The end of the price war? The triple logic behind the collective price hikes of 15 automakers

On March 5, 2026, Chery Exeed ET5's high - end version increased in price by 5,000 yuan. In essence, the previously free intelligent driving function package worth 28,800 yuan was changed to a paid service. This is the first time since the more - than - two - year price war that an automaker has adjusted its pricing strategy by "raising prices".

Three months later, the number of automakers raising prices reached 15. BYD increased the price of the "Tian Shen Zhi Yan B" intelligent driving laser version optional package from 9,900 yuan to 12,000 yuan (a increase of 2,100 yuan), while the base vehicle price remained unchanged. Xiaomi SU7's base vehicle price increased by 4,000 yuan, but the originally standard - equipped functions such as HUD and electric steering wheel were repackaged into a 6,500 - yuan optional package, resulting in an actual increase in consumer spending of 4,000 - 10,500 yuan. Changan Qiyuan raised prices by 3,000 yuan, and GAC Aion raised prices by 3,000 - 6,000 yuan. Tesla cancelled its 7 - year low - interest car purchase plan, which is a disguised price increase. NIO tightened its charging rights, ZEEKR scaled back its financial interest - free policy, and Leapmotor is considering following suit. Even Volkswagen's ID series and Toyota's bZ4X joined the price - increase ranks, with price increases of 4,000 - 7,000 yuan and 6,000 yuan respectively.

Has the price war really ended? Is this price increase a turning point or just an episode?

To answer this question, we need to understand the core factors behind this price increase.

01 Cost aspect: Lithium prices doubled, chip prices tripled

The most direct factor for automakers to raise prices is cost.

The first cost killer is lithium. The price of battery - grade lithium carbonate soared from 75,000 yuan per ton in July 2025 to nearly 200,000 yuan per ton in May 2026, a increase of more than 167%. Batteries account for 30 - 40% of the total cost of electric vehicles. Just the rebound in lithium prices has increased the production cost of each medium - sized electric vehicle by about 3,800 yuan. This is a figure that automakers cannot absorb. In the first quarter of 2026, the sales profit margin of the entire automotive industry had dropped to 3.2%, and it was only 2.9% in January - February, less than half of the historical average of 6% in the manufacturing industry.

The second cost killer is chips, more precisely, memory chips. In 2026, the price of automotive - grade DRAM increased by about 180% in the past three months, and the spot price of high - end DDR5 increased by more than 300%. Lei Jun, the founder of Xiaomi, put it bluntly: "The price of automotive memory increased by 40% - 50% last quarter. This alone will increase the cost of each vehicle by thousands of yuan." Li Bin, the founder of NIO, was even more pointed in his judgment: "The price increase of memory chips will be the biggest cost pressure in 2026."

The root cause of the chip price increase lies not in the automotive industry, but in AI. The insatiable demand for computing power from generative AI is systematically squeezing the production capacity of automotive - grade chips. Samsung, SK Hynix, and Micron are giving priority to allocating DRAM and NAND production capacity to AI servers and data centers, and the automotive industry has to wait in line. UBS estimates that the price increase of memory chips alone has increased the cost of each intelligent driving vehicle by 3,000 - 7,000 yuan.

The third cost pressure comes from bulk metals. The price of aluminum has exceeded 25,000 yuan per ton, and copper has reached 100,000 yuan per ton. Just these two factors have increased the cost of a medium - sized electric vehicle by about 1,800 yuan.

Combining these three factors, according to estimates by HSBC and UBS, the comprehensive cost increase per vehicle is about 6,000 - 14,000 yuan.

There is also a policy cost. Since 2026, the purchase tax for new energy vehicles has been changed from full exemption to half exemption (the tax - exemption cap has been reduced from 30,000 yuan to 15,000 yuan). Taking a 300,000 - yuan vehicle as an example, consumers need to pay about 13,000 yuan more in purchase tax.

The cost side has increased across the board, and the profit side has hit bottom. This is the "forced" aspect of the price increase. Automakers don't want to raise prices, but they will face losses if they don't.

