Chery New Energy, a division of the Chinese auto giant Chery, has announced a significant price reduction for three of its new energy vehicle (NEV) models. The cuts, ranging from RMB 4,000 ($581) to RMB 9,000 ($1,310), are effective from March 27, 2023.
The reductions affect the QQ Ice Cream, Little Ant, and Wujie Pro models, with the Little Ant seeing the largest percentage drop. Chery New Energy cited the correction of new energy material prices globally and the company’s supply chain management capabilities as reasons for the price cuts.
One significant factor in the price correction has been the sharp drop in the price of lithium carbonate, a critical raw material for batteries, which has fallen by 50% since November 2022. According to Mysteel data monitored by CnEVPost, the average price of battery-grade lithium carbonate in China as of March 24 was RMB 277,500 per ton, with industrial-grade lithium carbonate at RMB 235,000 per ton.
However, industry challenges may be the bigger reason for Chery’s move. The NEV maker’s performance at the start of the year was weak, with sales down 57.6% in January and February compared to the previous year. Additionally, the recent price war in the Chinese auto industry, with several NEV makers and traditional combustion engine automakers launching steep discounts, has increased consumer hesitation to purchase vehicles and disrupted the industry.
The China Association of Automobile Manufacturers (CAAM) has called on all parties to help return the industry to normalcy. As the industry navigates these challenges, Chery’s price cuts on its NEV models may provide an opportunity to win over hesitant consumers and improve sales.
