It has become a consensus that domestic demand for new energy vehicles will be under periodic pressure in 2026. However, the industry has not lost its growth momentum but is shifting from past expansion driven by pricing and policy to a growth model supported by products, structural optimization, and markets outside China. At the same time, the rise on the cost side is squeezing profit margins, making the issue of "growing but not profiting" increasingly visible.

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Metal materials are widely used in automotive components, and their price fluctuations significantly impact cost structures. According to SMM estimates, a typical NEV's cost breakdown is as follows: power battery (35%-40%), traction motor and motor controller (10%-20%), body/chassis/interior (30%), and other electronics (7%). This analysis focuses on the traction motor system, as SMM has extensively covered batteries elsewhere. Within the motor system (10%-20% of total vehicle cost), raw materials account for the largest share. Key metal inputs include rare earth-neodymium iron boron (NdFeB) magnets (30%-35%) , copper-enameled wires (15%) , and aluminum-structural components (20%) . The simultaneous surge in these metals from late 2025 to early 2026 has placed immense cost pressure on motor manufacturers and NEV OEMs . 1. Rare Earth Metals: Supply Squeeze and Demand Resilience Drive Prices Up ​ Rare earth prices, particularly for praseodymium-neodymium (PrNd) metal, have risen sharply. As of February 9, 2026, PrNd prices reached 975,000–985,000 RMB/ton , a year-to-date increase of 33.1% . This acceleration stems from tight supply ​ (limited upstream output, weak production activity, and reduced spot availability due to long-term contract deliveries) and robust demand ​ (steady overseas orders for magnetic materials and growing expectations for NEVs and e-bikes in 2026). These factors collectively pushed prices upward . Motor manufacturers face greater challenges than magnetic material suppliers. They must absorb not only soaring rare earth costs but also high copper prices. Compounding this, motor makers struggle to pass cost increases downstream . NEV OEMs, grappling with fierce market competition, resist price adjustments. Consequently, motor producers are caught between expanding losses ​ (if they continue production) and losing market share ​ (if they halt operations). Their weak bargaining power, due to proximity to concentrated downstream customers, exacerbates the strain . 2. Copper: Structural Supply-Demand Imbalance and Financial Factors ​ Copper prices rose sharply from 87,000 RMB/ton in late 2025 to 105,000 RMB/ton in early 2026 , a gain of over 20% , and have remained elevated. This rally was driven by: Supply-chain constraints : Production disruptions in major copper-producing countries (e.g., Chile, Peru), geopolitical tensions, and logistics bottlenecks limited short-term supply. Financial influences : Global liquidity conditions and inflation expectations attracted speculative capital, amplifying price volatility. Strong demand : Sustained optimism regarding data centers and cable demand further supported prices . The impact on motors is direct and significant. Copper, critical for stator and rotor windings, constitutes a substantial portion of motor raw material costs. The price surge adds hundreds of RMB to the cost per motor , translating to billions of RMB in additional annual expenses ​ for large-scale OEMs. This pressure cascades through the supply chain, squeezing margins for material suppliers, motor makers, and vehicle manufacturers. While some industrial motor firms have raised prices, NEV OEMs have so far absorbed the costs, further straining their profitability . 3. Aluminum: Tight Fundamentals Amid Energy Transition Demand ​ Aluminum prices climbed nearly 10% ​ from December 2025 to January 2026, primarily due to structural supply-demand tightness . Demand is bolstered by global energy transition trends (e.g., NEV bodies, battery trays, and e-drive casings) and solar PV growth. On the supply side, aluminum production—highly energy-intensive—faces pressure from elevated global power prices, leading to unstable operational rates. Financial investors' focus on "green metals" has also contributed to price gains . Although aluminum's cost sensitivity is lower than copper's, it is widely used in motor housings, end covers, and cooling systems. Price increases directly raise motor manufacturing expenses, costing hundreds of millions of RMB ​ for producers at million-unit annual scales and eroding margins for motor suppliers and OEMs . 4. Path Forward: Technology and Supply Chain Adaptation ​ The concurrent rise in rare earth, copper, and aluminum prices has created unprecedented cost pressure. Motor and vehicle manufacturers urgently seek cost reductions, but technological solutions (e.g., flat-wire motors , material recycling ) require time. Short-term strategies include long-term supply contracts ​ and futures hedging ​ to manage risks. Long-term success will hinge on material innovation ​ (e.g., reducing rare earth content, optimizing aluminum-for-copper substitution) and vertical supply chain integration ​ to navigate resource constraints . SMM advises industry players to closely monitor policy shifts and alternative technologies, adapting procurement and production strategies dynamically

【SMM Aluminium Flash News】According to foreign media reports, Vedanta has announced an investment of over 125 billion rupees to strengthen its metal manufacturing capabilities. This strategic initiative aims to strengthen the domestic supply of key materials necessary for electric vehicle production, meet the needs of India's rapidly growing electric vehicle (EV) industry, and contribute to India's vision of sustainable and clean mobility. The investment involves projects such as expanding aluminum smelting operations, increasing the value-added of aluminum products, building a new zinc alloy plant, installing a zinc roaster, and expanding ferrochrome production capacity. Each initiative is designed to meet the specific material needs of electric vehicle manufacturers. Vedanta supplies key casting alloys for wheels, engine blocks, and cylinder heads, and also produces aluminum billets for battery housings, HVAC systems, and vehicle frames.

