EU Tariffs on Chinese EVs Raises Red Flags, Battery Maker Warns Of Dwindling Demand For Material: 'Short-Term Outlook… Clearly Disappointing'

Umicore, one of the largest producers of battery materials, has warned about a sharp decline in demand for electric vehicle (EV) materials.

What Happened: The Belgium-based company, which supplies materials for EV battery cathodes, has significantly reduced its profit forecast for 2024, according to the Financial Times on Wednesday. CEO Bart Sap stated that volumes for battery materials could be equal to or slightly lower than last year.

Shares in Umicore dropped by 7 cents, hitting a 10-year low. The company attributed the decline to reduced plans by European automakers and unfulfilled expected volumes from a Chinese manufacturer.

“Our short-term outlook in battery materials is clearly disappointing,” Sap said.

Without a one-off €50 million gain related to vehicle recalls, Umicore said its battery materials business would have been lossmaking this year. The company has also cut its capital expenditure plans from over €800 million ($866 million) to no more than €650 million ($704 million).

"Over the past weeks, we started to get signals from our customers," Sap told analysts.

"In the past days, unfortunately, it has become clear that the volumes that we had anticipated, especially for the second half of the year of 2024, will not be materializing."

Global sales of fully electric cars are expected to grow 21% to 12 million units this year, down from a 28% growth rate last year, with Europe experiencing the most significant slowdown, according to consultancy CRU.

See Also: Elon Musk’s Boring Company Is Making A Tunnel At Giga Texas For Transporting Cybertrucks

Why It Matters: The warning from Umicore comes amid broader trends in the automotive and energy sectors. The European Commission recently announced that it would provisionally apply additional duties between 17% to 38% on imported Chinese EVs.

However, according to Wood Mackenzie, global gasoline demand growth is expected to halve by 2024 due to the increasing adoption of EVs in markets like China and the United States. This shift is anticipated to impact refinery margins in the second half of the year.

Despite the rise in EV adoption, a survey by KPMG revealed that many Americans still prefer gasoline vehicles over electric ones, even when prices are comparable. The survey found that only 20% of respondents would choose an EV, while 38% would opt for a standard gas vehicle, and 34% would prefer a hybrid.

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Image: Nerijus jakimavičius from Pixabay

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari

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