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

I. Policy Review 1. Implementation of the Third Batch of Subsidy Policies for China's Fuel Cell Vehicle Demonstration City Clusters On May 3, the Ministry of Finance and four other ministries and commissions jointly issued the "Notice on the Application for the Third Batch of City Clusters for the Demonstration and Application of Fuel Cell Vehicles," explicitly including hydrogen-powered heavy trucks, ships, and aviation within the scope of subsidies. For the first time, the policy of "replacing subsidies with rewards" was proposed to favor the green hydrogen production sector. The subsidy standards were increased by 20% compared to the previous two batches, with individual city clusters eligible for up to 5 billion yuan in support. 2. EU Adopts Amendments to the Hydrogen Act On May 5, the EU Council approved amendments to the Hydrogen Act, requiring imported hydrogen to meet a carbon intensity standard of ≤3 kg CO₂/kg H₂, and establishing a 2 billion euro special fund to support domestic electrolyzer manufacturing. The Act also simplifies the approval process for green hydrogen projects, allowing transnational hydrogen pipeline projects to enjoy a "fast-track" process. 3. US Department of Energy Launches the "Green Hydrogen Accelerator Initiative" On May 6, the US Department of Energy announced a total of 980 million US dollars in funding for 15 green hydrogen projects, with a focus on supporting R&D in wind and solar power-to-hydrogen production, storage, and transportation technologies in the Midwest region. Among them, Utah's "Solar-Green Hydrogen-Ammonia" integrated project received 120 million US dollars, aiming to achieve a green hydrogen cost of less than 2 US dollars/kg. 4. Japan Releases the "Ammonia Energy Strategy 2025" On May 8, Japan's Ministry of Economy, Trade and Industry released a document, clearly prioritizing ammonia as a hydrogen carrier for development. It plans to establish 10 large-scale ammonia receiving terminals by 2030 and promote the inclusion of ammonia-fueled ships in the carbon emissions accounting system of the International Maritime Organization (IMO). II. Corporate Developments 1. Toyota Unveils the World's First Liquid Hydrogen System for Commercial Vehicles On May 2, Toyota announced that its liquid hydrogen fuel cell truck had achieved a driving range of 1,000 kilometers, a 40% improvement over gaseous hydrogen storage. It plans to commence commercial testing in Japan and Australia in 2026. 2. Plug Power Expands US Green Hydrogen Plant On May 4 (US time), Plug Power announced an investment of 350 million US dollars to expand a 100MW electrolyzer production line in Texas, targeting an annual green hydrogen production capacity of 50,000 mt by 2026 to meet the demand for zero-carbon transportation hubs in California, New York State, and other regions. 3. Guohong Hydrogen Energy and Shenergy Group Sign Agreement for Wind and Solar Power-to-Hydrogen Integrated Project On May 6, Guohong Hydrogen Energy, in collaboration with Shenergy Group, launched a 500MW wind and solar power-coupled hydrogen production project in Ordos, Inner Mongolia, accompanied by the construction of a transportation network of 200 hydrogen-powered heavy trucks, with a total investment of approximately 6.5 billion yuan. 4. Cummins and Siemens Sign Cooperation Agreement on Electrolyzer Technology On May 7, the two companies announced a joint development of a 100MW-class alkaline electrolyzer, aiming to improve efficiency to over 75% and explore modular designs to reduce the cost of large-scale deployment. III. Technological Advancements 1. ITM Power Breaks Through PEM Electrolyzer Efficiency Bottleneck On May 3, UK-based ITM Power announced that its latest generation PEM electrolyzer achieved a current density of 3.5A/cm², with system efficiency exceeding 85%, while extending equipment lifespan to 100,000 hours and reducing costs by 18%. 2. Chinese Team Develops New Liquid Organic Hydrogen Carrier (LOHC) Material On May 5, the Dalian Institute of Chemical Physics, Chinese Academy of Sciences, unveiled a new hydrogen storage carrier material that achieves a hydrogen storage density of 82g/L at room temperature and pressure, with dehydrogenation temperature reduced by 40% compared to traditional materials, and has entered the pilot stage. 3. Toyota Fuel Cell Lifespan Exceeds 20,000 Hours Test data from Toyota Central R&D Labs shows that its hydrogen fuel cell, after accumulating 20,000 hours of operation under simulated commercial vehicle conditions, has a power decay rate of less than 3%, reaching international leading levels. 4. Green Hydrogen Production Cost Drops to $2.1/kg According to BNEF data, leveraging $4/W wind and solar power prices in the Middle East and cost reductions in electrolyzers, green hydrogen production costs have dropped to $2.1/kg, a 30% decrease from 2024. IV. Industrial Collaboration 1. China Energy Group and CATL Collaborate on "Hydrogen-Storage-Heat" Integration On May 2, the two parties signed an agreement to jointly build a wind-solar-hydrogen-storage integrated demonstration project, incorporating solid-state hydrogen storage, compressed air energy storage, and waste heat power generation technologies, aiming to achieve a multi-energy complementary supply system. 2. Sinopec and Saudi Aramco Joint Venture for Refining and Hydrogen Production Project Launched On May 7, Sinopec and Saudi Aramco announced a joint venture to build a green hydrogen project supporting the Saudi Yanbu refinery, utilizing local wind and solar resources to produce 200,000 mt of green hydrogen annually, with by-product green ammonia used as chemical raw material. 3. International Hydrogen Energy Council Releases "Global Green Hydrogen Trade Roadmap" The report predicts that global green hydrogen trade will reach 120 million mt by 2030, with 35% achieved through liquid hydrogen shipping, and calls for the establishment of a unified quality certification system and cross-border hydrogen pipeline standards. 4. Germany and Norway Establish Offshore Wind-to-Hydrogen Alliance On May 8, the two countries signed an agreement to build a 6GW offshore hydrogen production base utilizing North Sea wind resources and to transport green hydrogen to the European continent via subsea pipelines, with a total investment of approximately €12 billion.

