The prices of electric vehicle (EV) batteries in China market experienced a decline in June, according to a report by TrendForce.
However, the rate of decline across different battery types has started to slow down. The average selling prices (ASPs) of EV square ternary cells, LFP cells, and pouch ternary power cells each fell by 1-2 percent month-on-month (MoM) in June, settling at 0.74 CNY/Wh, 0.65 CNY/Wh, and 0.78 CNY/Wh, respectively.
The decrease in upstream material costs played a significant role in driving down the prices of these battery cells. On the demand side, the market for EV batteries showed signs of stabilization in June, recovering to levels last seen in the fourth quarter of 2022.
In the energy storage sector, market demand has rebounded significantly, especially in overseas markets. Chinese suppliers received substantial orders from buyers during the first half of 2023, and the second half of the year is expected to be primarily focused on delivering these products.
As lithium prices gradually recovered in China, the demand for energy storage cells also increased. Consequently, the ASP of energy storage cells grew by 3 percent in June, reaching 0.67 CNY/Wh. Demand in the energy storage market is predicted to regain stability in the second half of 2023, with enterprise orders surpassing expectations.
The consumer electronics market demonstrated satisfactory demand for consumer cells in June. However, the surge in raw material prices, such as cobalt and lithium, led suppliers to adopt more aggressive pricing strategies. This resulted in increased cost pressures for lithium cobalt oxide (LCO) cells, which in turn slowed down the decline in battery prices.
The ASP of LCO cells fell by 1.8 percent in June, reaching 7.42 CNY/Ah. Although lithium prices have started to stabilize, it remains to be seen whether the growing demand from the consumer electronics market can effectively support LCO cell prices in July. Current expectations suggest that prices in July will not easily rise.
The report highlighted the stabilization of lithium prices in June, indicating a gradual return to normalcy. The global supply of lithium is projected to reach 1.2 million tons of lithium carbonate equivalent (LCE) in 2023, with a 40 percent annual growth rate.
Demand is expected to reach approximately 1.11 million tons of LCE, representing a 26 percent annual growth rate. Significant growth in lithium mineral production is predicted for various regions, including Africa, Australia, China, and South America, which will contribute to a gradual rebalancing of the supply-demand dynamics.
Bolivia, known for having the world’s richest lithium reserves, remains largely untapped industrially. However, in recent years, companies such as CATL and CITIC Guoan have announced cooperative agreements with local Bolivian governments to develop these lithium reserves. Their goal is to achieve an annual production capacity of 100,000 tons of lithium salts by 2025.
TrendForce predicts that the supply of lithium mines will continue to grow, leading to a more diversified and decentralized supply of lithium ore in the long run. This shift should help reduce market supply risks. However, it is crucial to monitor potential risks associated with changes in local government policies on lithium mining investment and export.