TrendForce’s latest research report revealed that the global lithium battery market experienced a subdued performance in January.
Cell manufacturers continue to grapple with high inventories, resulting in production rates lingering at historically low levels. The report indicates that the Average Selling Price (ASP) of Electric Vehicle (EV) cells has witnessed a continuous decline.
Notably, the most significant drop occurred in EV pouch cells, with a Month-over-Month (MoM) decrease of 7.3 percent, settling at CNY 0.51/Wh. Analysts predict that while prices are anticipated to continue their descent in February, the rate of decrease is likely to slow down.
In the Energy Storage System (ESS) sector, despite the Lunar New Year approaching, market demand has remained relatively stable with no significant fluctuations. Although the production rate for ESS cells did not match that of EV cells, prices remained relatively steady, experiencing a MoM decline of 2.2 percent to CNY 0.44/Wh.
However, the scenario was different for consumer cells in January, as demand weakened. This was compounded by a continuous drop in the price of lithium cobalt oxide and a substantial MoM decrease of 7.4 percent in cathode prices. As a result, there was a slight decrease in the cost of Lithium Cobalt Oxide (LCO) cells in January, experiencing a MoM drop of 5.9 percent to CNY 5.43/Ah.
The report notes that the price of raw materials has stabilized, and as the Chinese New Year approaches, small-scale rigid demand replenishment among raw material suppliers has led to a slight rebound in lithium prices, while cobalt prices have generally remained steady.
Despite these positive indications, the downstream demand has not fully recovered, casting doubt on the momentum for a sustained rebound in raw prices. Consequently, the overall price trend for consumer cells in February is expected to remain stable.
TrendForce underscores that lithium salt prices have stabilized, but the growth of the EV market may face a slowdown in 2024. This aligns with Tesla’s insights shared during their Q4 earnings call last year, where expectations were set for moderated sales growth in the current year.
Faced with intensified market competition and buyers’ emphasis on cost reductions, Chinese battery suppliers are likely to implement cost-cutting measures, aiming to push EV cell prices down to CNY 0.3/Wh in 2024.
However, this strategy could pose operational challenges for suppliers facing disadvantages in securing raw materials. In light of these trends, the overall market average price of battery cells is expected to slightly decrease in the first quarter of the year.