SunSirs: Automakers Fight Back Against Skyrocketing Memory, Metal, and Battery Prices

Driven by the dual engines of intelligence and electrification, the automotive industry is facing an unprecedented test of supply chain costs - the pressure from rising prices in sectors such as memory, metals, and batteries is increasingly casting a shadow over the cost side of automakers.

The dual challenges of soaring prices and supply shortages of memory chips have gradually spread to the core of the automotive supply chain. Some people in automobile companies predict that against the backdrop of AI "absorbing chips" and automobiles "losing chips", the supply satisfaction rate of memory chips across the industry may be less than 50% this year. This means that the automotive industry, which is advancing by leaps and bounds in the wave of intelligentization, will face the impact of the "memory super cycle" directly.

Meanwhile, the rising prices of key metals such as copper, silver, and lithium have also exerted significant pressure on automobile manufacturing costs. The increase in raw material prices has further spread to power batteries, subjecting automakers to a secondary cost impact. Some automakers have to strive for a difficult balance between supply chain resilience and cost control. Industry analysts believe that price increases at the terminal, configuration adjustments, and even delivery delays may become countermeasures that automakers are forced to adopt.

Along with the fierce competition for upstream resources by emerging industries such as AI and energy storage, the automobile manufacturing industry is not only facing cyclical cost pressures but also exposing its passivity in the supply of key components. A profound evolution centered on supply chain security and cost control has quietly unfolded within the automotive industry.

Multiple price increase shocks

In 2026, the automotive industry may face a crisis in the supply of memory chips, with a satisfaction rate of less than 50%." Meng Qingpeng, vice president of supply chain at Li Auto, issued a warning recently. On January 6, Li Bin, founder of NIO, also admitted in an interview with Securities Times reporters: "The rise in memory prices has become the biggest cost pressure this year, and this is a major issue for the entire industry.

The global DRAM (Dynamic Random Access Memory) market is experiencing the strongest price increase cycle in history. Since the second half of 2025, DRAM prices have continued to rise rapidly, with most categories increasing by more than 100%; among them, the prices of the two mainstream specifications, DDR4 and DDR5, even rose by 2-3 times last year. Entering 2026, the upward trend has accelerated. Under the market rhythm of "a price per day", the overall increase in memory has far exceeded that of gold.

As automobiles rapidly evolve into intelligent terminals, memory chips have become the "digital memory" of smart cars. "Any high-end intelligent connected vehicle is not only a means of transportation but also a data processor," Li Bin explained. From the multi-screen interaction and audio-visual entertainment in smart cockpits to the several gigabytes of data generated per second by autonomous driving systems, all require the support of large-capacity, high-performance memory chips. Whether it is the self-developed "Shenji" chip by NIO or the externally sourced NVIDIA chips, they all rely on supporting memory.

Data provided by Wang Jin (a pseudonym), an expert from the China Academy of Information and Communications Technology, to reporters shows that the demand for memory chips in modern intelligent electric vehicles is growing exponentially. The storage demand for a single high-end model has reached 64GB to 256GB and is moving towards the terabyte (TB) level.

A person from a state-owned automobile enterprise revealed to reporters that the current increase in memory prices has led to an increase in the cost per vehicle ranging from several hundred yuan to over a thousand yuan, depending on the positioning of the vehicle model. "However, with the advent of the TB-level storage era, the proportion of memory costs in the total hardware cost of the vehicle will rise rapidly, and it is expected to exceed 15% by 2030.

The increase in the cost of other raw materials has also had a significant impact on automobile manufacturers. Since last year, the prices of copper, silver, aluminum, rare earth permanent magnets, and other materials have continued to rise. These materials are widely used in drive motors, vehicle body structures, and key controllers, among other components, and constitute unavoidable hard costs.

The aforementioned state-owned automobile enterprises previously focused on joint-venture fuel-powered vehicles and only began to make efforts in new energy vehicles in recent years. They did not fully anticipate that the rise in copper prices would have such a significant impact on automobile enterprises. "Key components such as battery systems, motors, copper foils, wire harnesses, and power distribution systems all use a large amount of copper. The amount of copper used in a new energy vehicle is several times higher than that in a fuel-powered vehicle, which will 'leveragely' increase the cost of vehicle manufacturing. Overall, due to the early signing of supply agreements, we have not yet felt obvious cost pressure. However, we have begun to assess the subsequent impact.

The impact of rising prices of non-ferrous metals has spread to the power battery sector. In recent months, due to the increase in upstream raw material costs and changes in supply and demand, the prices of wet-process diaphragm products such as base films and coatings have risen. Coupled with factors such as increased processing fees, all these are pushing up battery costs.

