The ongoing cost increase of raw materials such as steel and lithium that have driven up car prices over the past year or more has come to an end, car makers have said.
“Headwinds for raw materials have disappeared,” Thierry Piéton, Renault’s chief financial officer, said on the company’s first-half financial results call. “We are going into a period where costs should gradually get better.”
Renault’s note of optimism about material costs was picked up by other car makers as they told financial analysts of a more settled environment after multiple price shocks delivered first by Covid and then Russia’s war on Ukraine.
Other inflationary pressures remain, but there was a sense of relief that the bill of materials for each car was on a downward trajectory for a change.
Renault has even acted on the falling raw material prices to make its cars cheaper, while promising investors it wouldn’t damage the company’s vastly improved profit margins.
By way of reference, Renault CEO Luca de Meo singled out the newly facelifted Renault Clio and upcoming revamp of the Renault Arkana SUV. The price of the facelifted Clio E-Tech hybrid in the UK starts at £21,295, a £900 cut from the outgoing model. “When there is an opportunity to give some pricing back while continuing to improve margins, that is what we’ll do,” de Meo said.
The falling price of lithium was a big talking point, both for the likes of Tesla selling exclusively electric cars and for more traditional players struggling to achieve anything close to price parity with combustion-engined cars.
“Lithium prices were absolutely insane there for a while,” Tesla CEO Elon Musk said on his company’s earnings call. The price of lithium carbonate, the form of the metal that battery makers buy, has halved since November on the Shanghai Metals Market, a key trading platform.
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