Amidst the fervent 'price wars,' it comes as somewhat of a shock that certain automakers have initiated price increases. Reports indicate that over 15 prominent automakers have collectively revised their prices, with the maximum hike per vehicle reaching RMB 20,000, spanning the mainstream automotive market priced between RMB 100,000 and RMB 300,000.

In early March, Hongmeng Zhixing and Chery spearheaded the price hikes. Subsequently, BYD raised the prices of its intelligent driving option packages for several models by RMB 2,100. Brands such as Changan Qiyuan, Tesla, Xiaomi, and Volkswagen's ID series also adjusted their prices, with increases ranging from RMB 4,000 to RMB 20,000. NIO and XPENG have hinted at price adjustments, stating that new models will witness price surges of RMB 5,000 to RMB 10,000. Meanwhile, brands like Zeekr and Avatr have indirectly raised prices by scaling back on interest-free financing policies. The root cause behind this series of price adjustments is the relentless surge in supply chain costs.

The primary driver of these cost increases is lithium carbonate, the essential raw material for power batteries. Since the year's onset, the price of lithium carbonate has doubled, soaring from RMB 75,000 per ton to nearly RMB 200,000 per ton, marking an increase of over 125%. It's worth noting that power batteries constitute 30% to 50% of the total cost of new energy vehicles, and this price hike alone has added RMB 3,000 to RMB 5,000 to the manufacturing cost per vehicle. Faced with an industry profit margin of merely around 3%, automakers have little choice but to raise prices to stave off losses.

However, the pressure on automakers doesn't stem solely from the lithium carbonate price surge; an even more daunting challenge is the strain on automotive-grade memory chip capacity caused by the AI computing power boom. The burgeoning demand for computing power from AI large models has prompted global memory giants to divert most of their production capacity to the more lucrative AI sector, resulting in a supply-demand imbalance for automotive-grade memory chips and a subsequent price explosion. Within three months, the price of automotive-grade memory chips has skyrocketed by 180%, with the spot price of high-end DDR5 surging by over 300%. This has added RMB 3,000 to RMB 7,000 to the cost per vehicle for models equipped with advanced intelligent driving systems. Meng Qingpeng, Vice President of Supply Chain at Li Auto, even cautioned, 'The automotive industry will confront a memory chip supply crisis in 2026, with a fulfillment rate possibly dipping below 50%.' This implies that in the future, automakers will not only face the risk of 'buying at inflated prices' but also the possibility of 'being unable to procure at all.'

Yet, it's not just lithium carbonate and automotive-grade memory chips that are experiencing relentless price hikes; base metals like copper and aluminum have also quietly joined the fray. Since the year's beginning, aluminum prices have surpassed RMB 25,000 per ton, and copper prices have exceeded RMB 100,000 per ton. The price increases for just aluminum and copper have added roughly RMB 1,800 to the cost per vehicle. The cumulative effect of multiple cost pressures has put the industry's mantra of 'reducing costs and enhancing efficiency' to an unprecedented test.

Simultaneously, the fading of policy incentives is also driving up vehicle purchase costs. Starting from 2026, the purchase tax exemption for new energy vehicles will be adjusted from full exemption to a 50% reduction, with the maximum exemption amount plummeting to RMB 15,000. Taking an electric vehicle priced at RMB 200,000 as an example, the total purchase cost will increase by approximately RMB 9,000. Faced with this additional cost, automakers can either absorb it themselves or pass on the pressure through price hikes. Given that the industry profit margin has already dwindled to around 3%, price increases are likely to be the preferred choice for many companies.

The relentless accumulation of multiple cost pressures has kept the automotive industry's profits under sustained strain. In the first quarter of 2026, the profit margin of the domestic automotive industry plummeted to 3.2%, well below the manufacturing sector's average of 6%. The traditional strategy of automakers relying on economies of scale to distribute costs is no longer tenable.

Since 2026, the nearly two-year-long 'price war' in the new energy vehicle market appears to have hit the pause button. Affected by the soaring costs of lithium carbonate, chips, copper, aluminum, and the reduction of purchase tax incentives, over 15 mainstream automakers have commenced collective price hikes, with the maximum increase per vehicle reaching RMB 20,000. Although the 'price war' hasn't completely ended, a 'wave of price hikes' has quietly arrived. In the short term, the trend of price increases for new energy vehicles is unlikely to reverse, with the direction of vehicle prices in the second half of the year hinging on factors such as raw material market conditions and competitive dynamics.

(Image sourced from the internet. Removal upon infringement)