Regulators have taken a clear stand against unfair competition and have made it clear they will firmly crackdown on such behavior, a senior CAAM official said.

(Image credit: CnEVPost)

Rising raw material prices continue to be a headache for China's electric vehicle (EV) industry, and a senior official from an industry body has expressed concerns.

The current round of extraordinary raw material price increases deviates from normal supply and demand and is an irrational rise, Chen Shihua, deputy secretary-general of the China Association of Automobile Makers (CAAM), said in an interview with local media outlet Auto Review.

Behind this there is unfair competition from speculators who hoard and deliberately inflate prices in order to seize the last window before lithium capacity expansion, he said, according to the text of the interview released today. The pricing of upstream companies should return to rationality, car companies should not panic, Chen added.

The act of inflating the price of raw materials for power batteries is extremely destructive to the new energy vehicle (NEV) industry and affects the smooth and healthy development of NEVs, a national strategic emerging industry, he said.

The CAAM has included raw material price increases in its monitoring horizon since the second half of 2021 and has recently stepped up its actions and submitted proposals to regulators, he said.

Regulators have taken a clear stance against unfair competitions and have made a firm stand against such behavior, he added.

In the past year, big increases in battery raw materials, including lithium and nickel, have put the growth of China's fast-growing EV industry at risk.

Lithium carbonate prices were less than RMB 50,000 ($7,870) per ton in early 2021, but have now risen to more than RMB 500,000 per ton.

On March 18, China's lithium carbonate price was quoted at RMB 504,000 per ton, up 74 percent from the beginning of the year and 479 percent year-on-year.

China's Ministry of Industry and Information Technology (MIIT), as well as China's State Administration for Market Regulation, organized a meeting on the operation of the lithium industry and a meeting on price increases for upstream materials for power batteries on March 16 and March 17, according to a statement released by the MIIT on Friday.

The move is to maintain the supply of lithium resource products as well as price stability and promote the healthy development of the NEV and power battery industries, according to the statement.

Regulators also asked industry players to step up efforts to secure supply and better support the healthy development of China's strategic emerging industries, including NEVs, according to the announcement.

Chinese regulators express concern over rising EV battery material prices