Oil prices, semiconductors, and raw materials all rose... High-cost automobile structure will gradually expand

*This content was translated by AI.

The global auto industry is facing intense cost pressures due to soaring raw material prices and supply chain crises, putting an end to the last two years of price-cutting competition centered on China. Recent tensions in the Strait of Hormuz have led to a surge in international oil prices, pushing production costs across petrochemicals and battery materials up 15-30%. In addition, the supply of major minerals, such as Cheon Jin-seok, a key raw material for electric vehicle motors, is disrupted, and rising logistics costs and delivery delays caused by the war's change of sea transportation routes are hindering the production rhythm of finished car factories around the world.

In the semiconductor field, the rapid growth of the AI industry has a large chain impact. As the supply of memory semiconductors for vehicles became insufficient due to soaring demand for chips for AI computation, the prices of regular DRAMs soared 190% and high-end DDR5 prices soared 310%. As a result, the memory cost of each intelligent car tripled from about 150,000 won to more than 430,000 won in a year. In addition, the Kyoto cycle of power semiconductors and MCUs is increasing to 26 to 30 weeks, with prices rising by 20-40%, adding to the burden of manufacturing costs.

The price of carbon steel lithium, a major battery material, also rose 102% from its low point in 2025, with the increase in unit prices based on 60kWh battery packs exceeding 600,000 won. The simultaneous rise in prices of large commodities such as copper, aluminum and rare earths is pushing up the cost of motors and body structures in all directions. As a result of this complex cost increase, the total cost of a mid-sized smart electric SUV has increased by nearly millions of won. The situation is worse in China, especially for the global automobile industry, and the average operating profit margin plunged to around 2%. In fact, it is close to breaking even.

In response, automakers are increasing sales prices and reducing benefits. Some models in China have raised their official prices by 5,000 yuan, while major brands are reducing handset discounts by 15-20% and reducing existing promotions such as free charging or self-driving software. Due to supply chain shortages, the delivery period of new cars is being extended from the previous two to four weeks to six to eight weeks.

Global companies such as Honda, Toyota and Hyundai are also adjusting their production speeds or downgrading their target sales due to disruptions in semiconductor supply and marine logistics. Securing supply chain stability is expected to be a key indicator of corporate competitiveness in the future as energy supply risks due to the instability of the Middle East and competition to secure chips with the AI industry is expected to be prolonged. In the end, the era of low-cost competition in the automobile market is ending and entering a new stage that has to endure a high-cost structure.

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*This content was translated by AI.