What the big fish are doing in China The fourth quarter this year is the last season before the NEV subsidies are full cancelled. Coupled with the traditional production rush around the end of the year as well as advanced demand in the first quarter of 2023, the demand should have been revived in the fourth quarter. However, the sales of new energy vehicles seem to have encountered a bottleneck based on the historical data, and is hard to break through the 500,000 mark. And the traditional seasonal high has failed to achieve its glory.
As the industry has been highly optimistic about the NEV market, OEMs and some downstream battery cell companies have built large stocks of raw materials in response to the expected traditional seasonal high. However, when the actual demand has shown signs of weakening momentum, some OEMs are challenged by lack of strong new orders after the delivery of backlog orders, including renowned brands like Tesla and XPeng. Therefore, the OEMs and battery makers, in order to mitigate the risks, have decided to reduce the purchases of raw materials and digest their in-plant stocks first.