More than 20 electric vehicle manufacturers operating in China have bumped up prices this year on their leading models, forced by the soaring costs of raw materials used in batteries.
“The rise in battery costs has gone off the rails,” said the head of a promising EV startup in a social media post on March 19.
Li Xiang, CEO of Li Auto, explained why the company hiked the price of its Li One sport utility vehicle on Friday to RMB 349,800 (USD 54,950), up RMB 11,800.
He was not alone. Big-name EV manufacturer BYD raised prices on its flagship Dynasty series in February and March. Tesla, which makes the Model 3 and Model Y in Shanghai, has done the same for both vehicles on multiple occasions since the end of last year.
Even SAIC-GM-Wuling Automobile, the maker of the low-priced RMB 28,800 Hongguang Mini, has pushed up the EV’s sticker tag by more than 10%. The joint venture increased prices for multiple models on March 24.
The main reason is batteries, which account for about one-third of EV costs. CATL, the world’s largest supplier of batteries, has increased prices twice since late 2021, according to Chinese media.
CATL has released details of the higher battery prices, but it is reported the hikes have boosted the cost of single EVs by RMB 20,000 (USD 3,143).
Rising prices for nickel and lithium, two key raw battery materials, are responsible for the upward trajectory. In China, lithium carbonate traded above RMB 500,000 per ton at one point in early March, according to a Chinese research firm, about six times more than a year earlier. Nickel prices also continued to soar in March.
Chinese government officials are expressing concern over the surging costs.
“We are very concerned about the big increases in battery material prices; serious efforts must be made to address them,” said Xin Guobin, a vice minister at the Ministry of Industry and Information Technology, during an industry forum held in Beijing on March 26.
“Serious steps will be taken against anti-competitive practices such as speculative trading,” Xin added. “We’ll push for the return of critical raw material prices to reasonable levels.”
But there will be no quick fix to the problem, as raw material supplies are not keeping up with the growing demand for EVs.
Some industry players predict it will take at least a few months for battery material price gains to stabilize. Others say it may take as long as two or three years. EV makers could be forced to increase prices further, even if that means losing customers.