Chinese Car Makers Struggle With Sharp Rise in Lithium Prices

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Batteries for electric cars have quickly become much more expensive due to the sharp rise in the price of raw materials. As a result, Chinese manufacturers of electric cars, such as Li Auto, are complaining about the “ridiculous” price increase.


Meanwhile, China is asking lithium producers, an important raw material for batteries, to bring prices back to “acceptable levels”.

Lithium has become almost five times more expensive in the past year, partly because the demand from Chinese car manufacturers exceeds the supply. The price increase has, among other things, increased the cost pressure for manufacturers of electric vehicles. This also forces carmakers to raise their prices. “Automakers that have not yet raised their prices will likely have to do so once their battery suppliers start to charge more,” said Li Xiang, chief executive of Li Auto.

Recently, other automakers such as Tesla, BYD and Xpeng also announced that they would increase the prices of their cars. Another problem in the Chinese market is that government subsidies for sustainable vehicles are disappearing. According to CATL, the world’s largest battery manufacturer and a major supplier to Tesla, it is inevitable that the higher raw material costs will be passed on.

Last week, the Chinese government called on some market participants to ease price pressures. Last week’s meeting also made it clear that China is becoming nervous about the continued rise in lithium prices. The talks are also part of Beijing’s wider drive to curb rising commodity prices. Earlier, several manufacturers were also convened for a meeting after the prices of rare-earth metals jumped.

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