02 Profit aspect: The industry is collectively losing blood

In the past few years of the price war, the profit margin of the automotive industry has been continuously declining: 6.1% in 2021 → 5.7% in 2022 → 5.0% in 2023 → 4.3% in 2024 → 4.1% in 2025 → 3.2% in the first quarter of 2026. The single - month profit margin in December 2025 even dropped to 1.8%.

It has become normal for suppliers to "increase revenue but not profit", but in the first quarter of 2026: Tuopu Group's revenue increased by 14.92%, but its net profit decreased by 2.42%; Baolong Technology's revenue increased by 17.57%, but its net profit decreased by 24.87%; Huayu Automotive's revenue decreased by 0.97%, and its net profit decreased by 2.63%. The gross profit margin has also been under continuous pressure. Tuopu Group's gross profit margin decreased from about 23% in 2023 to 19.43% in 2025, a cumulative decrease of 3.6 percentage points in two years.

Moreover, suppliers are under double pressure: the annual price - reduction clause from OEMs (BYD's email in November 2024 asking for a 10% price reduction with the note "Do not reply" is the most extreme case) combined with cost increases. Chengtai Technology is a warning example. This millimeter - wave radar supplier's dependence on BYD increased from 81.9% in 2022 to 96.4% in 2025. Its revenue increased by about 500% in three years, but the company is still in the red. When your customer contributes 96% of your revenue, you don't have the ability to say "no".

BYD's leading price increase may be the strongest signal that the price war is ending, indicating that the industry has passed the critical point where "price cuts can bring growth". McKinsey's data supports this judgment: more than 80% of car buyers are indifferent to price cuts, and the purchase intention driven by technology is three times that of price discounts. When price cuts no longer lead to increased sales, they lose their reason for existence.

03 Competition aspect: The price war gives way to the technology war

There are risks in raising prices.

However, the market structure in 2026 is completely different from that when the price war first broke out in 2023.

The first change is the penetration rate. In April 2026, the penetration rate of new energy vehicles in China exceeded 60% for the first time. 60% is a critical threshold - the market has entered the "late majority" stage from the "early majority" stage. New energy vehicles are no longer a minority choice but have become the mainstream. This means that growth can no longer be achieved by "converting fuel - vehicle owners into electric - vehicle owners", but must be achieved by seizing market share from competitors. However, the most effective means of seizing market share is no longer price, but product strength.

The second change is the full - scale upgrade of the technological arms race. In May 2026, BYD is about to launch its "National Intelligent Driving 2.0" strategy, aiming to introduce high - level intelligent driving to vehicles priced at 70,000 yuan, making intelligent driving as standard as air - conditioning. Huawei Kunlun has cooperated with 33 models, and it is expected to cover more than 80 models in 2026, with a cumulative deployment target of 3 million vehicles. Domestic intelligent driving chips such as Horizon and Black Sesame are rapidly increasing in volume.

This is not a coincidence. The entire industry's resources are shifting from price subsidies to R & D investment. According to industry media reports, BYD's R & D expenditure of 63.4 billion yuan in 2025 exceeded the total of Geely, Great Wall, and Chery. Huawei's R & D budget for intelligent driving in 2026 alone is 18 billion yuan, of which 10 billion yuan is for computing power. The theme of the 2026 Beijing Auto Show is not "who is cheaper", but "who is more intelligent" - with a 380,000 - square - meter exhibition area, 1,451 exhibition vehicles, and 181 global premieres, the core highlights are intelligent driving, AI cockpits, and 5 - minute charging batteries.

This is almost the same as the evolution path of the Chinese smartphone industry a decade ago. From 2014 to 2016, the Chinese smartphone market experienced a fierce price war, with hundreds of brands competing in the low - cost smartphone market. Ultimately, it was not a company's "conscience" that ended the price war, but consumer upgrading. When consumers started to pay for a better experience, Huawei, OPPO, and vivo successfully broke through through technological differentiation (Leica cameras, fast charging, design), and Xiaomi was forced to transform from the mid - low - end to the high - end market. The winner of the price war (Xiaomi, which occupied the market with low prices) was not the ultimate winner.