The global cost increases in metals, chips, batteries and other areas will inevitably push up the overall vehicle manufacturing costs," the aforementioned automobile company executive said. "The theme of our company's first meeting at the start of 2026 is how to control the total cost through optimization in other links.

Unequal competition

The wave of rising upstream costs is actually a stress test for the competition between the automotive industry and other industries such as AI and energy storage for key resources.

Take memory as an example. Compared with the automotive industry, the market balance of suppliers is clearly tilted toward AI. Wang Jin analyzed to reporters that generative AI and large model training led by ChatGPT have locked in global high-end storage production capacity. Recently, the focus of AI applications has extended from training to the inference side, and the "using storage instead of computing" model has emerged. By reducing the movement of data between storage and computing units, it reduces the dependence on GPUs and video memory, which has significantly boosted the demand for memory.

Memory giant Micron Technology recently announced that it will break ground on a massive wafer fab with a total investment of approximately $100 billion in New York State, U.S., on January 16. This reflects the strong demand for memory chips driven by AI.

Storage giants such as Micron, SK Hynix, and Samsung will all give priority to ensuring orders from profitable AI clients. Currently, it is estimated that about two-thirds of the high-end DRAM production capacity has been occupied by AI demand. Chip production capacity is limited, and the highest bidder wins. The profit from selling to AI clients is usually several times that from the automotive industry," Wang Jin said.

Institutions such as TrendForce have predicted that by 2027, 70% of the global DRAM production capacity will be absorbed by the AI sector, and the production capacity left for traditional industries such as automotive and mobile phones will be significantly reduced.

In the field of intelligent driving that requires high-end storage, automakers' ability to offer prices and order sizes cannot compete with AI giants that have hundreds of billions of yuan in budgets," Li Bin said helplessly. "The AI industry has advantages in terms of capital volume and bargaining power. The competition for storage between automobiles and AI is an 'unbalanced competition.

If the competition for memory is still confined to the intelligent track, then the rise in the prices of non-ferrous metals means that the automotive industry is competing with more industries such as photovoltaic and energy storage on the same stage.

Last year, the newly installed capacity of China's new energy storage continued to increase, which once drove the surge of the A-share energy storage sector. The proportion of energy storage business in the operations of power battery manufacturers also rose simultaneously, which to a certain extent squeezed the production capacity quota of vehicle-used batteries.

A person from the aforementioned automobile company metaphorically stated: "Photovoltaic panels consume copper and aluminum by the ton; the core components of semiconductors, robots, and energy storage power stations are all inseparable from scarce metals, which are like 'industrial monosodium glutamate'. For automobile companies, it used to be like buying 'steamed buns'—you just purchase them when you're hungry; now what's needed is 'premium flour', and everyone making cakes, bread, and pizzas is scrambling for it.

Will it be passed on to the downstream?

The rising prices of upstream products have directly impacted the supply chains of automobile manufacturers. In terms of memory chips, a procurement director from a new energy vehicle company revealed that for the LPDDR5 memory ordered in the third quarter of last year, the supplier demanded a 40% price increase before agreeing to deliver the goods; otherwise, it would tear up the contract.

On January 13, the price of the main lithium carbonate futures contract hit the daily limit, reaching 174,100 yuan per ton during the session, marking the second consecutive day of hitting the daily limit. The reduction in the export tax rebate rate for battery products' value-added tax may have stimulated the enthusiasm of downstream lithium battery enterprises for stockpiling, further affecting the supply and demand balance in the lithium carbonate market.

Faced with the expectation of rising prices for power batteries, many automakers have rushed to power battery manufacturers to "snatch" orders. He Xiaopeng, Chairman and CEO of XPeng Motors, recently admitted, "I have had drinks with the bosses of all our battery manufacturers lately.

It is not uncommon in the new power camp for car company executives to personally step in to ensure the supply chain. The leaders hope to minimize the disruptions to product planning, production rhythms, and delivery cycles caused by shortages of core components.

Regarding the impact of rising prices of non-ferrous metals such as aluminum and copper, an insider from an automobile company revealed that although copper is used in large quantities in new energy vehicles, due to the fact that most supply agreements are signed in advance, no direct cost pressure has been felt yet.

But this is only temporary. Automakers generally predict that this supply chain predicament may last for 3 to 5 years.

