The Conflict between Russia and Ukraine has caused a "lack of core", and the price increase of new energy vehicles has affected China

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The Global Times reported that the recent rise in domestic oil prices has made fuel vehicle owners cry bitterly, and the "9 yuan era" has made many people no longer dare to shout "95 full" at will. In this case, can the new energy electric vehicles that do not burn oil and only use electricity take advantage of the opportunity to soar in sales? The answer is not so, and the world's electric vehicles are in an embarrassing situation where the cost is rising and forced to raise prices. For some time, due to the situation in Russia and Ukraine and the shortage of chips for more than a year, the world's major electric vehicle manufacturers have raised prices under the pressure of high costs, and China is the world's largest producer of new energy vehicles and the largest consumer market.

"Sell one, lose ten thousand"

"Tesla and SpaceX have recently faced huge inflationary pressures in terms of raw materials and logistics. Tesla CEO Elon Musk posted the above information on his social media on March 13, and around March 13, Tesla made three price increases in the Chinese market.

On March 10, Tesla announced that the sales of the Model 3 high-performance version, model Y high-performance version and long-endurance version in China will each increase by 10,000 yuan. On March 15, the price of the above models was raised again by 18,000 yuan to 20,000 yuan, and the standard endurance of the Model 3 was also increased to 279,900 yuan. On March 17, the Model Y standard endurance version also increased its price by 15,060 yuan to 316,900 yuan.

Domestic new energy vehicle brands have also ushered in a round of price increases, Xiaopeng Motors, BYD, SAIC-GM-Wuling, SAIC Roewe, Great Wall Euler, Geometric Motors, WM Motors, SAIC Volkswagen, etc. have announced price increases, most of which are within 10,000 yuan, and there are also very few products that have risen by more than 10,000 yuan.

But the most eye-catching is the Great Wall's Euler Automobile, the company's CEO Dong Yudong recently admitted that due to the sharp rise in raw material prices, the company's hot-selling model Euler Black Cat "sold one, loss of 10,000" and was forced to stop taking orders. Dong Yudong said in a statement that it is a helpless move to stop taking orders, and the background is the current lack of core and lack of electricity. "Taking black cat as an example, after the sharp rise in raw material prices in 2022, black cats lost more than 10,000 yuan per unit," Dong Yudong said, "The problems encountered by the Euler brand are also the risks faced by the industry."

The rise in the price of electric vehicles has a direct impact on car buyers, especially micro-electric vehicles that are already priced at tens of thousands of yuan. Because SAIC-GM-Wuling has a local factory, Wuling Hongguang MINIEV is one of the most common micro-electric vehicles in Liuzhou, Guangxi, and the recent price increase has made Mr. Lu, a Liuzhou citizen who wanted to buy this car, hesitate. "Originally a car was only 40,000 or 50,000 yuan, and now it has risen by a few thousand yuan, which feels very uneconomical," Mr. Lu said, wanting to buy a micro-electric car itself is just for commuting to work, "it is better to spend nearly 10% more than to continue to ride an electric car."

bottleneck

"(The current new energy vehicles) have not yet increased prices, most of them are that the price increase has not been negotiated, and after the negotiation is completed, the price will generally increase immediately." Ideal Car founder Li Xiang recently publicly stated that "war, politics, and the epidemic have allowed the purchase of cars to appreciate in value, and the overall price of used cars in the United States has risen by 30%."

As Li wants to mention, the price increase of electric vehicles has become a common phenomenon in various countries. In mid-March, Tesla had raised the price of all models in the United States by 4 to 10 percent, and raised prices in other markets, including Japan. In India, Tata Motors, the largest local electric vehicle manufacturer, is also bearing the burden of rising costs. Reuters quoted Shailesh Chandra, managing director of the company's passenger car and electric vehicle subsidiaries, as saying that soaring global raw material prices have led to a 20 percent increase in battery costs, which has put short-term pressure on the company. To address this problem, Tata Motors has raised the price of an electric SUV it sells in India by $300 and plans to offset some of the costs by adding local sourcing in the car manufacturing.

Since last year, the price of raw materials for electric vehicles has begun to rise slowly, and the price of raw materials for power batteries represented by lithium carbonate has risen almost sharply recently. Statistics show that the main raw materials of lithium, cobalt, nickel and other power batteries have seen sharp price increases this year. The comprehensive quotation of the battery-grade lithium carbonate market in March was about 500,000 yuan per ton, while the price of battery-grade lithium carbonate in early 2021 was only 50,000 yuan per ton. At the same time, cobalt prices have also risen from less than 300,000 yuan per ton at the beginning of last year to nearly 600,000 yuan per ton in March this year, nearly doubling.

On the one hand, this reflects the bottleneck faced by the supply of raw materials itself, and on the other hand, the impact of the situation in Russia and Ukraine. Russia is the world's third largest producer of nickel metal, and nickel is the main raw material for the cathode of ternary lithium batteries. As Russia launched a "special military operation" against Ukraine at the end of February, the United States and other Western countries announced sanctions against Russia, which made the market worry that nickel may face a shortage of supply.

At the same time as the price of battery raw materials rises, the problem of "lack of core" is still plaguing global car companies. Recently, STMicroelectronics, a major supplier of in-vehicle microcontrollers in Europe, issued a price increase notice, which will increase the price of all product lines from the second quarter of this year. Speaking of the reasons for the price increase, ST Saidmicroelectronics said that it is mainly due to the continued shortage of some semiconductor components, coupled with the overall economic environment and geopolitical factors on the impact on the industry in the short term is still difficult to alleviate. As the company continues to invest, costs such as materials and logistics have also risen, making it difficult to absorb all costs, so the price of all product lines will be adjusted from the second quarter.

How to resolve

For the current challenges encountered by the electric vehicle industry, Xin Guobin, vice minister of China's Ministry of Industry and Information Technology, said on March 26 that the current sharp price increase in power battery raw materials needs to be highly concerned and seriously studied and solved. We will moderately accelerate the progress of domestic resource development, resolutely crack down on unfair competition such as hoarding and speculation, and guide upstream and downstream enterprises in the industrial chain to strengthen cooperation and win-win development.

Cui Dongshu, secretary general of the China Passenger Transport Association, said in an interview with reporters that unlike the previous comprehensive supervision of thermal coal price speculation, it is difficult to supervise and regulate because some of the key raw material reserves of electric vehicles are overseas. Cui Dongshu said that for environmental protection considerations, some key raw materials for electric vehicles have not been mined on a large scale in China, and relevant departments can consider appropriately relaxing policies in this regard. At the same time, the state can also consider temporarily reducing energy storage projects to avoid competition with the electric vehicle industry for power batteries in this field.

An industry insider in the power battery industry suggested to reporters that the cost pressure of batteries can be resolved in a variety of ways, such as improving battery performance and diversifying suppliers.

For the future price trend of power battery raw materials, CICC recently released a research report that the impact of sanctions on Russia on the global trade map may last longer, the supply chain that has not yet recovered is facing greater challenges, and the local supply chain of key materials may also cause potential demand damage.

However, Cui Dongshu believes that the current price of electric vehicles has risen due to insufficient power battery supply, but in the long run, with the elimination of supply shortage problems and technological progress, the price of electric vehicles will still show a downward trend.

(Source: Global Times)