Ministry set to stabilize price hikes affecting auto industry

MIIT to help combat rising costs of NEV models brought on by raw material shortages

China's top industry regulator is to help ease price hikes in raw materials used in electric cars that have prompted automakers from Tesla to Changan to raise tag prices of their models.

"We will push their prices back toward the reasonable level as soon as possible," said Luo Junjie, a spokesperson of the Ministry of Industry and Information Technology, at a news conference last week in Beijing.

He said the ministry will help accelerate the development of local resources in China and work with other government departments to crack down on unfair competition activities such as hoarding and speculation.

Luo acknowledged that the booming new energy vehicle sector is being harassed by price hikes in materials including lithium-ion batteries, chip shortages as well as the COVID-19 pandemic.

"The sector's stable operation is facing great pressure that requires all relevant parties to cope with together," he said.

US carmaker Tesla has raised prices for several rounds of its models in both China and the United States since earlier this year, citing rising costs in raw materials.

Tesla CEO Elon Musk said on Thursday that the company is not mulling price rises for the foreseeable future unless the output of lithium and other materials fails to rise and carmakers rush to drive their prices up.

Many Chinese electric vehicle makers including BYD, Ora, Nio and Changan have done so as well, citing the same reason.

Nio, the New York-listed startup, said some of its models, including the ES8 and the ES6, will see their prices go up by 10,000 yuan ($1,546) from May 1. For the ES6, its most popular model, that represents a 2.8 percent rise in price.

Luo said China is scaling up the production of lithium-ion batteries, which topped 82 gigawatt-hours in the first two months of this year.

Specifically, the output of lithium-ion batteries used for power storage and for powering NEVs stood at more than 9 GWh and 30 GWh, respectively.

China now has around 11,000 lithium-ion battery firms, and more than 1,000 were registered in 2021, according to the corporate information provider Tianyancha.

Last year, the industry's total production value exceeded 600 billion yuan, according to the ministry.

Despite the current headwinds, experts and carmakers are optimistic about the prospects of the NEV sector.

Roy Lu, an independent auto analyst in Shanghai, estimates that NEV sales this year would reach at least 4 million units even taking into consideration price hikes and chip shortages. Last year, total deliveries were 3.5 million in China.

The China Association of Automobile Manufacturers expected NEV deliveries this year to reach 5 million units.

In the first quarter, NEV production and sales reached 1.29 million and 1.26 million units respectively, both up 140 percent compared with same period in 2021.

The market share of NEVs accounted for 19.3 percent of the automobile sector, up 11.4 percentage points year-on-year.

Chinese NEV brands have posted a growth of 1.5 times, which is higher than the overall market.

The State Council, China's cabinet, has asked local authorities to make purchasing vehicles easier, especially new energy ones, and to facilitate the building of charging facilities in the country.

Local governments shall not put in place new measures that curb vehicle purchases and those who have done so shall gradually scale up license plate quotas, said the State Council.

The construction of battery swapping and charging infrastructure has been accelerated.

In the first quarter, China set up 492,000 charging piles, up 3.6 times year-on-year; and 154 battery swap stations, up 1.6 times year-on-year.

There were 3.1 million charging piles in China by the end of March, up 73.9 percent from the same period in 2021, according to statistics from the country's charging infrastructure alliance.

Luo at the MIIT said the country will continue to pilot battery swapping technology for electric cars, which will save more time than charging.

A number of carmakers including Nio and Geely have been rolling out models capable of getting their batteries swapped and building battery swap stations.

China's battery maker CATL said it expects to open 30 fast battery swap stations by the end of this year, with the first launched in Xiamen, Fujian province, last week.

Luo said that the government is to take other measures to bolster the sector, saying it is considering if it would extend the preferential purchase tax policy for NEVs.