It is the balances on lithium carbonate, used in particular for the manufacture of battery cells for electric vehicles. Finally, not for everyone, according to the CnEVPost site, which is based on information from the local media 36kr. Indeed, CATL, one of the world leaders in the manufacture of battery cells (37.1% of global sales), has decided to lower the price of its batteries for certain targeted car manufacturers.
These are essentially “small” manufacturers, all Chinese, considered as “strategic customers“. NIO, Li Auto, Huawei and Zeekr (Geely group) would thus be concerned. On the other hand, Tesla, CATL’s largest customer in China, was not admitted into this circle of “strategic customers“Does this mean that the two protagonists have already signed specific agreements in terms of supply?
Concretely, CATL will pay – over the next three years – part of the bill on the basis of a negotiated rate of approximately €27,295 per ton of lithium carbonate, against €54,571 currently. The only imperative is that the car manufacturers concerned will commit to buying 80% of their batteries from CATL. This subsidy system will be put in place from the 3rd quarter of 2023. Some manufacturers have already expressed their interest in this agreement.
For its part, CATL asked its suppliers of raw materials for a 10% reduction, a first according to them given the high gross margins of the Chinese manufacturer.
Last year, CATL decided to index the price of its batteries to that of raw materials. As a result, while materials posted a 40% increase, the price of CATL batteries mechanically increased by 40%. Many small manufacturers such as NIO and Li Auto had then taken the decision to develop their own batteries in-house and to diversify their supply of batteries. This is what Xpeng Motors – CATL’s third largest customer – did, which last year changed supplier by opting for CALB and Svolt Energy.
According to Ouyang Minggao, a member of the Chinese Academy of Sciences, lithium carbonate prices “could fall by 20% in China in 2023“. The supply and demand for lithium resources should regain their balance within two years (source Electrek).
Morgan Stanley Bank expects $67,500 per ton of lithium carbonate in China in the first half of 2023, then $47,500 per ton in the second half of 2023.
However, this CATL rebate for the benefit of local manufacturers risks embarrassing second- and third-tier battery manufacturers who will have no choice but to lower their prices.
Finally, what foreign manufacturers with partnerships with CATL, such as Ford, which announced the establishment – from 2026 – in the United States of a battery factory (3.5 billion dollars of investment) in partnership with CATL? This is not likely to help the already strained relations between the United States and China in the commercial field…