Shanghai-based new energy vehicle (NEV) brand WM Motor announced on Wednesday that due to factors including rising parts prices, the production schedule and price of some models will be adjusted from March 1.
Among them, current policies for the firm’s 2022 EX5-Z all-electric SUV models remain unchanged. After comprehensive subsidies, the price of the 2022 EX5-Z PRO will be 154,800 yuan ($24,500), and the price of the EX5-Z Lead version will be 163,800 yuan, an increase of three thousand to four thousand yuan.
In addition to WM Motor, other Chinese new energy vehicle firms including BYD, Xpeng Motors, Hozon Auto and Zeekr have raised prices recently for all or some models. Among them, BYD raised the official guidance price for several new energy vehicles on February 1, 2022, with an increase ranging from one thousand to seven thousand yuan.
The decline of government subsidies for new energy car purchases and the sharp rise in raw materials have become the main reasons for most car companies to adjust prices.
On December 31, 2021, China’s Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Science and Technology and the National Development and Reform Commission jointly issued a notice, making it clear that subsidies for new energy vehicles in 2022 will decline by 30% on the basis of 2021 levels. Among them, subsidies for pure electric vehicles below 300,000 yuan will be reduced by 5,400 yuan, and subsidies for plug-in hybrid vehicles will be reduced by 2,040 yuan.
While policy subsidies are declining, the price of raw materials have risen sharply in the past year and will continue for some time in the future. Many market insiders believe that the sharp rise in raw materials is the biggest driving force for the price rise of new energy vehicles.
For example, lithium carbonate and lithium hydroxide, the main raw materials needed to make power batteries, have increased greatly. As of February 22, 2022, the average spot price of battery-grade lithium carbonate was 470,000 yuan/ton, an increase of 417,000 yuan/ton compared with January last year – nearly eight times as high. The average spot price of battery-grade lithium hydroxide is close to 400,000 yuan/ton, up 350,000 yuan/ton, or nearly seven times higher compared with January last year.
In addition, rising computer chip prices caused by a global industry shortage has further boosted the manufacturing costs for new energy vehicles.