China's auto industry is shifting from a "discount war" to "price hikes." As authorities move to put the brakes on cutthroat competition, prices for in-vehicle memory have surged after batteries and raw materials, leading analysts to say cost pressures have hit a tipping point. With carmakers' profitability deteriorating quickly and consumers taking a wait-and-see stance, the industry expects the upward pricing trend to continue for the time being.
On the 29th, according to China Business News, BYD, China's No. 1 electric vehicle maker, announced the previous day that it will raise option prices for some models. In the Dynasty (王朝), Ocean (海洋), and Fangchengbao lineups, the price for selecting the driver-assistance system "Tienshen's Eye (天神之眼) B" rose from 9,900 yuan (about 2.14 million won) to 12,000 yuan (about 2.59 million won). The increases take effect May 1.
Worsening profitability also underpins the price adjustments. According to a BYD release the same day, first-quarter net profit was 4.08 billion yuan (about 881.0 billion won), the lowest in about three years. It fell 55.4% from a year earlier, the biggest drop since 2020. Revenue for the period fell 11.8%, marking a third straight quarterly decline.
◇ DRAM prices jump 300%… smart-car costs squeezed
BYD's price moves align with broader industry trends. Along with selective option changes, full-vehicle price hikes are continuing. In March, Chery Automobile Co. raised prices for its premium brand "Xingtu (星途)" by 5,000 yuan (about 1.08 million won), and Xiaomi's new SU7 increased prices across the lineup by 4,000 yuan (about 860,000 won). Huawei's smart-car brand "Hongmeng Zhixing (鸿蒙智行)" also raised some model prices by about 10,000 yuan (about 2.16 million won) alongside a lidar spec upgrade.
Surging prices for in-vehicle memory are a key driver. According to Taiwan market researcher TrendForce, while generic DRAM prices are expected to rise 55%–60% this year, spot prices for DDR5 used in high-end vehicles have jumped as much as 300%. In particular, as Autonomous Driving and advanced driver-assistance systems (ADAS) proliferate, rapidly growing in-car memory demand is squeezing automakers' cost structures.
A China-based semiconductor industry source told China Business News, "Automotive DRAM will be in very short supply this year and prices will rise, with no room for price negotiations," adding, "The supply-demand imbalance is likely to persist into next year."
Rising raw material costs are adding pressure. Recent increases in global oil prices are pushing up chemical material costs and broadly lifting vehicle production expenses, prompting senior executives at major automakers to repeatedly say in public that "if cost pressures keep building, price adjustments are inevitable."
◇ Policymakers also move to curb "self-defeating" price cuts amid worsening profitability
Policy signals are leaning toward "normalizing EV prices," reinforcing the case for hikes. China's State Administration for Market Regulation recently issued "Guidelines on Pricing Conduct in the Automobile Industry," putting the brakes on disorderly price wars such as below-cost dumping. The China Association of Automobile Manufacturers has likewise called for restraint from "self-defeating" competition while emphasizing fair-competition order.
Weak profitability metrics back this up. In the first quarter, China's auto industry revenue fell 0.2% from a year earlier, while expense rose 0.7%. As a result, net profit fell 18%, and the sales profit margin dropped to 3.2%, well below the overall industry average of about 6%.
Cui Dongshu, secretary-general of the China Passenger Car Association, said, "While battery export prices continue to fall, domestic battery prices are soaring, increasing the burden on automakers that do not produce batteries in-house and rely on external procurement," adding, "This could lead to continued deterioration in profitability, and if consumers remain on the sidelines, the burden will grow even heavier."