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According to the report of Jiwei Network, it is obvious to all that although the automotive supply chain in 2021 has suffered from the epidemic and chip shortage, the competitiveness of global electric vehicles is rising. This year, compared with 2020, sales of electric vehicles in China increased by 158%, Europe increased by 65%, and the United States increased by nearly 100%. The industry generally believes that the "electric vehicle era" is coming ahead of schedule.
But it also needs to be confronted, in 2021, the automotive supply chain has emerged some new problems, the most critical of which is the rise in raw material prices, and more and more electric models in 2022 began to "increase prices". The reason behind this is "short supply": the production and sales of new energy vehicles have increased significantly, the supply of power batteries is in short supply, and the supply of raw materials transmitted to the upstream is tight. On the other hand, or as previously expected, the escalation of the Conflict between Russia and Ukraine may exacerbate the original supply chain pressure, and the "All in Electrification" road will add "black swans", and global automakers will be more "struggling".
Behind the price increase of electric vehicles, it refers to the rise of raw materials for power batteries
Gong Min, head of automotive research at UBS China, pointed out earlier this year that "in the past year, global electric vehicles have exceeded expectations, including the impact of supply chain disruption due to the epidemic and the recovery of demand in Europe and the United States." We can see that there is a shortage of chips, but the shortage of chips is a temporary phenomenon, and the problem that may be more durable than the chip shortage is the rise in the price of raw materials, which is both the traditional steel plate, iron, aluminum, copper, and the rise in the price of rare metals used in fuel vehicles. But more sustained than these are actually the materials of electric vehicles, including battery materials, including lithium, cobalt, and the rise of various materials. ”
According to UBS's calculations, compared with 2020, a fuel vehicle in 2021 actually rose by about 5,000 yuan, and if the battery of an electric vehicle is counted, the cost of each car has increased by more than 10,000 yuan. This will have a big impact and may lead to a full price increase for electric vehicles.
On the market side, this impact has been seen in late 2021 and early 2022.
In November 2021, Tesla raised the price of the domestic Model 3 rear-wheel drive version by 15,000 yuan to 250,900 yuan, and then raised it to 255,652 yuan again less than a week later, and on the last day of 2021, Tesla raised its price by 10,000 yuan, a total increase of nearly 30,000 yuan. At the same time, the rear-wheel drive version of the Model Y also increased in price by 21,088 yuan, and the starting price rose to 301,840 yuan, so that all Model Y models no longer enjoy national new energy subsidies.
Coincidentally, at the beginning of 2022, the official announcement of price increases by major car companies: GAC Ande Security Department increased prices by 4,000 to 14,000 yuan; Xiaopeng Automobile increased prices by 4,300 to 5,900 yuan; BYD's Dynasty and Ocean series models rose by 1,000 to 7,000 yuan; Wuling officially confirmed that the price of NanoEV rose by 3,000 yuan...
The above is only a part, Nezha, Feifan, Zero Run, Chery New Energy, Ford, etc. have also adjusted the prices of some of their models.
Speaking of the rise in prices, in the announcements of some car companies, they pointed out the "shortage of chips", "the price of raw materials for power batteries" and "the decline of national new energy policies".
But as mentioned above, "chip shortage is a temporary phenomenon", as for subsidies, Gong Min believes that for the Chinese market, it can now be said that it is basically free of dependence on subsidies. Moreover, in 2021, the automotive industry is also under the pressure of lack of cores and subsidies, but compared with 2022, there are few price increases.
This also seems to indicate that the crazy rise in the price of raw materials for power batteries or the main reason for car companies to raise the price of electric vehicles.
For example, as of March 9, 2022, the data of Xinzhu lithium battery shows that battery-grade lithium carbonate (an important raw material for power batteries) has risen to more than 510,000 yuan per ton, while in 2020, the price of battery-grade lithium carbonate at a low level was only 38,000 yuan / ton, and the price rose to 50,000 yuan / ton in January 2021, which can be seen to have doubled by more than 10 times.
Power batteries have always been the "Achilles heel" on the road to the development of electric vehicles. At present, the development of new energy vehicles is too fast, and the demand for batteries is rising, but the production capacity is obviously insufficient, so the raw materials for power batteries are bound to rise.
Raw material rise superimposed subsidies decline, electric vehicles price reduction is difficult?
When does the price fall back?
Of course, this depends on "when supply and demand are balanced".
On the demand side, the process of global electrification is still accelerating, so the demand for power batteries will double. Upstream manufacturers of raw materials have also continued to "bind" supply agreements with car companies to increase investment, but the construction of production capacity requires a cycle, and most of them will not be put into production until after 2023.
For example, Australian lithium miner Core Lithium said the first lithium ore is expected to start production in the fourth quarter of 2022 under the terms of the contract, with supplies scheduled to begin supplying to Tesla in the second half of 2023. Liontown Resources, another Australian lithium miner, also said that under the agreement, starting in 2024, Tesla will purchase 100,000 dry metric tons of spodumene concentrate in the first year. Many domestic enterprises also choose to go overseas to open mines, including Ningde Times, Ganfeng Lithium, Tianqi Lithium, etc. are buying mines around the world.
