Rising raw material prices have led to rising prices for new energy vehicles, and the industry is calling for intervention measures

Experts believe that under cost pressure, battery manufacturers have been forced to raise prices several times, but this situation will not continue.

On March 26, Li Zhen, chairman of Guoxuan High-tech, predicted that "the total demand for raw material batteries for battery manufacturing and the total supply of materials provided by recycled batteries will eventually reach a balance, and this will be basically achieved by 2040."

Li Zhen revealed that with the advancement of technology, the exploitation of domestic lithium mineral resources and the advancement of battery recycling technology, the demand for imported lithium resources will be greatly reduced. It is expected that by 2025, Yichun will be able to develop 500,000 tons of lithium resources, ending China's shortage of lithium resources.

In fact, in order to cope with the rise in raw materials, as early as the beginning of 2021, Zeng Yuqun, chairman of CATL, pointed out that breakthroughs must be made in raw materials, battery manufacturing, operation services and material recycling. Many partners must form an ecological chain in order to truly win in the TWh (terawatt hour) era.

Battery manufacturers represented by CATL have expanded their industrial chains, strengthened upstream and downstream cooperation in the industrial chain, and ensured the stability of raw material supply. Tianyancha shows that CATL has invested in and established two companies, Yichun Times New Energy Resources and Sichuan Times New Energy Resources. In addition, other major battery manufacturers have also continued to accelerate their layout in the upstream industrial chain, including Yiwei Lithium Energy, Guoxuan High-tech, and Honeycomb Energy.

New energy vehicle sales may fluctuate in the short term

Lithium carbonate, as a chemical product of lithium concentrate, is the basis and key component of lithium iron phosphate, which is the positive electrode material of lithium batteries and is part of the composition of lithium batteries. Faced with the rise in lithium carbonate prices, which in turn drives up the price of lithium iron phosphate, new energy vehicle companies have raised the prices of their new vehicles.

Dong Yudong, CEO of Great Wall Motors' Ora brand, said in an interview with the Securities Daily: "The main reason why new energy vehicle companies have raised prices is that the price of lithium iron phosphate is too high. Up to now, the price of lithium iron phosphate is basically close to 500,000 yuan/ton, and the highest price has reached 530,000 yuan/ton, which is 10 times higher than the same period last year."

Dong Yudong explained to reporters that the purchase price of lithium iron phosphate by automakers in the fourth quarter of last year should have been maintained between 300,000 yuan/ton and 400,000 yuan/ton, but now it has basically been consumed. Currently, both battery manufacturers and OEMs are saying that they will raise prices. Among them, the price of lithium iron phosphate has approached 500,000 yuan/ton, which has led to downstream automakers raising prices one after another.

"There is a high probability that the price of new energy vehicles will continue to rise." Dong Yudong said: "Major OEMs and car companies are trying to buy or invest in some mines. The possibility of empowering them in the short term is very small, so the price increase will not last long."

It is worth mentioning that the passenger car market data for February 2022 showed that from January to February this year, the retail sales of new energy passenger cars reached 624,000 units, a year-on-year increase of 153.2%. Among them, pure electric vehicles sold 480,000 units, a year-on-year increase of 131.8%; plug-in hybrid vehicles sold 144,000 units, a year-on-year increase of 265.8%.

According to industry insiders, the increase in raw material prices is partly due to the growth in sales of new energy vehicles. The short-term mismatch in market supply and demand has led to a shortage of raw materials, which will in turn affect the future sales of new energy vehicles.

"New energy vehicle sales in the second quarter may decline compared to the first quarter." Dong Yudong analyzed to reporters: "The price increase of new energy vehicles may lead to short-term fluctuations in the industry. In addition, the first quarter basically delivered orders before the New Year, so compared with the first quarter, new energy vehicle sales in the second quarter may decline.

In Dong Yudong's view, the rise in raw material prices may eliminate some brands with relatively weak integration capabilities. From a long-term development perspective, it is very important for car companies to have vertical integration capabilities for the entire industry chain, including the ability to lock in resources.