Auto Stocks Slide Amid Soaring Lithium Prices and Chip Shortages Intensifying Cost Pressures

Recently, the automobile sectors of both the Hong Kong and A-share markets have broadly corrected, with share prices of automakers such as Li Auto, XPeng, and NIO falling significantly. The previous week, auto stocks had surged collectively on the back of favorable policy support and strong earnings reports. However, mounting cost pressures from upstream suppliers quickly reversed market sentiment: battery-grade lithium carbonate prices have surged nearly 130% since July 2025, increasing per-vehicle battery costs by RMB 3,000–5,000. Meanwhile, automotive-grade memory chips—driven by surging AI demand—have seen prices skyrocket by almost 300%, with supply fulfillment rates potentially falling below 50%. Faced with these multiple pressures, brands including Chery, Zeekr, and Xiaomi have announced price hikes or indirect price increases. Compounding the situation, the phased reduction of purchase tax exemptions for new energy vehicles (NEVs) is further squeezing automakers’ profit margins. Analysts note that lithium resources and semiconductors have become new industry barriers, and automakers lacking secure access to these critical resources will face even greater challenges ahead.