[Electricity Prices and Alumina Prices Declined Together, Aluminum Costs in February Dropped Sharply by Nearly 3,500 Yuan/mt] SMM, February 28: According to SMM data, the average tax-inclusive full cost of China's aluminum industry in February 2025 was 16,909 yuan/mt, down 15.4% MoM and up 2.5% YoY. The main reason was the sharp pullback in spot alumina prices during the period. The average SMM alumina index price in February was 3,490.5 yuan/mt (January 27 to February 25), down by approximately 1,600 yuan/mt compared to the previous month's average. The average SMM A00 spot price in February 2025 was about 20,484 yuan/mt (January 27 to February 25), and the average profit of the domestic aluminum industry was approximately 3,575 yuan/mt, marking a shift to a significantly profitable state for the industry.

[SMM Analysis: Weekly Price Situation of LFP] This week, the LFP market price remained relatively stable, with a relatively small increase. Except for a slight rise in mid-end power prices, the price increase for other types was not significant.

[SMM Analysis: The price difference between peak and valley in 19 provinces and cities across the country exceeded 0.7 yuan/Kwh in July] SMM News on July 12: According to SMM's tracking of 1-10Kv electricity prices for general industrial and commercial users, the maximum price difference between peak and valley in 19 regions exceeded 0.7 yuan/kWh in July. In July, various regions entered a critical stage of peaking in summer. In order to better guide industrial and commercial power users to reduce peak loads and fill valleys, many regions across the country began to implement peak electricity prices, resulting in a significant increase in the price gap between peak and valley power prices in various regions.

【Texas' Continued High Temperature Raises Electricity Demand and Power Prices Jump 1600% Overnight】Affected by the continuous high temperature, the electricity demand in Texas, the United States, has continued to rise, pushing up the spot market price of electricity. Late on the 17th local time, the electricity price on the website of the Electric Reliability Council of Texas (ERCOT) soared to US$688 per megawatt-hour, an increase of 1600% compared to the previous day. According to this electricity supplier, the electricity demand next week will break the record set in May 2022. Reports say that Texas has its own independent power grid, and the actual electricity price paid by consumers depends on the type of contract they sign with the supplier. Many electricity suppliers link the electricity price to demand, and the price rises sharply when electricity consumption surges during extreme weather. In addition to weather factors, Texas has many computing-intensive industries such as data centers and Bitcoin mining, which further increase the demand for electricity.

From January to February, domestic silicon metal prices showed a "down-stable-down” trajectory.

SHANGHAI, Jun 5 (SMM) – The average price of SMM prebaked anode dropped 306 yuan/mt in June.

SHANGHAI, May 4 (SMM) – In May, prebaked anode prices are expected to slump nearly 1,000 yuan/mt, while alumina prices have shown no signs of bottoming out, thus there is still room for aluminium costs to decline in the future.

SHANGHAI, May 4 (SMM) – In terms of input costs, alumina and coal prices both fell last week.