Korea’s domestic NEV sales rose 22.1% month on month to 93,722 units in June, while combined BEV, HEV and PHEV exports increased 23.3% to 102,551 units. HEVs accounted for about 78% of incremental growth in both markets. BEV volumes also posted double-digit gains, but their share declined as HEVs expanded faster, highlighting a gap between overall vehicle-market recovery and the pace of BEV-led electrification.

[In June, China's NEV sales were about 1.643 million units, up 23.6% YoY, with a penetration rate of about 58.5% for the month] In June, China's NEV sales were about 1.643 million units, up 23.6% YoY, with a penetration rate of about 58.5% for the month. Of which, domestic sales were about 1.12 million units, up 6.7% MoM but down 0.4% YoY. Of which, domestic sales of passenger NEVs were about 1.007 million units, up 6.3% MoM but down 4.5% YoY; domestic sales of new energy commercial vehicles were 113,000 units, up 9.9% MoM and up 61% YoY. In exports, NEV exports in June were about 523,000 units, up 17.2% MoM and up 1.6x YoY. Of which, passenger NEV exports were 510,000 units, up 17.3% MoM and up 1.6x YoY; exports of new energy commercial vehicles were 13,000 units, up 11.8% MoM and up 60.9% YoY.

In the first half of 2026, the new energy commercial vehicle (NECV) sector truly took off. According to CAAM data, China's NECV sales reached 548,000 units in H1 2026, up 36% YoY . Domestic sales accounted for 495,000 units, up 40%, while exports reached 53,000 units, up 8% . The strength in domestic sales can be attributed to two main factors: supportive policies and declining costs . On the policy front, the "two new" initiatives continued to support the scrappage of commercial vehicles with China IV emission standards or below, replacing them with low-emission models, with priority given to electric vehicles. Subsidies for new NECV purchases can reach up to RMB 140,000 per vehicle, and in some regions, this can be stacked to as high as RMB 220,000 per vehicle, substantially shortening the payback period for the price gap between electric and diesel vehicles. On the cost side, with oil prices remaining high this year, the cost advantage of electricity over diesel has become evident . Electric commercial vehicles can save approximately RMB 0.8 per kilometer in energy costs, translating into RMB 80,000 in annual savings for a vehicle travelling 100,000 km per year. In addition, declining battery prices, along with the growing maturity of battery swapping and leasing models, have significantly narrowed the initial purchase price gap between NECVs and their internal combustion engine counterparts. With both policy support and cost improvements in place, the penetration rate of NECVs has climbed steadily. In May, the penetration rate of NECVs in domestic sales reached 40%, up 15 percentage points from the same period last year. Among these, heavy-duty trucks stood out as the brightest spot, with cumulative domestic sales reaching 126,200 units in H1 2026, up 85% year-on-year . The "Implementation Plan for Promoting the Large-Scale Application of New Energy Heavy-Duty Trucks," jointly issued by the Ministry of Transport and other departments, sets clear targets: a penetration rate of 40% and a total stock of 1.6 million units by 2030, providing a clear growth trajectory for the segment. NECV exports have also progressed steadily. In May, the export penetration rate of NECVs exceeded 10% for the first time . Although its share in total commercial vehicle exports remains relatively small, the strategic significance of exports is evident amid increasingly fierce domestic competition. China is deepening its presence in traditional markets such as Asia-Pacific, South America, and Africa, while also breaking into higher-standard markets like Turkey, Australia, and Germany. Chinese commercial vehicles are gradually transitioning from a cost-effective positioning to one defined by high technological sophistication. With domestic NEV sales contracting by 13% year-on-year in H1 2026, and pressure on domestic sales likely to persist, the NECV sector still represents a blue ocean. SMM projects that the ratio of passenger to commercial vehicles in China's NEV market will be approximately 91:9 in 2026, shifting to 87:13 by 2030 . While passenger vehicles will remain the dominant segment, commercial vehicles have higher battery capacities per vehicle, which will meaningfully support long-term demand for upstream battery materials, particularly lithium iron phosphate. In terms of battery capacity, commercial vehicles are also seeing significant gains. In May, the average battery capacity of new energy buses and trucks both exceeded 210 kWh, compared with around 180 kWh in the same period last year. The rise in the share of heavy-duty trucks has been a key factor—the current average battery capacity for new energy heavy-duty trucks has already reached 460 kWh . Looking ahead, as heavy-duty truck penetration continues to increase, the average battery capacity per new energy truck is expected to exceed 300 kWh by 2030. From a global perspective, SMM estimates that in 2026, ICE vehicles will still account for 77.5% of the commercial vehicle market, while NEVs will take a 22.5% share, within which BEVs and PHEVs will account for 17.4% and 5.1%, respectively . BEVs have become the mainstream in NECVs for simple reasons: commercial vehicle operators prioritize per-kilometer costs, and pure electric operation is far cheaper than diesel. Heavy-duty trucks and buses tend to operate on fixed routes, making them ideal for battery swapping solutions, while policy support also favors BEVs. In the long run, BEVs are set to maintain their dominant position in the NECV sector .

According to data released by CAAM, China's total automobile sales in June reached 2.81 million units, but were down 3.2% YoY. However, the NEV market performed impressively, with sales reaching 1.643 million units, up 23.6% YoY. Export side, June automobile exports reached 1.037 million units, up 75.1% YoY; notably, NEV exports were particularly outstanding, reaching 523,000 units, up 1.6 times YoY.

