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Chinese carmakers at risk of serious injury, raw materials prices cause EV battery prices to rise

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A surge in raw material prices could cause EV battery prices to rise, according to a recent Reuters report.

Battery prices have declined consistently over the past few years, but rising prices of nickel, lithium, and other materials—exacerbated by Russia’s invasion of Ukraine—could halt or even reverse that trend, according to the report.

 “EV” in China is considered the world’s largest EV market. In the past, it was known that the heat continued. With fierce competition from many manufacturers and Chinese government subsidies.

But now, EV makers in China are raising their selling prices universally as a result of rising battery costs Small and mid-range Chinese automakers are at risk of being severely affected.

Nikkei Asia reports that More than 20 EV manufacturers in China raise their prices for EVs. Whether it is a giant EV car company like “Tesla” (Tesla) that gradually increases the selling price of Model 3 and Model Y EVs manufactured and sold in China. Several times since late 2021 until now

Including Chinese EV maker “BYD” (BYD) has also raised prices for the main EV model in the Dynasty Series twice in February and March. while “Xiao Peng” (Xpeng) raised the price of EVs around 10,100-20,000 RMB/vehicle

Mid-range and small-scale EV maker Lee Auto also increased the selling price of its Li-One model by 11,800 yuan to 349,800 yuan, as did SAIC-GM-. Wu Ling, has adjusted the price of the Hong Guang EV model. Mini and other models, about 10%

As CNBC reported that “Great Wall Motors”, a giant Chinese EV manufacturer. Has announced the termination of the sale of EVs brand “Ora” (Ora) 2 models, the Black Cat and the White Cat, due to increased production costs. Especially the Black Cat model, which is at risk of causing damage to the company as much as 10,000 yuan/car if it is still sold at the same price.

However , “Tong Yutong” , CEO of Ora brand. It issued a statement at the end of the month. Last Feb. that “Black Cat and White Cat models just stop accepting orders. but has not stopped production I believe that the problems Ora’s faces are the same risks that the entire industry faces.”

Both models of EVs are at risk of causing enormous damage to the company. with reservations of up to 173,000 units since its launch the situation is a shortage of chips and batteries at the moment As a result, Ora still has about 20,000 vehicles left to deliver, which the company will expedite deliveries as quickly as possible.

“Battery” costs account for one-third of the cost of manufacturing an individual EV, while CATL (CATL), is the world’s largest EV battery manufacturer and manufacturer of its own battery packs. many Chinese cars It has raised battery prices twice since late 2021.

Because the price of key components in battery production like “Lithium Carbonate” traded in prices as high as 500,000 yuan/ton during the month. last Mar. This is about six times higher than in 2021, and the price of “nickel”, another key ingredient, is also highly volatile and highly volatile during the same period.

However, although the manufacturer has raised the price of EVs. But demand for EVs in China remains strong. by car sales “New energy”, which includes EVs in China between Jan.-Feb. 2022, rose about 153.2 percent from the same period last year. According to the data of the China Personal Car Association

Jason Lowe, an analyst at research firm Canalis, said: “Higher EV prices have little impact on consumer demand. Because those who have already decided to buy a car If you do not agree to pay the higher price will change the model or brand in order to get a car that is in line with the existing budget.”

Therefore, smaller EV manufacturers are more vulnerable to impact than large carmakers, said Bill Russo, CEO of investment advisory firm Bill Russo. Automobility Limited states that “mid-and entry-level brands will face more challenges in passing on costs to consumers This group of manufacturers may therefore choose to accept lower profits. or suspend production and distribution of certain products.”

While the big camps are still able to deal with the situation. With a strong battery supply chain such as BYD, which can manufacture its own batteries While Tesla has a factory “Giga Factory” in Shanghai and has good business ties with major battery manufacturers such as CATL.

Xin Guobin, the vice-minister of the Ministry of Industry, said: “Serious action must be taken against counter-competitive acts such as speculative trading. to push back the price of key raw materials in battery production to an appropriate level.”

In addition, the return of the heavy spread of COVID-19 In many cities of China now especially Shanghai also resulted in several EV production plants having to stop during the month. last Mar. And affect the amount of Chinese EV production has decreased. 

This is yet another challenge that Chinese EV automakers will have to face until the situation resolves.

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