According to industry insiders on Tuesday, prices for key materials and components used in electric vehicles (EVs) including lithium, aluminum, copper and semiconductors, have surged, prompting a series of price hikes by global automakers.
Chinese automaker BYD already raised prices by more than 2,000 yuan for additional driver convenience features on some models in its Dynasty, Ocean and Formula Leopard lineups late last month. Xiaomi also recently raised prices across all trims of its SU7 series by 4,000 yuan, while fellow Chinese EV makers NIO and XPeng plan to increase prices for their major models in the second quarter.
Battery materials, which account for about 30 percent to 50 percent of EV production costs, have risen especially sharply.
According to market research firm Fastmarkets, lithium, a key material for lithium iron phosphate (LFP) batteries used in budget EVs, was priced at US$25.15 per kilogram as of last week, up 212 percent from an average of $8.1 in June last year.
Nickel, another key material used in nickel-cobalt-manganese (NMC) batteries, rose 28.4 percent to $19,017 per metric ton from $14,879 at the end of last year. Higher memory chip prices are also driving up costs. Prices for high-performance automotive DDR and storage memory chips have surged 70 percent to 100 percent since the end of last year.
"Major chipmakers such as Samsung Electronics and SK hynix are prioritizing semiconductor shipments for artificial intelligence (AI) servers for global big tech companies over automotive chips, which offer lower margins and require more rigorous certification processes, worsening overall supply instability," said an industry insider.
"Despite surging demand driven by the rise of autonomous driving, supply remains insufficient, pushing prices sharply higher," he added.
Price increases are becoming more visible in the domestic market. Tesla recently raised prices on some Model Y lines by 4 million won (US$2,700) to 5 million won, following increases in the U.S. Its midsize electric SUV Model Y Long Range AWD rose 4 million won to 63.99 million won from 59.99 million won.
German automaker BMW is also expected to raise prices for some models next month. The increase is likely to be around 1 percent and could affect the 5 Series, X6, i4 and i5.
If temporary tax breaks for EV buyers expire at the end of this year, consumers will have to pay more to buy vehicles, which could weaken demand overall. "Automakers may expand promotions such as zero-interest financing and other discounts, but rapidly rising manufacturing costs are leaving little room for price cuts," another industry insider said.
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