New-energy vehicle price hikes: Where do they start, and how far can they go?

Since late April, the automotive market has witnessed a rare phenomenon in recent years: more than a dozen brands have announced price hikes one after another. To date, some 15 brands are said to have joined the trend. In fact, anyone familiar with the market knows that pricing adjustments come in many forms, and some increases are not easily categorized or attributed outright.

Direct price hikes are typical of brands that operate under a direct‑ownership model, while reducing perks, scaling back promotions, or raising prices on optional packages can be considered indirect price increases. In contrast, for non‑direct‑ownership brands, the final retail price at the point of sale is what matters most. Few people pay attention to official price cuts because they’ve already been implemented by the distribution channels; the same logic applies to price increases—official announcements merely formalize outcomes that have already taken effect. By any measure, this round of vehicle price hikes is indeed quite substantial. As for the reasons, the prevailing consensus is that rising costs are to blame. While this explanation certainly holds water, it falls short of being the primary driver and lacks persuasive force.
The prices of supply-chain procurement materials have been fluctuating. Currently, lithium carbonate (a cathode material for batteries) and memory chips have risen in price, but they are far from their peaks. Between 2021 and 2022, chips were extremely hard to come by—not just memory chips, but nearly all types, with prices soaring several-fold, even for the simplest logic chips. Automakers often found themselves unable to secure supplies despite having the funds, prompting many brands to set up dedicated supply‑guarantee teams. Meanwhile, lithium carbonate once surged to 600,000 yuan per ton in 2022, whereas today it’s below 200,000 yuan per ton—a mere drop in the bucket—and is now on a downward trajectory, having fallen below 180,000 yuan. At their respective peaks, automakers refrained from raising prices; yet now, with prices only at about one-third of those highs, they are instead increasing them. This suggests that the stated rationale is not credible.
Right now, the entire automotive industry is struggling to turn a profit—everyone knows it. After two consecutive years of price wars, even without regulatory intervention to halt them, most manufacturers can barely stay afloat; their profit margins have been virtually exhausted. What follows is an awkward truce. Seen this way, regulatory action to stop the price war may actually have provided a way out for many companies. Looking more closely, in the first two months of this year, industry profits were even lower than the one-year LPR rate, with a slight improvement in March and April. If the squeeze on margins is the root cause, why wasn’t the price hike launched in February? In fact, most brands simply lack the financial strength to implement such moves—just as launching a price war requires substantial resources. Today, nearly every brand claims it’s not making money, yet no one has voluntarily cut production (unless inventory builds up and forces them to slow down). And if raising prices means sacrificing market share, no one will do it. These small, incremental price increases must reflect a clear conviction that they won’t erode market share before being rolled out.

Since more than a dozen companies have taken action, there’s naturally some tacit understanding among them. Such collusive behavior—what’s known as an “under‑the‑table cartel”—is strictly prohibited and a key target of the Anti‑Monopoly Law. As for “tacit coordination,” that may indeed exist: they’re waiting for a leading player to make the first move. Judging by the timeline, BYD is most likely that player. On April 28, BYD was the first to officially announce price hikes. With this move, even those who had previously raised prices surreptitiously at dealerships now felt confident. This once again underscores that BYD does wield pricing power in the sub‑RMB 200,000 new‑energy vehicle segment. Although this pricing power is incomplete and lacks strong exclusivity, it nonetheless gives BYD the decisive edge. Everyone worries that if they raise prices first, they’ll become the easy target, allowing competitors to seize market share. Without BYD taking the lead, any price increases are unlikely to gain traction.
It’s easy to see that this round of price hikes has affected only new‑energy brands and new‑energy vehicles. By contrast, gasoline cars have not only avoided increases but are actually seeing price cuts. The current surge in oil prices has dealt the hardest blow to gasoline cars in years, fundamentally altering market dynamics. Just as gasoline vehicles were steadily losing ground under the relentless advance of new‑energy offerings and seemed on the verge of establishing a new defensive line, that “new line” has suddenly begun to crumble, rekindling a downward trend. Market participants now recognize that the supply disruptions triggered by the U.S.–Iran conflict will persist at least through next year. That’s a serious problem: you can call it temporary, but that’s beside the point. Back in the 1970s, during the oil crisis, everyone knew the situation would eventually stabilize—but Japan’s fuel‑efficient cars took off, firmly securing their foothold in the U.S. Even after the crisis ended, the new trends that had taken hold endured. This time is no different.

