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 (NASDAQ: TSLA), Xpeng Inc (NYSE: XPEV), BYD Co (OTC: 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 (NYSE: 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 (NYSE: GM) and SAIC Motor.

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

Photo courtesy: Nio Inc