Wang Jin gave an example: "Take memory as an example. On the one hand, the demand for memory from large AI models is only increasing, and giants like OpenAI have already locked in most of the HBM production capacity for the next two years. On the other hand, automotive storage chips have high technical thresholds and long certification cycles, making it difficult to rapidly expand production in the short term. Although domestic manufacturers are breaking through, they still cannot fill the production capacity gap in the short term.

Despite the high pressure of rising supply chain costs, several automakers confirmed to reporters that the automotive industry as a whole is still in a phase of "internally absorbing cost pressures." Li Bin stated that NIO has not yet passed on the pressure of rising memory prices to terminal prices, and this pressure is still within the company's affordability. However, he still suggested that everyone buy a car earlier, as car prices are likely to rise in the future.

Against the backdrop of further withdrawal of new energy vehicle purchase tax subsidies and market sales under pressure in 2026, expectations of rising terminal prices have become particularly sensitive.

However, the mainstream view is that car companies generally dare not easily raise prices to maintain their market share and customer relationships, but this also means that all the pressure falls on the car companies.

A person from a leading automotive company told reporters that the possibility of large-scale delivery delays is unlikely, but adjustments to some configurations or delivery delays for specific models may be unavoidable. "Some car companies will reduce non-essential computing power and storage configurations in some models, using one chip to meet the needs of two previous cars; some car companies will also be forced to cut storage configurations for non-core systems such as smart cockpits to prioritize ensuring key components like intelligent driving domain controllers.

This wave of cost increases may accelerate industry reshuffling. "Leading automakers with strong technical capabilities and excellent supply chain management can alleviate pressures through long-term agreements and diversified procurement; smaller and medium-sized automakers, however, may further lose market share due to unstable supplies, and may even face delays in new car deliveries," the aforementioned person judged.

Supply Chain Evolution

Wang Jin pointed out that the imbalance between supply and demand of memory chips caused by AI is essentially a resource squeeze by high-value-added industries on traditional manufacturing industries. "In an era where computing power defines the future, the giants that control the production capacity and distribution rights of core chips are gaining unprecedented industrial dominance.

Faced with the challenges of supply chain costs, automobile companies are also actively seeking solutions. Some automobile companies respond to cost pressures through technological transformation and adjustments to supply chain strategies, such as accelerating the research and development of low-cobalt batteries and signing long-term supply agreements to lock in prices. This is equivalent to taking automobile companies as the chain leaders to promote the accelerated technological transformation of industrial chains such as power batteries.

In terms of chip procurement, some automakers are considering reducing risks by deepening cooperation with local suppliers and signing long-term agreements. Some procurement heads of automakers have also traveled to South Korea and other places in the hope of securing a larger share of orders. "The result is unknown, but making efforts to try is better than waiting passively.

In the second half of 2025, Tesla reached a $16.5 billion chip manufacturing foundry agreement with Samsung. Tesla obtained core computing power guarantees for its autonomous driving hardware, while Samsung used this to boost its foundry business and demonstrate its AI chip manufacturing capabilities. Some domestic automakers believe that they can also learn from Tesla's strategy, exchanging scale for stability - locking in supplies through signing long-term agreements, although they may need to accept higher unit prices.

Wang Jin believes that for the automotive industry, this is not only a short-term supply crisis, but will also trigger a profound "supply chain awakening". On the one hand, automakers will rethink how to build a more resilient and independently controllable supply system; on the other hand, if the supply chain predicament persists, it is not impossible that some automakers will start vertical integration and transform into a systematic capability like BYD, which "manufactures both batteries and complete vehicles".

Taking memory chips as an example, the market is increasingly recognizing the urgency of supply chain diversification and domestic substitution. Near NIO's Hefei Xinqiao Factory is the location of Changxin Memory Technologies, a leading domestic memory chip enterprise. "The strong demand for memory chips is beneficial to Hefei, and Changxin Memory Technologies, invested by Hefei, has become one of the most watched technology companies in China," said Li Bin.

By the end of 2025, Changxin Technology's application for an IPO on the Sci-Tech Innovation Board was accepted. As the only enterprise in Chinese mainland with large-scale DRAM manufacturing capabilities, its listing process marks the further improvement of the capital ecosystem of China's semiconductor industry chain. Some industry insiders revealed that some automobile companies have begun to test domestic chips such as Changxin Storage. "Although some high-end products still have a technical generation gap, the catching-up speed is very fast.

The multiple challenges brought about by rising prices of memory chips, non-ferrous metals, batteries, etc., will force the automotive industry to accelerate the reshaping and upgrading of its supply chain," Wang Jin said, adding that an in-depth evolution concerning costs, technology, and supply chain security will sooner or later have to be promoted.

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