![]() ![]() Mining in the US has been restricted due to its environmental impact. To become self-sufficient and to keep the EV adoption progress on track, President Biden may include these rare earth metals under the Defence Production Act, which will enable the country’s mining industry to extract and refine these metals.The US imports a major portion of its rare earth metal requirement for vehicle production. But the Ukraine crisis and geopolitical tension with China may hinder the country’s plans. The US recently released its EV policies which are designed to push up EV adoption rates. ORA has been forced to stop taking new orders due to a shortage of chips and other core components.Other important auto OEMs such as Chery, SAIC, Hozon Auto and Wuling Motor also announced price increases for NEVs.Smaller OEMs may find it harder to control costs and compete with larger OEMs as they have less control over supply chains. Xpeng, a rising Chinese EV start-up, followed in the footsteps of larger OEMs to increase prices by $1,500-$3,000.BYD is developing and producing LFP batteries in-house but still increased prices twice this year. Leading Chinese electric vehicle (EV) manufacturer BYD increased prices by $500-$1,000 depending on the model and specifications.The recent inflationary pressure on raw materials and logistics forced Tesla to then make a further price increase, the second time within a week, which looks like bad planning or miscommunication as much as a forced price increase. Tesla increased the price of its cheapest Model Y by more than $2,000 in March.This was long planned but will impact demand right at the point where escalating costs are increasing prices: ![]() The country’s government cut subsidies on NEVs (New Energy Vehicles) by 30% in 2022. The Chinese automotive sector is contending with a double whammy – subsidy cuts and sharply increasing materials prices. To cope with these cost increases, automakers across regions have reluctantly increased their vehicle prices, despite the likely impact on demand. Furthermore, gases used in the production of semiconductors are also impacted – although the overall effect is unlikely to be immediately material. Restricted supplies of critical raw materials procured from Ukraine and Russia are causing new supply chain impacts, driving up raw material prices including that of lithium, cobalt and nickel – the latter by 60% – as well as aluminium and, to some extent, steel. But Russia’s invasion of Ukraine and fresh COVID waves in China have further delayed the industry’s recovery. With the semiconductor shortage beginning to ease, 2022 was expected to be a better year, as indicated by increased sales during the initial months. The industry and its supply chain were initially disrupted by COVID-19, and then by supply chain chaos when the sector was unprepared for the demand rebound. The global automotive industry has been in turmoil since 2020.
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