Soaring Chip and Battery Material Costs Add Thousands to Vehicle Prices, Pressuring Automakers

Starting in the second half of 2025, lithium carbonate—a key raw material for batteries—has seen sustained price increases, while storage chip prices have also risen due to supply shortages. By early 2026, UBS estimates indicated that these factors had added several thousand yuan to the cost of each vehicle. At the High-Level Forum on Intelligent and Electric Vehicle Development held on April 11, Lu Fang, Chairman of Voyah Auto, stated that the rapid rise in chip and memory prices has significantly impacted the automotive supply chain. As a result, automakers are facing mounting pressure to control costs. Although some smartphone manufacturers raised product prices at the end of March due to higher chip costs, most automakers—facing intense competition in the auto market—have opted to absorb the additional costs themselves rather than pass them on to consumers through higher retail prices.