Tesla shares & Co: Tesla competitor BYD is raising prices

• War in Ukraine causes raw material costs to rise
• BYD raises prices for e-cars
• Competitor Tesla is also passing on rising costs to customers

After BYD (Build Your Dreams) had already decided to raise prices in February, the Shenzhen-based car manufacturer announced again in mid-March that it would raise the selling prices for its “new energy vehicles”. Accordingly, its plug-in hybrids and electric cars are expected to be 3,000 to 6,000 yuan (471 to 942 US dollars) more expensive.

Higher commodity prices

As a reason, the group had already pointed out in February that the Chinese government reduced subsidies for electric cars by 30 percent in January. In Beijing, it is now assumed that the industry has now matured enough to no longer be so dependent on government support.

On the other hand, BYD had stated that raw materials would have to be bought more expensively. The semiconductor shortage and supply chain interruptions, for example due to the renewed outbreak of the corona pandemic in China or the war in Ukraine, are not without consequences. The company, which has Warren Buffett on board as a prominent major investor, also justified the recent price increase in March with a sustained increase in raw material costs.

Price increases at Tesla

With the price hike, BYD is following the lead of industry leader Tesla, which previously raised its selling prices in China and the US twice in less than a week. Tesla CEO Elon Musk justified this by saying that the US group felt “significant inflationary pressure” in terms of raw materials and logistics.

For experts, this development is not surprising given the war between Russia and Ukraine. After all, Russia is one of the leading exporters of nickel, which is needed for electric car batteries. According to Seeking Alpha author Jonathan Weber, some estimates have suggested that the recent spike in nickel prices could push the average cost of electric vehicles by $1,000 per vehicle.

Tesla, BYD and other electric car manufacturers are currently trying to pass on the higher costs to consumers. It remains to be seen whether this will continue to work, or whether demand will suffer as a result, so that the corporations will ultimately have to accept cuts in their margins.

Editorial office finanzen.net

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