The turning point in price is often the result of a switch in the competition logic. The collective price increase of 15 automakers in May 2026 indicates that the industry is shifting from "trading price for volume" to "trading technology for volume". It's not that automakers don't want to continue the price war, but that the price war can no longer be sustained.

04 How long will the price increase last?

Whether the price increase can be sustained depends on three factors.

One is whether the demand side can accept it. From January to April 2026, the cumulative retail sales of passenger cars decreased by 18.5% year - on - year, and the market has declined for four consecutive months. There was a short - lived "panic buying" during the May Day holiday - consumers were worried about further price increases and locked in orders in advance - but this is not sustainable. SCMP quoted analysts' warnings that "weak demand may force automakers to lower prices". Cui Dongshu, the secretary - general of the China Passenger Car Association, was more cautious in his judgment: "Currently, most automakers are only in the stage of tentative price increases, and there are still significant obstacles to large - scale implementation in the future."

The second is whether the cost side can decline. There is controversy over the sustainability of the sharp increase in lithium prices. The last time the lithium price dropped from a historical high of nearly 600,000 yuan per ton at the end of 2022 to 75,000 yuan per ton in mid - 2025, it took about two and a half years. If the lithium price drops, the cost logic for the price increase will be weakened. However, the supply - demand gap for memory chips is structural. The demand for computing power from AI will not subside, and the competition between the automotive industry and data centers for chip production capacity is expected to continue until 2030.

The third is the differentiation of the competitive landscape. High - end markets (vehicles priced above 250,000 yuan) and technology - leading enterprises have the ability to maintain price increases through product strength. Low - end markets (vehicles priced below 100,000 yuan) and enterprises lacking technological differentiation may be forced to continue trading price for volume. This means that the price increase will not be uniform - the industry differentiation will intensify rather than narrow.

For suppliers, the price increase is good news, but it needs to be interpreted carefully. The reason for OEMs to raise prices is cost increase, which does not mean that they will transfer the incremental profit to suppliers after the profit margin expands. Historically, even during the cost - relief period, OEMs rarely take the initiative to share profits with suppliers. A more substantial benefit for suppliers may be the improvement of the payment cycle. In 2025, 16 automakers promised to pay within 60 days. If this is truly implemented, its significance is far greater than a few hundred yuan change in unit price.

From the perspective of the three - tier growth model: Tier - one enterprises (CATL, Fuyao, Sanhua) with pricing power will benefit the most during the price - increase cycle. CATL's revenue in Q1 increased by 52.45% year - on - year, far exceeding the 17% growth rate for the whole of 2025. The difficulties of Tier - three enterprises (Tuopu, Baolong, Xinquan) will not be automatically solved by OEMs' price increases. Their profit pressure comes from new business investment and customer concentration, not simply a cost - transmission problem.

05 Conclusion

The collective price increase of 15 automakers is a real turning - point signal.

The three - year price war (2023 - 2025) has changed the fundamental structure of the Chinese automotive industry: it has eliminated weak players (WM Motor, Evergrande Auto), accelerated market integration (the market share of the top 10 enterprises has continued to concentrate), and forced all enterprises to shift resources from marketing to R & D. The cost of the price war is real - the industry's profit margin has dropped from 6.1% to 3.2%, and more than 60 out of 266 listed auto - parts enterprises "increase revenue but not profit". However, it has also accelerated the screening process.

2026 is not the "end" of the price war, but a switch in the competition mode. McKinsey says that "the effectiveness of the technology war is three times that of the price war". The theme of the Beijing Auto Show has changed from "who is cheaper" to "who is more intelligent". BYD has invested 63.4 billion yuan in R & D instead of continuing to subsidize vehicle prices. These signals are more worthy of attention than the price increase itself.

The winners of the previous price war were BYD and Tesla. The winners of the next technology war may not be the same.

For auto - parts enterprises, the real test has just begun. During the price - war period, the question was "can you survive". During the technology - war period, the question is "can you keep up". Suppliers that cannot keep up with the OEMs' technology iteration speed will face not only a decline in profit margin, but also replacement.

This article is from the WeChat official account “Che Yun” (ID: cheyunwang), author: Che Yun Jun, published by 36Kr with authorization.