In a development that could hit Australian lithium, nickel and copper producers, China’s huge car making industry – conventional and NEVs (New Energy vehicles) – is being forced to close as Covid wreaks havoc across more and more of the country.
The number of car factories closing or cutting production is rising gathering closure of Chinese car making, including EVs because of the rising Covid toll.
Not only has Covid in Shanghai forced Tesla to shut its huge factory, but Volkswagen has suspended output as well as has large Chinese producer Nio which revealed its decision on its mobile app on the weekend
“Since March, due to reasons to do with the epidemic, the company’s supplier partners in several places including Jilin, Shanghai and Jiangsu suspended production one after the other and have yet to recover,” the company said on its mobile app.
“Due to the impact of this Nio has had to halt car production.”
The company said it will postpone deliveries of the EVs to users and will work together with the suppliers to strive for resumption while meeting the government’s COVID curbs. the company lifted March quarter sales by 29% to more than 25,700.
Tesla has suspended production at its Shanghai plant since March 28, after the city started a two-staged lockdown which was later expanded citywide and was originally supposed to be lifted on April 5 but has been extended indefinitely.
Volkswagen’s joint venture plant with FAW Group in Changchun, the provincial capital of Jilin, has been shut since mid-March, while its plant in Shanghai with SAIC Motor has been closed since April 1.
Car sales last month fell because of the rising lockdowns and factory closure and early April has seen the situation worsen considerably.
The China Association of Automobile Manufacturers release data showing car sales declined by 11% year-on-year to 2.25 million units in March, shifting from an 18.7% rise in the year to February.
This was the first drop in three months (and the lowest monthly total for six month) and was due to the growing Covid cases and associated lockdowns.
For the first three months of the year, auto sales in China edged up 0.5% from the same period of 2021 to 6.52 million units. That’s a sharply slowing in growth from the 7.5% rise in total sales in January and February.
The Association did not provide a breakdown between sales of convention (international combustion engine models) and NEVs but analysts said the size of the fall means sales of both fell.
Given that the closures have accelerated in April analysts are already forecasting a very weak April for sale sales and production, and May as well.
Australian producers of renewable minerals for EV and battery use and their investors should be aware of the changing outlook which could very well prick the current price boom, especially for lithium.
The rising number of Covid cases and the inability of the Government to control them – let alone enforce President Xi Jinping’s Covid ‘zero’ policy – has seen massive lockdowns across dozens of Chinese cities and towns led by Shanghai, the centre of the country’s finance, business and much of its manufacturing.
On Saturday Shanghai reported 1,015 confirmed and 22,609 asymptomatic domestically transmitted COVID-19 cases on the day, a new record. and the third day in a row case numbers have topped 20,000 in total. The 23,624 is almost three times the 8,000 symptomatic and asymptomatic cases reported Sunday, April 3.
Shanghai’s outbreak has easily topped 130,000 cases in total, far exceeding the approximately 50,000 symptomatic cases recorded in the original Wuhan outbreak as of mid-April 2020 – two years ago.
This has seen three leading conventional and NEV manufacturers forced to suspend production at a cost of tens of thousands of lost sales and hundreds of millions of dollars in revenue, including exports from Tesla.
The rapidly growing Covid infections has forced all of Shanghai to close as well as more and more other cities – some cities and towns in Jilin province, a major car making centre, have been hit since early March.
On Saturday Guangzhou, capital of South China’s huge Guangdong Province, launched citywide anti – Covid efforts restrictions and testing after a handful of cases appeared on Friday and Saturday. its the third time in a year the cit and province have reported infections.
