowering emissions all around
the world, which will be nearly impossible to achieve without
"Internal combustion vehicles are at the top of what they can
achieve in emission reduction," Panayi added.
Market participants think EV output will be the main driver of
lithium demand in the coming decades due to the
car’s lithium-ion battery usage. ESK, for example,
estimates lithium consumption will total 382,000 tonnes in
2019, rising to 1 million tonnes in 2025.
This comes at a time when the lithium market has been
correcting downward, following large price spikes over 2017 and
2018 when much excitement surrounded the lithium and battery
raw materials’ markets.
Fastmarkets last assessed the spot price for
battery-grade lithium carbonate (99.5% Li2CO3) imported in
China, Japan and Korea at $11-12.50 per tonne cif on June
6, stable since May 23 but down on the top end of the range
from $11-13 per tonne on May 16.