Image source: CleanTechnica
This shows that from the perspective of supply and demand, global lithium supply is difficult to alleviate in the past two years. Battery costs increase, superimposed on the full cancellation of subsidies in 2023, the market price of domestic electric vehicles may be difficult to decline.
Cui Dongshu, secretary general of the Association, also said yesterday: "The rise in raw material prices has indeed brought a greater impact on the new energy vehicle market, but the current terminal consumer demand for new energy vehicles has not changed. Therefore, short-term price fluctuations will not have a significant impact on the sales target of 5.5 million units this year. However, the price increase in the upstream is bound to affect the profitability of new energy vehicle companies, and it is expected that the days of new energy vehicle companies will be more difficult this year. ”
This is also a common problem facing the global automotive industry. According to consulting firms LMC and J.D. Power, in February 2022, the average transaction price of a new car in the U.S. was $4.446 million, up 18.5 percent from the same period last year.
The soaring cost of raw materials under the Russian-Ukrainian conflict, the electric vehicle supply chain "worse"?
Now, geopolitics will increase the pressure on these car companies, the escalation of the situation in Russia and Ukraine may bring about the rise of raw materials for power batteries, and is pushing up the price of other automotive metals.
Reuters reported that the Russian-Ukrainian conflict is driving up the price of automotive metals, from nickel for electric vehicle batteries, to aluminum in car bodies, to palladium in catalytic converters, and consumers may have to pay for it.
While the metals sector has yet to be the target of Western sanctions against Russia, some shipping companies and parts suppliers have begun to steer clear of Russian goods, putting more pressure on automakers already struggling with chip shortages and rising energy prices.
It is reported that Russia is the world's leading exporter of aluminum, nickel, palladium and platinum. Lu Shengyun, a partner at Artefact and a strategic consultant of Zero Idea Technology, told Jiwei Network that Russia has its own advantages in new energy raw materials, and now or because of Western sanctions against Russia, the export of raw materials such as nickel and aluminum may eventually be transmitted to the supply chain of electric vehicles.
For example, the price of nickel, known as "demon nickel", the metal used to produce stainless steel, surged further by 100% on Tuesday after surging about 70% on Monday, breaking through $100,000 per ton, a record high.
Nickel is also an important raw material for power batteries, and automakers have been fighting with nickel prices. Caspar Rawles, chief data officer at Benchmark Mineral Intelligence, a specialist consultancy, said that while Russia produces 5 percent of the world's nickel, it supplies about 20 percent of the world's high-purity nickel. "This is becoming a major concern in the battery supply chain, as lithium prices have now hit record highs and cobalt and nickel prices are also very, very high," Caspar Rawles noted. ”
In addition, Russia is the world's second largest producer of aluminum, accounting for 6% of global aluminum production. Andreas Weller, ceo of Aludyne, which makes aluminum and magnesium die castings for automakers, said aluminum costs for its European operations had risen by 60 percent over the past four months, as well as energy bills. The company's annual sales are only $1.2 billion, and now the cost has soared to "hundreds of millions of dollars." Andreas Weller said he had to ask automakers to pay a higher price than the already agreed selling price. "Some companies will understand our request for a price increase because we really can't survive without a price increase."
What happens next? Carlos Tavares, CEO of Stellantis, the world's fourth-largest automaker, said in an interview with the media, "First and foremost, rising raw material and energy costs will put more pressure on our business model." ”
Before the rise in raw material prices, automakers and consumers were already suffering from a crisis of lack of cores. Carlos Tavares said the end of the chip shortage could help automakers offset the impact of rising metal and energy prices, but he doesn't expect the lack of cores to be resolved this year either.
Indeed, at present, the balance of supply and demand of automotive chips may wait until after 2022. Han Xiaomin, general manager of Jiwei Consulting, said that the tension of car core shortage began in the second half of 2021, in the case of smooth ideals, in the second half of last year, chip manufacturers began to adjust the production line for the automotive industry, and this part of the production capacity was released to the second and third quarters of this year, which did not consider uncertainties such as equipment and upstream material shortages, as well as the surge in demand for chips such as intelligent and electrified chips, so the lack of core in automobiles was really alleviated, and the production capacity currently under construction was released.
Write at the end
At present, it seems that a variety of factors are superimposed, and the rise in the price of electric vehicles this year has become a boat. In recent years, the imbalance between supply and demand has led to soaring prices of nickel, lithium and other important raw materials for making electric vehicles, coupled with the emergence of increasing uncertainties, which could frustrate automakers' dreams of cutting costs and launching affordable electric vehicles.
It is worth vigilance that some analysts believe that the price increase will affect the acceptance of electric vehicles, and consumers are resistant to overpaying for electric vehicles. They argue that it will take longer than expected for automakers to achieve cost parity between electric vehicles and conventional fuel vehicles, and more critically, any factor that increases costs will affect or even hinder the acceptance of electric vehicles.
Of course, this needs to be further observed, but it needs to be pointed out that in the development and growth of the industry itself and the external ups and downs, the electric vehicle supply chain also needs to be further improved and consolidated.
(Proofreading/Jimmy)