The explosive growth of new energy vehicle (NEV) sales in China is expected to push up demand for lithium batteries and lithium products over the next few years, analysts say.
Over the past two years, the government released a slew of measures to promote the burgeoning sector, including subsidies, tax cuts and favorable number plate allocation.
Driven by the incentives, output and sales of NEVs climbed 131.4 percent and 134.1 percent to 132,000 and 126,000 in the first five months of this year, according to China Association of Automobile Manufacturers.
Wang Chuanfu, president of BYD, told Xinhua that the NEV sector has seen rapid growth since the latter half of last year, resulting in higher demand for lithium resources and a surge in lithium prices.
In 2015, the average price for lithium carbonate used in batteries surged 41 percent from a year earlier, data from the China Non-Ferrous Metal Association showed.
A guideline for the sector released last November forecast that China will have more than 5 million NEVs by 2020, with more than 4.3 million being electric cars.
Duan Dongping, head of Qinghai Lithium Industry Alliance, said prices of lithium products will continue to climb as lithium production is unlikely to develop at the same rate as NEV growth.