Chinese lithium giants Ganfeng and Tianqi warned investors on Tuesday that their profits are plunging by up to 80 percent as the demand for electric vehicle (EV) batteries weakened, producing a glut of lithium that drove prices down.
Ganfeng posted a note to the Hong Kong stock market that said net profits declined by up to 80 percent in 2023 because the “cyclical” nature of the lithium industry, and the “growth rate of demand slowing down,” caused a “significant decrease in the price of lithium-salt products.”
Ganfeng shares fell by five percent in trading after the announcement. Rival lithium supplier Tianqi suffered a 6 percent decline after making a similar announcement of profits slipping by up to 73 percent in 2023.
The South China Morning Post (SCMP) quoted estimates that EV sales are still growing in China, but the pace is down considerably, from 30 percent in 2023 to an estimated 20 percent in 2024.
China currently produces about 58 percent of the world’s battery-powered vehicles. Ganfeng and Tianqi are two of the world’s largest suppliers of lithium products.
Analysts say global demand for lithium is still growing, but not as fast as the supply, resulting in downward pressure on prices until at least 2026.
EV sales slowed around the world in 2023, a trend slowed only by dramatic price cuts from expensive market-leading brands like Tesla and a push to adopt Tesla’s charging port design as the industry standard, a move that would theoretically reduce consumer anxiety about being able to find compatible charging ports on long drives.
Tesla’s competitors are hoping some flashy new models will capture consumer attention, coupled with an industry-wide advertising campaign that almost pretends gas-powered vehicles have ceased to exist.
Some pessimistic analysts doubted these measures would stop EV demand from crashing because early adopters have made their purchases, the general public is increasingly skeptical of EVs, and high prices plus soaring interest rates on auto loans make them unaffordable. Even mighty Tesla is now losing money on every sale by lowering its prices enough to attract reluctant buyers, while competitors like Ford and Audi are dramatically scaling back production of electric vehicles.
Automotive News reported on Wednesday that EV sales are even beginning to fall in California, the national bellwether market for the industry – and a state that plans to outlaw gas-powered vehicles entirely in 11 years.
“EV sales have now fallen for two consecutive quarters in the state, even as California regulators set a 2035 deadline for all new auto registrations to consist of zero-emission vehicles,” Automotive News noted.
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