Previously, we speculated that, under current technological conditions, the market share of new‑energy vehicles in China would not expand indefinitely—but where would that ceiling lie? 60%, 70%, or perhaps 75%? Now it appears that the assumptions underlying those earlier projections are being upended, for two key reasons: oil prices are steadily eroding the economic rationale for purchasing gasoline‑powered cars; and emerging technologies—such as low‑temperature battery charging and discharging, advanced thermal management systems, and new battery chemistries—are steadily pushing new‑energy vehicles northward, enabling them to capture the “Three North” regions, a prospect that once seemed far-fetched. As a result, forecasts for the market’s upper limit have become increasingly uncertain. For the gasoline‑car camp, the sole remaining hope is that China will not, like Norway—a small, sparsely populated market—be almost entirely eclipsed by new‑energy vehicles.
This seesawing of market expectations provides the new‑energy sector with its strongest psychological confidence as it begins to “press the attack.” With the valuation of traditional internal‑combustion‑engine vehicles declining, the practical value of new‑energy vehicles has become even more pronounced. New‑energy brands, too, sense that the time has come for a “rebalancing” of perceived value. At the same time, this suggests that the current offensive is still tentative: if consumers respond positively—especially given the lackluster sales in April—then the test will be deemed successful, paving the way for more brands to join the price‑hike trend, with increases likely to be bolder. That said, manufacturers are unlikely to push prices all the way back to the levels at which Tesla initiated its price cuts in 2023. Regaining much of lost ground would already be a welcome development, offering the prospect of restoring profitability as much as possible. It thus becomes clear that, while cost pressures are not the primary driver behind these price hikes, they remain the ultimate objective.

As for pace and the extent of adjustments, they will still hinge on mutual understanding. All moves will avoid upending the current landscape—namely, profit‑restoration efforts that do not hinge on seizing market share. Should any player push too far, they are likely to face coordinated pullbacks from their rivals. Even BYD cannot afford to act arbitrarily. In other words, even in more ambitious scenarios, price hikes will remain non‑structural. From the consumer’s perspective, they won’t foot the bill for a “cost‑driven narrative.” At the heart of purchasing decisions remains the ability to find viable alternatives at the same price point. The likelihood of OEMs coordinating a “rapid, large‑scale” move is virtually nonexistent. Meanwhile, high‑end vehicles—the 8‑Series and 9‑Series segments currently locked in fierce competition—are largely outside the scope of price increases. They have been excluded because the market share in these niche segments remains uncertain, calling for a cautious approach.
Today, doing OEM in China is clearly less “comfortable” than in other countries. Over the past few years, China has overtaken the United States to become a global low‑cost hub for vehicle pricing—except for ultra‑luxury imported cars. Meanwhile, automakers have long complained that upstream suppliers, especially Tier 1s, are capturing excessive profits. Such grievances are, of course, grounded in reality: in any industry, OEMs traditionally allocate value across the entire supply chain. Yet in the automotive sector, over the past decade—marked by the rise of new energy vehicles—the balance of profit distribution has shifted dramatically, and the trend is now unmistakable. From this perspective, the recent price hikes are not merely about boosting margins; they represent an effort by OEMs to reclaim control over how value is allocated along the supply chain. Whether this move will succeed—and whether it can achieve lasting results—depends on the underlying reasons.

How did the power to allocate value get lost? Battery giants and chip suppliers, leveraging their scale, production capacity, and technological monopolies, capture the lion’s share of profits. Meanwhile, the new‑entrant automakers’ direct‑sales model, transparent pricing, and region‑based “total‑war” approach to building automotive industry clusters have all eroded OEMs’ ability to wield market leverage. OEMs have been reduced to mere assemblers caught between two powerful forces. This explains why OEMs are now so eager to build their own battery‑production capacity and invest in chip R&D. Price hikes are merely a stopgap—time that must be used to establish vertically integrated supply chains for critical subsystems; otherwise, such measures would amount to little.
Ultimately, even in pursuit of this ambitious goal, raising end‑device prices is merely a tactical measure. Unless OEMs can regain control over the supply chain, their grip on the terminal market will continue to erode, and any realignment of value‑sharing priorities will remain little more than lip service. Whether the price‑increase trend can endure hinges on how steadily the first step in that process is taken.