Selling a new car priced at 100,000 yuan earns only 1,500 yuan? The auto industry's profit margin has dropped to a freezing point of 1.5%, yet upstream supply chain companies are raking in huge profits.

"The profit level of the automobile manufacturing industry is at a historical low, with the profit margin of complete vehicle manufacturing standing at only 1.5%." At the recently held High-Quality Development Summit Forum of China's Automotive Industry, the industry data released by Chen Shihua, Deputy Secretary-General of the China Association of Automobile Manufacturers, once again presented the fierce competition status of the domestic automotive market to the public.

Calculated based on a 1.5% profit margin, for a new car priced at 100,000 yuan, the profit of the complete vehicle manufacturer is merely 1,500 yuan.

According to data from the China Passenger Car Association (CPCA), from January to May this year, the profit of the automotive industry reached 144 billion yuan, down 20% year-on-year; the profit margin of the automotive industry was 3.4%, which is lower than the average 6.1% profit margin of downstream industrial enterprises.

More notably, according to CPCA data, the profit margin of the automotive industry in May of each previous year has always been at a relatively high level.

Specifically, the automotive industry profit margin was 5% in 2023, and the figure reached 8.1% in May that year; in 2024, the industry profit margin was 4.3%, hitting as high as 7.5% in May; in 2025, the automotive industry profit margin was 4.1%, with the figure standing at 5.2% in May. In contrast, the sales profit margin of the automotive industry dropped to 3.4% from January to May this year, and the industry sales profit margin in May was 3.6%, underperforming the monthly performance of 3.7% recorded in March and April.

"May of every year is a period with a relatively high industry profit margin, but the automotive industry profit margin in May this year still remains at a historical low, with the downward pressure on profitability becoming increasingly prominent. Recently, as the production scale of the automotive market expands and the PPI rises, the profits of upstream mining industries such as non-ferrous metals and petroleum have skyrocketed. While the unit price per ton of lithium battery exports is relatively stable, domestic battery prices have surged, and the issue of automakers not manufacturing batteries has dragged down the profit performance of automakers," Cui Dongshu, Secretary-General of CPCA, analyzed.

1

OEMs Under Profit Pressure

Some Supply Chain Enterprises See Their Net Profit in the First Half of the Year

Surge by Over 49 Times at Maximum

CPCA data shows that from January to May this year, 12.28 million automobiles were produced, down 5% year-on-year; the revenue of the automotive industry reached 4.21 trillion yuan, up 1.4% year-on-year; the total cost hit 3.74 trillion yuan, up 2.3% year-on-year; the profit was 144 billion yuan, down 20% year-on-year; the profit margin of the automotive industry stood at 3.4%.

"From January to May, the overall per-vehicle revenue across the automotive industry chain was approximately 343,000 yuan, up 5.8% year-on-year; the per-vehicle cost was 305,000 yuan, up 6.7% year-on-year; the per-vehicle taxes and fees amounted to 27,000 yuan, up 7.3% year-on-year; the per-vehicle gross profit of the industry chain was 12,000 yuan, down 16.2% year-on-year," Cui Dongshu stated.

Compared with industry-wide data, the performance of complete vehicle OEMs can more intuitively confirm the profitability predicament of the industry. Major automakers have seen a sharp decline in their first-half performance this year, even incurring large-scale losses, and the industry elimination race continues to intensify.

By contrast, upstream automotive supply chain enterprises have staged a completely different market trend. According to incomplete statistics, among the 58 non-ferrous metal companies that have disclosed their interim performance forecasts, 49 have recorded pre-increased profits and 4 have turned losses into profits, with the positive performance ratio exceeding 91%.

In addition, leading enterprises in multiple segments have delivered reports of substantial net profit growth. For example, Tianqi Lithium estimates that its net profit attributable to shareholders of listed companies in the first half of 2026 will increase by up to 49 times year-on-year, reaching 4.25 billion yuan; Ganfeng Lithium also predicts that its net profit in the first half of this year will reach 3.65 billion to 4.6 billion yuan, achieving a turnaround from losses to profits.

2

Per-Vehicle Cost Sees a Ten-Thousand-Yuan Level Increase

Automakers' Cost Pressure Is Expected to Ease by the End of 2027

Against the backdrop of meager profits in complete vehicle manufacturing, the material cost per vehicle of many mainstream new energy models has risen by a magnitude of ten thousand yuan.

Taking the new-generation Li Auto L6 as an example, its battery capacity has been expanded from 36.8kWh to 51kWh. With the rising price of lithium carbonate, the cost of the battery alone has increased by more than 8,000 yuan. At the same time, the memory cost of the new car has risen by nearly 4,000 yuan, and the cost of the Qualcomm 8797 chip is expected to increase by more than 2,000 yuan. After adding up these three core components, the comprehensive per-vehicle cost increase has exceeded 14,000 yuan.

"Due to the rising prices of raw materials, the cost of each NIO ES8 vehicle has increased by nearly 20,000 yuan. If this is reflected in the selling price, the price needs to rise by 30,000 yuan to maintain a comparable gross profit, and the cost pressure is extremely huge," Li Bin, Chairman and CEO of NIO, also talked about the realistic cost pressure during a recent interview with a reporter from National Business Daily.

Previously, Zhang Xinghai, Chairman of Seres Group, stated that the unit price of memory chips has risen from 20 yuan to nearly 100 yuan. Coupled with the lithium carbonate price surging from 80,000 yuan/ton in the same period of last year to 180,000 yuan/ton, the average per-vehicle cost of AITO vehicles has increased by 15,000 to 20,000 yuan.

Multiple OEMs mentioned in their performance forecasts that the price fluctuation of upstream raw materials has increased their cost pressure.

Taking lithium carbonate, a key material for power batteries, as an example, its price has experienced a sharp surge from the end of last year to now, once exceeding 200,000 yuan/ton. Currently, the lithium carbonate price has fallen back to around 150,000 yuan/ton, but it still represents a significant increase compared to the price of about 70,000 yuan/ton last year.

The substantial year-on-year increase in lithium carbonate prices has directly driven the overall cost center of the entire power battery industry chain to move upward.

On July 15, Hunan Yuneng, a leading enterprise in the lithium iron phosphate sector, issued a price adjustment letter to its customers. Due to the continuous upward trend in the prices of core upstream raw materials, the company's ongoing full-capacity production, and the fact that this year's newly added production capacity cannot meet the growing order demand of all customers, the price of its full series of lithium iron phosphate products will be increased by 2,000 yuan/ton starting from August 1.

An employee of a joint-venture brand automaker told the reporter: "The (automotive industry) is having a hard time. Competition in the terminal market has not weakened at all, while upstream batteries, bulk metals, and automotive-grade chips are constantly rising in price, squeezing the profit margins of automakers from both sides. Since the beginning of this year, the biggest pressure within our company has been cost control. This competitive pressure is expected to ease only by the end of 2027 or 2028."

This article is from the WeChat Official Account "NBD Auto", written by Huang Xinxu, and published with authorization from 36Kr.