New energy vehicles “叒” going up in price, is this why?

According to incomplete statistics, since this year, there have been more than 20 car companies nearly 50 new energy models have announced price increases. Why do new energy vehicles rise in price? Come and listen to the sea sister say well -

As prices go up, so do sales

On March 15, BYD Auto officially issued a statement saying that due to the continued sharp rise in raw material prices, BYD Auto will adjust the official guidance prices of related new energy models of Dynasty and Ocean network by 3,000 to 6,000 yuan.

This is the second time BYD has announced price increases since 2022. On January 21, BYD officially announced that it would adjust the official guidance price of and Haiyang related new energy models by 1,000 to 7,000 yuan starting from February 1.

Byd’s second price increase in two months is not uncommon in the new-energy vehicle market. The standard range version of Tesla’s Model Y went up by about 15,000 yuan in March, after rising by about 21,000 yuan on Dec. 31. Ideal Auto raised the price of its “Ideal ONE” by 11,800 yuan from April 1. Xiaopeng, Nezha, SAIC Roewe and other car companies have also announced price increases.

Not only car companies, new energy battery manufacturers have also dynamically adjusted the prices of some battery products due to the sharp rise in upstream raw material prices.

Hai Mei noticed that while prices have been rising, sales of new energy vehicles have also maintained a growth trend. Popular models such as BYD’s Yuan Plus and IdealOne are still in hot demand. Looking at the latest data, in March, the production and sales of new energy vehicles respectively reached 465,000 and 484,000, an increase of 1.1 times year-on-year.

In recent years, China’s new energy vehicle industry has developed rapidly with increasing consumer acceptance. The production and sales of new energy vehicles have ranked first in the world for seven consecutive years. “The development of China’s new energy vehicle industry has entered a new stage of large-scale and rapid development. Although the development still faces some difficulties and challenges, it is expected to maintain rapid growth this year,” Xin Guobin, vice minister of Industry and information technology, said earlier.


A staff member inspects new energy vehicles at Kaiyi Auto’s smart factory in Sanjiang New Area, Yibin city, Sichuan province. Photo by Wang Yu (People’s Vision)

Rising raw material prices are being passed on to vehicles

In the car market, price reduction over the years is the mainstream, why this time new energy vehicles have risen in price?

From the major car companies issued a price statement can be found, raw material prices are transmitted to the vehicle is the main reason.

The components of new energy vehicles are highly dependent on raw materials. The price of lithium carbonate, a key raw material for power batteries, a core component of new-energy vehicles, has soared since last year. According to public market data, the price of battery-grade lithium carbonate has risen from 68,000 yuan/ton at the beginning of last year to about 500,000 yuan/ton today, an eight-fold increase. Although the actual transaction price of lithium carbonate may not reach the maximum market price due to manufacturers’ pre-stocking and other reasons, the cost premium is still substantial.

The production expansion cycle of raw materials is long, which makes it difficult to reduce the rising cost of automobile enterprises in the short term, and then forms a general market situation of rising prices. “It is understood that the cycle of power battery expansion usually takes six to eight months, raw material expansion takes one and a half years, lithium mining and other mining needs two and a half to three years. The capacity of raw materials can not be brought up all at once, and it is still relatively lagging behind.” China Association of Automobile Manufacturers deputy chief engineer Xu Haidong said.

In this case, the imbalance between supply and demand further drives up car prices. Looking at the demand side first, domestic sales of new energy vehicles grew rapidly from 1.367 million in 2020 to 3.521 million in 2021, nearly quadrupling. On the supply side, raw materials and power batteries are in short supply. A sudden increase in sales would result in tight supply of chips and new-energy batteries, driving up prices.

At the same time, with the growing maturity of the new energy vehicle market, the subsidy policy is gradually declining. In 2022, the subsidy standard for new energy vehicles decreased by 30% on the basis of 2021, which also led to the price increase of new energy vehicles to a certain extent.

We will take a combination of measures to stabilize costs and prices

How to control the sharp price rise of raw materials, and then stabilize the cost and price of new energy vehicles?

“Rising raw material prices are a challenge for the industry to overcome.” Byd officials told Hai Mei, “We suggest a comprehensive review of lithium carbonate resource layout and production capacity, increase domestic mining and foreign imports, maintain market supply and demand, stable price expectations, promote the healthy and safe development of the industry.”

Accelerate the improvement of power battery recycling system. It is understood that the current power battery recycling system is constantly improving, power battery recycling treatment, the formation of cathode materials technology is also constantly improving. Experts pointed out that with the strengthening of China’s whole-life traceability management of power batteries and the continuous improvement and standardization of the recycling system, the level of resource recycling and efficient utilization will continue to improve, which will help release more lithium carbonate capacity, improve the supply and push the price back to normal.

After the price hike began, Haimei noticed a phenomenon: on a used car platform, orders for new energy vehicles were being sold as high as 3,000 yuan or even 10,000 yuan. Reselling and ordering indexes have disturbed the market order to a certain extent. In this regard, many car companies have implemented real-name order system and do not support private transfer.

Xin Guobin said that the Ministry of Industry and Information Technology will pay close attention to research and clear new energy vehicle car purchase tax preferential extension and other support policies, promote the integration of electric and intelligent network technology development, start the public domain vehicle comprehensive electric city pilot, accelerate the construction of charging infrastructure, and moderately accelerate the development of domestic lithium resources. At the same time, we will improve the recycling and utilization system of power batteries, support technical breakthroughs such as efficient disassembly and recycling, and constantly improve the recycling ratio and resource utilization efficiency.

Post time: Aug-16-2022


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