Impact of Russia-Ukraine War on CCP’s Auto Industry

As of now, more than a month following the Russian invasion of Ukraine, the global energy panic generated by the war is propelling crude oil to above $100 per barrel and keeping the trend, as both Russia and Ukraine are major energy exporters.

In Communist China, 92 gasoline has entered the era of 8 yuan RMB per liter, and 95 gasoline has over the threshold of 9 yuan per liter, leading to an additional expense of several dozens of yuan for a full tank of petrol that has directly impacted the living cost of the public. Moreover, high gasoline prices have also reduced people’s enthusiasm for purchasing cars. As Russia is a major producer of nickel metal, since the start of the war, the current nickel future contract on the London Metal Exchange once soared to a record high of more than $100,000 per ton from the previous $29,000 per ton. Given nickel is a raw material used to make batteries in green cars, the sharp rise in nickel prices has also contributed to the increased cost of electric vehicles.

Tesla raised its sale prices three times within a week in Communist China, leading to price hikes of up to 30,000 yuan, while Chinese electric vehicle manufacturers, such as BYD and XPENG, followed suit with increases of around 10,000 yuan.

Currently, in light of a double blow of hiked vehicle sale prices and high gasoline prices, sales of commercial vehicles in Communist China fell 16% year-on-year in February, and passenger car sales fell 13% in March. In addition, heavy-duty truck sales also fell 67% year-on-year in March, presenting the worst March sales for this model since 2017.