China's government
subsidy program
drove the adoption
of electric vehicles.
We know the
Chinese economy
is suffering from
the President Trump
trade war.
But it barely shows
in their manipulated
GDP numbers.
There are other indicators
that reveal problems.
This is one of them.
The China Association
of Automobile
Manufacturers (CAAM)
said demand for
electric vehicles
was weakening.
They then made
a bizarre claim:
That was why the
government was
pulling back it's
electric vehicle
subsidy program.
The subsidies
were to spur growth
of an industry
beyond what normal
consumer demand
would have done.
That was working
until the trade war
reduction in
global trade,
and roughly
a 10% decline
in the value of the
Chinese currency
versus the U.S. dollar.
So you might expect
higher subsidies now,
not lower, if the goal
remained the same.
But the government
decided to save money
And the result
was very predictable.
CAAM
reported
sales of
electric vehicles
plunged 45%
in October,
and warned the
electric car market
would deteriorate
through 2020.
September battery
demand plunged,
as orders collapsed,
from decareased
electric car demand.
Batteries sold fell from
10% for Contemporary
Amperex Technology
Co., to 71% for BYD.
"Weak
demand
in China
(for EVs)
is expected
to continue,
and there's
still uncertainty
in the U.S. market,"
SNE Research said.
The EV subsidy
hit battery makers
very hard.
They already
had issues
in late 2018,
from the trade war,
which started the
downward pressure
on spot lithium prices.
The chart below
shows that
spot lithium prices
plunged 37%
since the second
half of 2018
And that
tells us more
about the
Chinese
economy
than their
phony, always
"rounded up",
GDP numbers.