From a supply-demand balance perspective, China's lithium carbonate market exhibited a tight balance in H1 2026, with sellers and buyers continuously seeking new equilibrium points amid bargaining.

In the second half of last year, ahead of the halving of the NEV purchase tax rebate, ternary cathode orders climbed steadily, hitting record highs month after month. At that time, the market generally expected ternary demand growth for 2026 to be within 10%. But the actual results for the first half of this year came in much stronger. According to SMM, domestic ternary cathode production reached 493,000 metric tons in H1 2026, up 40% YoY, while global ternary cathode output reached 611,500 metric tons, up 24% . Meanwhile, CAAM data shows that NEV sales in China (including exports) reached 7.445 million units in H1 2026, up only 7% YoY, with domestic sales actually contracting by 13%. Given such modest growth in vehicle sales, where did the strong performance of ternary cathode come from? The answer lies in two key factors: a rising share of premium vehicle models and a rapid increase in battery capacity per vehicle . The halving of the purchase tax rebate has had a greater impact on low-priced vehicles. For A00-class models priced under RMB 50,000, the exemption was a major selling point—now, buyers face an additional tax payment of several thousand yuan, significantly eroding their cost advantage. In contrast, for mid-to-high-end models priced between RMB 200,000 and 300,000, the RMB 15,000 rebate cap still covers most of the tax, so the actual cost increase perceived by consumers is limited . At the same time, trade-in subsidy rules shifted from a fixed-amount structure to a tiered system based on the new vehicle price—higher-priced purchases yield subsidies closer to the cap, effectively steering consumer demand toward the premium segment . As a result, the share of B-segment, C-segment, and SUVs in China's NEV passenger car mix rose from 68.3% in 2025 to 73.6% in H1 2026—and these are precisely the models that predominantly use ternary battery cells. The rising share of premium models also directly lifted average battery capacity per vehicle . In May, the average battery capacity of BEV passenger cars reached 62 kWh, up 11% year-on-year, while PHEV passenger cars reached 37 kWh, up 37%. While automakers have been proactively increasing battery sizes to meet market demand, the more significant driver has been the compositional shift toward premium vehicles. This explains the apparent paradox: vehicle sales growth has been moderate, yet cathode material demand has surged—the key lies in the increase in battery capacity per unit . Overseas markets also contributed to the growth. European NEV sales rose approximately 30% year-on-year in the first half of the year, supported by local subsidy policies, high oil prices that favor NEVs, and the aggressive expansion of Chinese brands. Given that ternary batteries still account for more than 60% of Europe's NEV passenger car market , leading battery manufacturers serving the European market—such as CATL, EVE, AESC, and LGES—have maintained high procurement volumes of ternary cathode materials from China this year. Another notable feature of this year's production schedule has been its atypical seasonal pattern, largely influenced by raw material price volatility and policy shifts. On the raw material front, pricing between domestic ternary battery manufacturers and cathode producers is generally settled using a M-1 month metal price mechanism. This gives battery makers a strong incentive to build inventories ahead of anticipated price increases . For instance, in January, the SMM average monthly price of lithium hydroxide (coarse grains) surged to RMB 147,100 per ton, but the settlement price referenced the December price of RMB 88,800 per ton. This translated into a cost saving of more than RMB 26,000 per ton of cathode material, which is why production remained robust even during a traditionally slow month. A similar pattern played out in May, when the monthly average lithium hydroxide price rose by about RMB 20,000 per ton from the previous month, prompting another wave of restocking and driving cathode orders beyond expectations. On the policy side, the most significant impact came from the removal of the VAT rebate on ternary cathode exports, which pulled a large volume of export orders forward into Q1, breaking the typical seasonal slowdown. Domestic production in Q1 reached 236,000 metric tons, up 47% YoY. Notably, after the rebate was officially withdrawn, overseas orders did not drop sharply—Q2 still posted 34% YoY growth. This resilience can be attributed to two factors: first, overseas battery makers remain heavily reliant on Chinese cathode suppliers , who offer clear advantages in product quality, stable mass-production capabilities, and cost, making it difficult to switch suppliers in the short term. Second, overseas end-market demand remains solid , with popular models in Europe (Volkswagen ID series, BMW Neue Klasse, Renault, Hyundai IONIQ series, Tesla, etc.) and key models in Japan and Korea (Toyota, Hyundai, Kia, Tesla, etc.) continuing to rely on ternary chemistries. With order books full and procurement needs urgent, customers have little room to qualify new suppliers, which has only reinforced existing partnerships. Looking ahead to the second half of the year, the upcoming removal of the VAT rebate on lithium battery exports next year is expected to bring some orders forward into 2026. However, the market has already priced this in, and battery manufacturers have ample time to plan their inventory strategies, so a concentrated surge similar to the one seen ahead of the ternary rebate cancellation is unlikely. The purchase tax rebate will remain at the halved level next year and will not be fully phased out until the year after, so there is no additional pull-forward effect for Q4 2026. With orders already exceeding expectations in the first half and battery makers continuing to build inventories, the traditional "Golden September-Silver October" peak may be less pronounced this year. Still, seasonal patterns persist, and the market's inherent restocking momentum remains, so Q4 still warrants attention. SMM currently forecasts: 1.02 million metric tons of domestic ternary cathode production for 2026, up 24% year-on-year; 240,000 metric tons overseas, down 2%; and a global total of 1.26 million metric tons, up 18% .