Summary of Key Points
In the first half of the year, new players in the new energy vehicle market all suffered significant losses. A typical example is Seres: the company made a profit of 2.9 billion yuan in the same period last year but incurred a loss of 1.7 billion yuan this year. Rising raw material prices were a major factor, but unusually, the prices of new vehicles did not increase. Behind this are various contradictions such as market competition, cost pressures, and corporate strategies.
I. The extent of the losses among new players: Seres is not an isolated case
Not only Seres but most new players in the market lost money in the first half of the year. NIO lost 5.44 billion yuan, Xpeng lost 5.14 billion yuan, and Li Auto lost 2.12 billion yuan (although less than the other two, it was still a loss). Seres' situation is particularly striking: last year, it made a profit of 2.9 billion yuan due to the high sales of its Askar M5/M7 models and the brand synergy with Huawei. However, this year, sales of the Askar series declined (37,000 units sold from January to June, a 41% decrease year-on-year), and combined with rising costs, the company turned losses. In short, most new players either lost more money because they sold more or lost more even though they sold fewer units—there are almost no exceptions.
II. How did rising raw material prices become the main culprit? The high cost of batteries
Batteries account for 30%-40% of the cost of new energy vehicles, and the core raw materials for batteries are lithium, cobalt, and nickel. Lithium prices were high last year (once exceeding 500,000 yuan per ton), and although they have dropped this year, they are still much higher than in 2021 (in 2020, lithium prices were only 40,000 yuan per ton). For example, if an electric vehicle uses a 50-kilowatt-hour battery and lithium prices rise by 100,000 yuan per ton, the cost of the battery increases by about 1,500 yuan. Seres' Askar series are electric vehicles, and the rise in raw material prices directly eroded its profits—money earned last year was consumed by the increased costs this year, resulting in losses.
III. Why didn't vehicle prices rise? The market competition is too fierce to afford price increases; subsidies have also decreased
It's not that companies don't want to raise prices, but they can't. The new energy vehicle market is highly competitive this year: Tesla cut prices at the beginning of the year, and BYD followed suit. If new players raised prices, customers would simply switch to their competitors. For instance, the starting price of the Seres Askar M5 remained the same this year as last year at 259,800 yuan, while the Xpeng G6 was launched at a price below 200,000 yuan. Additionally, national new energy subsidies were completely phased out last year—previously, companies could receive 10,000-20,000 yuan in subsidies for each vehicle sold, but now they have to bear these costs themselves, making it even harder to increase prices.
IV. What other factors are contributing to the high costs? Research and development plus expansion are consuming a large amount of money
New players are still in the stage of expanding their market share. On one hand, they need to invest heavily in research and development (such as autonomous driving and battery technology); NIO invested 3.9 billion yuan and Xpeng invested 3.2 billion yuan in R&D in the first half of the year. On the other hand, they need to build stores and charging stations (NIO has already built more than 1,600 charging stations), which are long-term investments with no immediate returns. For example, Seres' cooperation with Huawei means it has to share R&D and distribution costs, and with declining sales, revenue cannot keep up with expenses, leading to increased losses.
V. Will these losses continue? What impact will they have on consumers?
In the short term, it's unlikely to change: as long as the market remains competitive, companies will not dare to raise prices; as long as they continue to expand and invest in R&D, costs will not decrease. In the long run, if sales can increase (due to economies of scale) or if raw material prices continue to fall, the situation may improve. For consumers, the fact that vehicle prices have not risen is good, but there are two concerns: some companies may secretly reduce the quality of their products (using cheaper components); if companies suffer heavy losses, after-sales services may be affected (such as closure or reduced maintenance). It is recommended to choose brands with stable sales and strong financial strength when purchasing a vehicle.
In summary, the losses of new players in the new energy vehicle market are a part of the growth process—they have to withstand cost pressures, compete with competitors on price, and invest in the future. Consumers can benefit from lower prices, but they should also be aware of the associated risks.