Since last week, more than 10 Chinese electric car makers have raised prices for their EV models, prompted by the significant increase in raw material costs. Analysts say that the price hikes will not hurt vehicle sales in the short term due to an already high order backlog, but also predict that companies will change prices more often in the future to meet their sales targets.

Some of the biggest names in the EV market have led the price hike. In March, Tesla raised prices for two premium versions of its China-made Model Y electric crossover twice in less than a week. Chinese EV giant BYD on March 15 announced it was lifting prices for most of its vehicle lineups, after it upped prices two month previously to address government EV subsidy cuts. Among the 11 carmakers that raised their prices in recent weeks, EV startup Leapmotor enacted the biggest hike, increasing its list prices by as much as 15%, or RMB 30,000 ($4,710), while state-owned automaker SAIC introduced the lowest price rises on average, with a 1.2% hike, or RMB 2,000, according to data compiled by TechNode. 

Why the price hikes?

A major reason behind the rise in EV prices is the “very strong” growth in the Chinese market, making it harder for raw material suppliers to keep up with demand, Peter Li, a Credit Suisse analyst, said on Tuesday during the company’s Asian Investment Conference.

EV battery makers have been scrambling to secure supplies of key ingredients, such as lithium. In mid-January, the cost of battery-grade lithium carbonate was 569% higher compared to two years ago, according to figures from Benchmark Mineral Intelligence. Lead battery maker CATL raised its price by RMB 20,000, Chinese media Yicai reported Monday. 

Major battery suppliers have now directly linked their pricing mechanisms to raw material price changes rather than adjusting their rates on an annual basis, due to the volatile commodity market. “That’s why we are seeing further battery price hikes in the second quarter,” Li said, adding that the trend will continue in the next two years, pushing potential price surges throughout the industry value chain from material suppliers to battery makers to car manufacturers.

Credit Suisse expect the lithium supply deficit to be expanded from 37,000 tonnes in 2021 to 101,000 tonnes this year, around 18% of global demand, and commodities prices to remain high at least until 2024, due to EVs’ growing popularity in China. Sales of new energy vehicle sales (NEVs) in China, mainly EVs and plug-in hybrids, skyrocketed 154% year on year to 3.52 million units in 2021, according to official figures. 

Does the future hold more frequent price changes?

Analysts anticipate the price hike won’t have a major impact on automakers’ deliveries in the short term, thanks to major players enjoying massive backlogs of orders in the market.

The waiting time for new orders of Tesla’s locally-made Model 3 sedan is now 20 to 24 weeks, compared with only six weeks last April, while the waiting time for Xpeng’s P7 is at least 12 weeks. BYD chairman Wang Chuanfu said in November that the company’s orders for its various models had reached an all-time high of 200,000 and it had to spend four months on average to deliver a vehicle, Chinese media reported.

In the longer term, Chinese EV makers could implement more flexible pricing strategies, lowering prices at the cost of their margins to ensure growth, if the current high demand for EVs slows down later this year. Some automakers are already preparing for more pricing adjustments, which means they could provide promotions or discounts to maintain their volume targets if demand starts to weaken during the second half of this year, Wang Bin, a Credit Suisse analyst, said at the investment conference.

EV makers could also change prices more frequently to attract new buyers, as the industry is transitioning towards a revenue model based on software subscription services rather than car sales, said Lu Shengyun, an independent adviser to entrepreneurs and CEOs. Passenger EV sales could grow by 84% year on year to 5.5 million vehicles this year, industry group the China Passenger Car Association said in January.

Electric vehicles “is a strategically important direction for automakers. They will sacrifice margin to offset the impact from rising material cost,” Wang added.

Ward Zhou contributed to the reporting of this story.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: or Twitter: @yushan_shen