"Fitch believes the prospects for China's EV market are bright, given still-strong demand," the credit rating firm said.
(Image credit: CnEVPost)
Despite recent increases in electric vehicle (EV) prices due to surging battery costs, deliveries in China are likely to remain robust in the coming months due to a strong backlog of orders, said credit rating firm Fitch Ratings.
"Fitch believes the prospects for China's EV market are bright, given still-strong demand," the firm said in a report released Sunday.
Cost pressures on EV makers increased in early 2022 as battery suppliers try to pass on surging raw material costs on a more timely basis by shifting from annual to quarterly contract terms, the report noted.
Some Chinese EV makers expect vehicle battery prices in the second quarter to be about 30 percent higher than in 2021 as prices for certain materials rise due to stronger-than-expected global EV demand, a strategic shift by automakers to cheaper lithium iron phosphate (LFP) batteries, and soaring global commodity prices, according to the report.
Fitch expects wholesale deliveries of EVs in China to increase by more than 50 percent and their market share to exceed 20 percent in 2022.
In the past month, dozens of new energy vehicle (NEV) companies have announced plans to raise prices. Fitch believes the latest price hikes are likely to affect low-end EVs more than high-end EVs, as potential buyers of cheap EVs tend to be more price-sensitive.
Plug-in hybrids may outperform with better value for money because of their smaller battery packs, according to Fitch.
