Shenzhen-based BYD released a statement on Friday regarding the recently increased price of its Dynasty and Ocean series new energy vehicle (NEV) models, which have become more expensive by up to 7,000 yuan ($1,105).
BYD attributes the change to higher prices of raw materials and the declining subsidies for new energy vehicles. The instructions on price adjustments indicate the new prices will come into effect on February 1, and that customers who pay a deposit when signing contracts are not subject to the adjustment.
Earlier, several Chinese mainstream electric vehicle brands raised the prices of their models. On January 11, Xpeng Motors announced the newest price of all models after the latest subsidy, up by between 4,000 yuan and 6,000 yuan ($632-$947). The rise in prices doesn’t involve any changes to the vehicle configuration or design.
Other NEV makers such as GAC AION and NETA Automobile announced price increases in 2022, and Leapmotor directly launched 2022 T03 models with higher guiding prices on December 28, 2021.
China’s Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, and the National Development and Reform Commission jointly issued a notice on December 31, 2021, stating plans to lower the subsidy standards for NEVs in 2022 by 30% from that of 2021. NEVs licensed after December 31, 2022 no longer receive any state subsidies. The new policy suggests that 2022 is the last year for the Chinese government to provide subsidies for NEVs.
Regarding the matter, the China Passenger Car Association (CPCA) said that as NEVs received declining subsidies, some models would adjust their price, consumers may change their purchase intentions, and the demand for NEVs would still be slightly affected. Still, the NEV market remains prosperous. Many orders are not delivered yet, so the sales volume of most NEVs will not be affected by the lower subsidies.
The latest data from the CPCA indicates the retail sales of new energy passenger cars reached 475,000 in December 2021, up 128.8% year-on-year and 25.4% quarter-on-quarter. From January to December, the retail sales of NEVs were 2.989 million, up 169.1% year-on-year.