EDITOR: | January 14th, 2020 | 1 Comment

EV sales rebound in China, electric car makers rally on the no significant subsidy decrease in 2020

| January 14, 2020 | 1 Comment
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After a tough H2 2019 it now appears the EV slowdown is over. The US-China trade war Phase 1 deal agreed to in mid December 2019 appears to have been the catalyst for electric vehicle (EV) buyers to have confidence to buy EVs again.

China EV sales in December 2019 were about double November 2019

Chinese New Energy Vehicle (NEV) sales were recently reported to be 163,000 in December 2019, which is sharply up from November 2019 sales of 83,000. In fact, it is a 96% increase month on month.

Given the trade war Phase 1 deal was announced on December 13, 2019, it appears that the renewed confidence has helped December 2019 China NEV sales already.

China suggests no significant subsidy decreases in 2020

On January 11, 2020, Reuters reported: “China will not cut NEV subsidies in July 2020 – Minister of Industry and Information Technology Miao Wei said on Saturday.

A later Bloomberg report confirmed the news stating:

Electric car stocks jump as China signals lull in subsidy cuts….. In order to stabilize market expectations, and ensure the industry’s sustained development, subsidies on new-energy vehicles will stay relatively stable this year, and they won’t be scaled back significantly.”

Electric car makers rally on the no significant subsidy decrease in 2020 news

As a result of these two great pieces of news last weekend, EV related stocks have been rallying sharply. Chinese EV manufacturers rose 10% (limit up) in China yesterday following the news and are mostly rallying again today. BYD Co. (OTC: BYDDY | OTC: BYDDF), China’s number 1 EV seller in 2019 and global number 2, has rallied about 15% the past two trading sessions. Last month BYD Co announced a Netherlands order for 259 pure-electric BYD buses. This was Europe’s largest ever electric bus order. NIO Inc. (NIO) also rose 5.4% on the news.

BYD is leading the EV charge after a record e-bus sale in December 2019

Tesla’s stock passes US$ 500 a share for the first time

Tesla’s (NASDAQ: TSLA) stock price jumped 9.77% yesterday on the news with the stock hitting a new all time high of US$ 524.86, breaking through the US$ 500 mark for the first time. Tesla has just recently begun production and sales of Model 3 from its Shanghai factory. The hype has been so great that one buyer proposed to his girlfriend by giving her a Tesla Model 3. Naturally, she said ‘yes’ to the proposal. I am not sure if that was a yes to the Model 3 or to getting married?

A Tesla employee proposes during the delivery ceremony of their Model 3

EV metal miners also rally on the news

The EV related miners (lithium, cobalt, graphite & nickel) have also rallied strongly on the recent good news. Some such as Galaxy Resources Limited (ASX: GXY) and Syrah Resources Limited (ASX: SYR) are up over 50% in the past month after suffering large falls in 2018 and 2019. Across the board, the lithium miners surged this week on the China news. Lithium leaders such as Albemarle rose 5.2% yesterday, while SQM rose 8.7%. Even nickel giant Norilsk Nickel (OTC: NILSY) rose 3.8% on the news after already rising 94% in the past year helped by the palladium boom.

Closing remarks

A combination of recent events such as the US-China Phase 1 trade war deal, the December 2019 China EV sales rebound, and last weekend’s Chinese news that subsidies ‘will stay relatively stable this year’ have all conspired to restore confidence to the EV related market. This has led to a surge in EV related stock prices. But don’t worry in most cases the 2018 and 2019 EV metals downturn has meant many EV metal miners are still relatively cheap, especially given the EV boom decade has just begun.


Matthew Bohlsen

Editor:

Matthew Bohlsen is a Senior Editor for InvestorIntel.com. With a Graduate Diploma in Applied Finance and Investment, and a Graduate Diploma in Financial Planning. He ... <Read more about Matthew Bohlsen>


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Comments

  • Mike Hirschberger

    Good call Matt. I believe in my survey of analysts, you were the only one who consistently pegged the Chinese lull in NEV sales to the US/China Trade imbroglio; And EV and EV metal stocks were long oversold and a relief rally was waiting in the wings for a long time.
    However, as fickle as Trumps policies are, I would look for other confirming signs before going ballistic on the upside. There remains a large swath of Junior EV metals companies, esp in the Cobalt space, that need funding to survive, A shake out in this sectors still remains high on the risk side.

    January 15, 2020 - 10:24 AM

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