I. Production and Sales Data According to public data released by authoritative institutions such as the China Association of Automobile Manufacturers (CAAM), the production and sales of fuel cell vehicles in China from January to May 2025 are as follows: (I) Overview of Core Data: Unit: 10,000 units Indicator May Data YoY Change Value (units) YoY Change Production 0.025 -37.2% 0.1 -25.0% Sales 0.0165 -62.9% 0.1 -26.1% Note: The data statistics cover fuel cell commercial vehicles (including buses and trucks), excluding passenger vehicles and stationary power generation applications. (II) Monthly Trend Analysis: 1. January-February: Affected by the Chinese New Year holiday and the policy transition period, the production and sales pace was relatively slow (with approximately 219 units produced and 252 units sold). 2. March: The implementation of local subsidy policies drove demand, with monthly production reaching 365 units and sales reaching 377 units, marking the peak for the quarter. 3. April-May: Stable growth was maintained, with monthly production of approximately 592 units and sales of 493 units. The expansion of infrastructure contributed to an increase in market penetration. II. Key Driving Factors: Policy Support: From January to May 2025, the national and provincial/municipal governments jointly issued 116 hydrogen energy-related policies. Expansion of Application Scenarios: Heavy-duty trucks and logistics vehicles accounted for a significant proportion, with demonstration projects in ports, ore areas, etc., being delivered in batches. Among them, Hydrogen Blue Times delivered 100 hydrogen-powered heavy-duty trucks to Handan, Hebei Province. Cost Reduction: The average price of fuel cell systems has dropped to approximately 1,000 yuan/kW (a 47% decrease YoY), driving an improvement in the economic efficiency of the entire vehicle. III. Regional and Corporate Dynamics: Regional Concentration: The Beijing-Tianjin-Hebei, Yangtze River Delta, and Guangdong clusters accounted for 78% of the national sales. Performance of Top-Tier Enterprises: Antelope Hydrogen Energy: Delivered and operated 100 hydrogen-powered container trucks for Jiaxing Port Authority; Farizon New Energy Commercial Vehicle: Successively delivered 1,000 Farizon Star Intelligence H9M units to Shanghai Shangqiao; Proton Motor: Signed an export intention agreement with an Australian partner for 20 hydrogen fuel cell heavy-duty trucks. IV. Challenges and Outlook: Existing Bottlenecks: The coverage rate of hydrogen refueling stations is still insufficient, particularly in second- and third-tier cities, which lack supporting hydrogen refueling stations. H2 Outlook: Policy: As the final year of the "14th Five-Year Plan" fuel cell subsidy policy, the uncertainty surrounding the continuity of policies in 2025 will, to some extent, affect corporate production plans. Some enterprises have adopted conservative strategies due to unclear expectations for new policies, with some automakers suspending or reducing their production plans. Taking Beijing as an example, the hydrogen vehicle purchase subsidy in 2025 has decreased by 50% compared to 2021, and the subsidy disbursement cycle has been extended to 18 months, exacerbating the cash flow pressure on vehicle manufacturers and significantly reducing their purchase willingness. Additionally, the demonstration city cluster policy is set to expire in September 2025, while new policies remain unclear, plunging the industry into a "policy vacuum," with enterprises generally postponing their expansion plans. Short-term Drivers: Policy Sprint and Peak Season Effect 1. Subsidy Sprint: 2025 marks the final year of the demonstration city cluster policy, with local governments needing to complete their targets by August (Beijing-Tianjin-Hebei) or December (Zhengzhou, Hebei). It is expected that orders will be concentrated in Q3-Q4. 2. Expansion of Highway Access Policies: Ten provinces nationwide (including Shandong and Shaanxi) have introduced policies for free highway access for hydrogen-powered vehicles. The relaxation of highway access will stimulate demand for logistics and heavy-duty trucks. 3. Seasonal Installation Peak: Historical data shows that June and Q4 are the peaks for production and sales, with a rebound expected after the trough in May. The following figure illustrates the completion status of pilot projects in various target cities. (The above information is sourced from public data and survey data compiled by relevant departments.) V. Conclusion: Short-term Pressure, Expected Bottoming Out and Rebound in H2 1. The decline in May reflects a combination of economic bottlenecks, a policy vacuum, and seasonal fluctuations, rather than a reversal of long-term trends. 2. Core variables in H2: The intensity of the subsidy sprint in city clusters, the progress of hydrogen refueling station commissioning, and the speed of green hydrogen cost reduction. 3. Key periods: If sales do not rebound in June, the probability of a conservative annual forecast (7,000 units) will increase. If policy coordination is strengthened, an optimistic target (15,000 units) remains achievable.

Yingong Technology Delivers Sodium-Ion Battery Pack Products to ASEAN: Recently, Yingong Technology officially completed the first batch of deliveries of its self-developed sodium-ion battery pack products to the ASEAN market, marking the large-scale "going global" of Yingong Technology's first sodium-ion battery applied in the fields of two-wheelers and three-wheelers. The sodium-ion battery packs delivered in this batch are equipped with "Yinfeng" battery cells, which adopt polyanion cathode and anode-free technology, achieving an energy density of 180Wh/kg and maintaining stable charge and discharge with over 85% capacity at -30°C. This product offers significant advantages such as a 30% cost reduction and a 25% increase in charging speed, making it suitable for the hot and rainy climate in ASEAN. Yingong Technology has established strategic cooperation with multiple overseas vehicle manufacturers and dealers.