Why Fitch Sees Price Hikes In China Hitting Low-End EV Makers More

Ratings agency Fitch said on Monday that the recent price hikes are likely to affect China’s low-end electric vehicles more than high-end ones as buyers for more affordable vehicles are price sensitive.

What Happened: Fitch said China’s EV market is “bright, given still-strong demand,” and that it expects wholesale EV deliveries to rise by over 50% and their market share to exceed 20% in 2022. 

“Cost pressure for EV manufacturers increased in early 2022, as battery suppliers tried to pass on the surging raw-material costs ... by shifting from an annual to quarterly contract duration,” Fitch said. 

Some Chinese EV makers are expecting vehicle-battery prices to be around 30% higher year-on-year in the second quarter, according to Fitch.

See Also: Tesla, Xpeng, Li Auto, Nio, BYD: How EV Prices Are Looking Like In China With Latest Hikes

Why It Matters: Leading EV makers including Tesla Inc TSLA, Xpeng Inc XPEV, BYD Co BYDDY recently hiked prices in China amid chip shortages and rising raw material costs. 

Tesla’s price hike was the steepest among them. Nio Inc NIO did not raise prices but instead plans to launch a smart hardware upgrade for its models in 2022 and could adjust prices later. 

Prices have also reportedly shot up for Hongguang Mini EV, China’s best-selling budget electric car jointly made by General Motors Co GM and SAIC Motor.

Price Action: Tesla stock closed 0.6% higher at $1,04.6 a share on Friday.

Photo courtesy: Nio Inc