Recently, the adjustment of vehicle prices by a number of electric vehicle enterprises has attracted the attention of the industry. The main reason for the rise of electric vehicle prices is the rise of upstream raw material prices. Power batteries account for nearly a third of the cost of an electric vehicle. Therefore, the change of battery price has a direct impact on the vehicle price.
“The material price of battery is nearly 70% higher than that at the beginning of last year, and the production cost of power battery enterprises is under great pressure.” On March 19, a power battery industry expert told the 21st Century Business Herald reporter.
As for whether the price has been adjusted, on March 21, Contemporary Amperex Technology Co.Limited(300750) told the 21st Century Business Herald reporter that the price of some battery products has been dynamically adjusted due to the impact of the upstream price rise.
In addition, a number of employees from different power battery enterprises in China told reporters that under the background of rising raw material costs, each battery enterprise is facing great cost pressure.
The 21st Century Business Herald reporter learned that due to the rising price of battery raw materials, the whole battery supply system and rules are changing. Battery enterprises hope to supply with a more flexible bargaining mechanism. Under the pressure of supply, most of the main engine manufacturers are renegotiating the price with the battery enterprises, and after the price is determined again, the car enterprises will adjust their car price to a certain extent. However, due to the rise in the price of raw materials, the price of power batteries is still possible to rise.
Bargaining and renegotiation
In fact, due to the rapid growth of Shanxi Guoxin Energy Corporation Limited(600617) automobile industry in the middle of last year, driving the demand for power batteries, the rising trend of raw material prices of power batteries has gradually appeared since the middle of last year. Since the third quarter of last year, power battery enterprises have begun to adjust the supply price of power batteries.
At that time, many battery enterprises took measures to deal with the rise of raw material prices, such as real-time updating of product quotations, clarifying the price increase range, shortening the accounting period, renegotiating existing orders and so on. But even so, in the process of price negotiation, some battery enterprises must bear part of the rising costs, which also affects the profits of some enterprises.
Since the beginning of this year, due to the continued rise in the price of raw materials, it is difficult to maintain the previous rise in the price of batteries, and the main engine manufacturers and battery enterprises continue to negotiate prices.
Last year, although the price of battery materials has risen, most of them were digested by the main engine manufacturers and battery enterprises. However, since this year, it has been difficult for enterprises to continue to bear the pressure of rising raw materials. At present, the pressure has been transmitted to the rise of terminal vehicle prices.
“At present, most models with a range of about 500600 kilometers have a price rise of 2 Fawer Automotive Parts Limited Company(000030) 000 yuan. But in fact, this is the case that car enterprises and battery enterprises have digested part of the cost.” Some people from automobile enterprises told the 21st Century Business Herald reporter.
The above-mentioned person told reporters that at present, most car enterprises and battery factories have relatively flexible pricing mechanisms, and some have adopted linkage pricing mechanisms.
Ideal car CEO Li Xiang said on his microblog on March 19 that at present, brands that have signed contracts with battery manufacturers to determine the price increase of batteries in the second quarter have basically announced the price increase immediately. If the price has not been increased yet, most of them are that the price increase range has not been negotiated, and the price will be increased immediately after negotiation. The increase in battery costs in the second quarter of this year will be very outrageous.
Many industry insiders told the 21st Century Business Herald that if the price of raw materials continues to rise, the price of batteries is still likely to rise. Therefore, power battery enterprises are more inclined to negotiate prices with customers with a more flexible mechanism, so as to reduce the impact on their profitability.
In fact, the bargaining power of power batteries will determine the operation of enterprises to a great extent.
Farasis Energy (Gan Zhou) Co.Ltd(688567) previously, the company has released the financial report for 2021. The company’s revenue in 2021 increased by 203.97% year-on-year to RMB 3.403 billion, but the net loss expanded to RMB 974 million.
The rise in raw material prices is one of the reasons for the expansion of Farasis Energy (Gan Zhou) Co.Ltd(688567) losses Farasis Energy (Gan Zhou) Co.Ltd(688567) said that in 2021, the global new energy vehicle industry was in a new period of rapid development, the demand for raw materials of power batteries increased, the prices of raw materials of the company’s main products rose sharply, and the cost of materials increased. Due to the lag of price adjustment, the product price failed to rise in time with the rising trend of power battery material prices during the year. However, at present, the selling price of most customers’ products has been adjusted.
When the company can turn around its losses depends largely on the price increase before it and its largest customer Mercedes Benz. Earlier, Farasis Energy (Gan Zhou) Co.Ltd(688567) had disclosed in the announcement that it was discussing the price increase with Daimler, the parent company of Mercedes Benz. Recently, some investors asked on the investment platform “whether the price increase with Daimler has been completed”, and Farasis Energy (Gan Zhou) Co.Ltd(688567) said that the price negotiation with Daimler was still in progress.
Battery recovery temperature rise
Since this year, the price of lithium salt products has been rising, especially the price of lithium carbonate, which has risen all the way from 250000 yuan / ton at the beginning of the year to 500000 yuan / ton.
The website of the Ministry of industry and information technology announced on March 18 that it had organized a symposium on the operation of the lithium industry and a symposium on the price rise of upstream materials of power batteries in conjunction with the national development and Reform Commission and other departments. The meeting requested that we should jointly guide the rational return of lithium salt prices, strengthen efforts to ensure market supply, and better support the healthy development of strategic emerging industries such as Shanxi Guoxin Energy Corporation Limited(600617) automobile.
Due to the influence of the government and the gradual increase of the price of lithium carbonate, it is worth paying attention to.
In addition, people from power battery enterprises told the 21st Century Business Herald that the price of 500000 yuan / ton has been very high. Although lithium salt resources are still in short supply on the market, it is difficult for enterprises to bear higher prices. If the price continues to rise, it is difficult for enterprises to accept high priced lithium carbonate products, so they will watch the price rise with a more cautious attitude in the future.
Some battery enterprises have previously laid out upstream, and the relevant effects will gradually appear, which is expected to alleviate some pressure on enterprises. For example, on March 18, Gotion High-Tech Co.Ltd(002074) said on the investor interaction platform that the company’s lithium carbonate project was mass produced in the first quarter of this year, and the production capacity has been gradually released. The production capacity is expected to be about 10000 tons this year Contemporary Amperex Technology Co.Limited(300750) even announced to invest 29 billion yuan in upstream and downstream in 2020. This measure is also expected to consolidate its industrial chain security, and the effect is expected to appear in the later stage.
However, in the long run, lithium ore is a non renewable resource, and the price of lithium carbonate will still be subject to the relationship between supply and demand. At present, due to the high growth rate of China Shanxi Guoxin Energy Corporation Limited(600617) automobile industry, the demand for batteries is also expanding.
It is worth noting that under the bullish market of raw materials, the recycling of materials through battery recycling has begun to heat up the power battery recycling market. The use of advanced technology to recover precious metals in a high proportion can alleviate the pressure caused by the rising price of raw materials.
In addition, with the end of the service life of the first batch of electric vehicles, the scale of the retired battery market is also expected to expand rapidly in the next few years. Through recycling, the value of the whole life cycle of batteries can be further increased. Of course, power battery recycling also requires close cooperation between the main engine factory and power battery enterprises. At present, most battery enterprises including Contemporary Amperex Technology Co.Limited(300750) , as well as major vehicle enterprises, are beginning to layout battery recycling business.
