Highlights for Jan: 1) Upstream: Softened lithium price in a calm market; 2) Midstream: Power battery installation and production volume growth slowed down in China reopening; and 3) Downstream: Demand overdraft worries are overdone; AITO, Leapmotor and XPeng followed Tesla’s price cuts, but BYD is unlikely to do so in the near term, in our view.
Demand overdraft worries are overdone. Despite that we expect Jan wholesales to decline 50% MoM to c.407k units, the wholesales volume in our view, is likely to pick up in the coming months as the recovery of foot traffic after CNY are better-than-expected, according to our channel checks. Autohome ask orders of PV market increased 9% MoM in Jan (vs. 3-year median MoM change of -10%), which is against the seasonality and reflect more optimistic consumer sentiment. Moreover, nearly 20 provinces and cities have introduced stimulus measures (see exhibit 10) with visibilities at least into 1Q23 (i.e. Shanghai has extended the NEV replacement subsidies till 2Q), which could also boost the NEV sales.
