Rise In Key Input Metals Sends EV Prices Up in China

Leading China-based EV manufacturers, that have sprouted to take advantage of the world’s largest EV market, have surprised potential customers with price hikes in recent weeks. The hikes come as a surprise to many people who have taken a drop in battery prices, which account for almost 40-50% of EV costs, for granted. As it turns out, it is the battery prices that have created a challenge for manufacturers no longer willing to absorb rising costs.

Companies ranging from BYD, Li Auto, SAIC-GM-Wuling  and Tesla are among the big names which have hiked prices.  The hikes have ranged from 5% to 12% for now, but there is no guarantee that more hikes will not follow, as seen with Tesla in the past year.

CATL, China, and the world’s largest EV battery maker with its Lithium Ion giga factories, has increased prices twice in 2021, and at least one more price increase is on its way, perhaps as early as April itself, thanks to the wild gyrations seen in the price of Cobalt, Nickel and Lithium.

Lithium carbonate prices have touched highs of over 500,000 yuan per tonne before correcting somewhat, levels that are 5x to 6x the levels existing at the same time last year.

Challenges in China will have their repurcussions around the world, as the country dominates overall lithium market. A quick end to the Russia-Ukraine conflict seems to be the only trigger that could help somewhat, by cooling down prices for nickel at least.  Nickel prices continue to trade at double the levels of last year.

With more and more battery gigafactories coming up outside China, including CATL’s massive plant in Berlin, proximity of these supplies will only help marginally in controlling the runaway price rise that looms for the EV industry. A price rise at a time when elevated oil prices have created a huge opportunity for a faster transition would be a massive blow to the sector worldwide.