Runaway raw material costs are fueling a “ridiculous” increase in the price of batteries for electric vehicles (EV), said Li Auto Inc (理想汽車) chief executive Li Xiang (李想), who took to social media in China late on Saturday to offer a rare insight into EV makers’ pain.
“The cost of batteries in the second quarter rose by a very ridiculous amount,” Li said on his official Sina Weibo (微博) account.
EV makers that have not raised prices yet are probably going to have to once their battery suppliers start charging more, he added.
Photo: AP
Li’s comments came after automakers in China from Tesla Inc to BYD Co (比亞迪) increased the prices of their vehicles.
Xpeng Inc (小鵬汽車) also hiked costs last week, saying in a note to customers that it would increase the price of its EVs by between 10,100 yuan and 20,000 yuan (US$1,587 and US$3,143).
Automakers in China, the world’s biggest EV market, are trying to lure more customers just as government subsidies for cleaner vehicles fall away. Combustion engine cars, still made by the likes of BYD and Geely Automobile Holdings Ltd (吉利汽車), are also facing higher running costs due to soaring oil prices.
Contemporary Amperex Technology Co Ltd (CATL, 新能源科技), the world’s largest battery maker, has noted the higher commodity costs, saying they are putting pressure on cell and automakers alike.
“The surge of upstream raw materials has caused certain pressure on downstream segments of the industry chain, including carmakers and battery makers,” a CATL spokesman said. “We adhere to the principle of providing customers with high-quality products while maintaining a reasonable level of profit.”
Smaller EV maker WM Motor Technology Co (威馬汽車) also cited raw materials prices and supplier constraints for its increases of between 7,000 yuan and 26,000 yuan after subsidies, according to a Sina Weibo post last week. Those hikes start on March 28.
Li Auto gets its batteries from CATL, as does WM Motor, among other suppliers, according to Bloomberg Intelligence.
Meanwhile, the Chinese government is telling its EV battery supply chain that it wants lithium prices to return to sustainable levels.
The government last week called in a range of market participants — from lithium producers to the main automakers’ association — to discuss “a rational return” for lithium prices, a statement from the Chinese Ministry of Industry and Information Technology said late on Friday.
Lithium has soared nearly 500 percent in the past year, adding to cost pressures for EV producers.
The seminar on Wednesday and Thursday last week was aimed at discussing surging costs and promoting what the ministry called the healthy development of the new-energy vehicle and battery sectors. It also addressed supply bottlenecks, how lithium is priced, as well as measures to steady prices and secure supply.
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