people always say that capitalism or the invisible hand of...

people always say that capitalism or the invisible hand of supply and demand leads to the most efficient use of resources and state intervention leads to an inefficient use of resources.
well this is what is happening in China. it would seem that the Chinese Communist Party's need to dominate the EV market by using subsidies for car makers has lead to some major inefficiencies in the use of resources.
Clearly they (the subsidies) have resulted in hundreds of start ups arising in the EV market which all needed batteries and lead to a temporary spike in the demand for lithium and a spike in the lithium price.
But now they are finding that by subsidising all these car makers there is now an oversupply of vehicles and they can't sell them all.
Prices are dropping
EV producers can't cover the cost of production and are going broke everywhere.
Then when supply exceeds demand car makers have no alternative but to cut production.
Lower production means fewer batteries, fewer batteries, means less lithium and a lower lithium price..