Is there a rise in lithium ion battery price?

On October 25, a document with the theme of “lithium ion battery price increase contact letter” signed as Shenzhen BYD Lithium Electric Co., Ltd. caught the attention of the whole industry.

According to the content of the letter, due to market changes, combined with the impact of power restrictions, the raw materials for lithium batteries in 2021 are rising continuously compared to December 2020, resulting in a significant increase in the comprehensive cost.

In this context, Shenzhen BYD Lithium Electric Co., Ltd. decided to this “lithium ion battery price increase contact letter”.For the above rumor, October 26, BYD declined to comment on it.

Why is the industry so concerned about this rumor? This is because from the current market situation, the rise in lithium ion battery price is indeed very likely to happen.

Lithium battery raw materials are rising like crazy

Since this year, as mentioned in the contact letter of BYD on the Internet, the price of lithium battery raw materials keeps rising, and there is a serious shortage of supplies. Most material manufacturers require cash delivery and still cannot guarantee supply.

According to data, on October 25, part of the lithium materials quotation continued to rise, lithium carbonate up 1000 yuan/ton, electrolyte up 1000 yuan -2000 yuan/ton, lithium hexafluorophosphate up 5000 yuan/ton.

In addition, spot cobalt prices in China have risen from a low of less than 240,000 yuan per ton in April last year to more than 380,000 yuan per ton as of October 8, up nearly 60%.

From the perspective of power battery industry chain, cobalt is the real scarce resource compared with lithium, and Nearly 99% of China’s cobalt resources are imported. The continued rise in cobalt prices could lead to higher prices for power batteries and electric cars.

In fact, BYD’s lithium ion battery price hike comes after a series of upstream suppliers of the power battery industry have announced price increases.

On Oct. 9, ganfeng Lithium, a raw material supplier, released a price adjustment letter, announcing that the lithium metal product range will increase by 100,000 yuan per ton. On October 17, Penghui Energy issued a price increase letter, listing various raw material projects and recent price changes.

The main reason for this phenomenon is the rapid increase in the demand for new energy vehicles. Despite the fact that many new energy car owners have encountered “difficulty charging” during the festival time, consumers’ enthusiasm for new energy vehicles remains unabated.

In a poll of Chinese Internet users, more than 50 percent said no when asked whether the difficulty of charging a car has swayed their decision to buy a new energy vehicle.

Most people say that the difficulty in charging is just a special situation, and new energy vehicles are still worth buying for short trips, which shows that the increase in consumer demand for new energy vehicles is still the future trend.

Whether increase the lithium ion battery price, battery manufacturers have their own words

In the background of prices rise in upstream material , BYD, CATL and other lithium-ion battery manufacturers have their own words. On October 26, CATL denied to the media that it plans to raise lithium ion battery prices.

CATL previously said, “The rise of upstream raw materials will bring some pressure on the cost end. On the one hand, the company actively expands the industrial chain, strengthens the upstream and downstream cooperation of the industrial chain, and guarantees the stability of raw material supply;

On the other hand, the company continues to optimize product design, improve product performance, production process and product yield, thus effectively reduce costs. We insist on product differentiation to win the market, to provide customers with quality products, while maintaining a reasonable profit level.”

In view of the rising price in the industry, on October 26, Guoxuan High-tech insiders told the media：

“we are also under great pressure. We are still waiting and will negotiate with enterprises, about whether to raise our lithium ion battery price. Lithium battery industry chain is very long, the company now is still constantly improving the industry chain.”

“We saw that last night, but this is BYD’s increase in cell price, not lithium ion battery price. And BYD’s batteries are more self-produced and sold, so the overall impact on the market should be small.” October 26, the power battery enterprise insider said to the media.

Nevertheless, in many news stimulation, the capital market has already begun to revel. In recent days, CATL, BYD and other new energy leading stock prices rose.

As of Tuesday afternoon, BYD’s share price was 321.13 yuan per share, up about 26% from September 29, while CATL and Guoxuan High-tech rose about 22% and 28% over the same period.

Financial people think that “new energy stocks rally fierce recently, because lithium-ion battery industry continues to increase, and the development trend of new energy vehicles and as a core component of cell cycle will continue.

The cost increases and the high-end battery gap widens

With the unexpected growth of new energy vehicles, the battery supply of new energy vehicles is facing a test. Although battery enterprises are expanding production without stopping, they can not stop the pressure of raw materials on the supply side.

As lithium and other precious metals become more precious, raw materials are in short supply, causing costs to rise further and even widening the gap in the “battery shortage”.

Battery materials soared, leading to the many small and medium enterprises in downstream encounter costs rise.

At the same time, car companies gather their main orders in the head battery manufacturers, which leads to the small and medium-sized battery manufacturers, who are already burdened by cost, unable to reduce costs by scale.

And the head battery manufacturers cannot absorb all orders at the moment, leading to the battery supply is not available. This is another cause that the lithium ion battery price may rise.

At the end of August this year, the CEO of Honeycomb energy said that the price rise of key raw materials for power batteries is market behavior, there is no solution in the short term, troubling battery enterprises is the problem of buying raw materials.

The current power battery capacity gap should be 30-50%, and the product mix of different enterprises. This year, next year, and the year after that, we even predict that power battery capacity will be tight in 2025.”

Will rising lithium ion battery price affect electric car prices?

As mentioned earlier, raw materials are skyrocketing and battery costs are also rising. There is a capacity gap in power batteries. Will the rising in lithium ion battery price which may really happen in near future affect electric car price?

And this year, as the core components of electric vehicles, the lithium ion car battery, in background that the upstream raw material increased price, have also repeatedly raised prices. Some consumers are worried that this could trickle down to higher prices for electric cars.

In this regard, an industry insider said, “In the current market, the downstream car companies are unlikely to increase the price of car sales. Even though the lack of cell was serious and lasted for more than a year, there was no large-scale price increase.”

As the price of raw materials is quoted by the market, the actual purchase price of battery enterprises is lower than that quoted by the market, and the improvement of product performance, yield, group rate and other factors of battery enterprises can offset the pressure of rising material costs.

Therefore, it is predicted that the actual cost increase of battery enterprises is about 20%-25% and the purchase volume of long-term cooperative bargaining power is taken into account.

The account period will also have an impact on the actual purchase price of batteries by automakers, and automakers may form compensation agreements with battery manufacturers on the difference in price increases.

The increased cost of batteries will be transmitted to the downstream but not all of them to the downstream automakers, and finally the purchase price of batteries by automakers may actually increase by about 10%-20%

And in the material cost distribution of electric vehicle, the battery material cost accounts for about 35%.

Therefore, if the lithium ion battery price is actually increased by about 10%-20%, the material cost of the vehicle can be estimated to increase by 3.5-7%. Since the second half of last year, the production and sales of new energy vehicles have shown an obvious upward trend.

Considering the scale effect and other factors, the overall cost of new energy vehicles may decrease, which can weaken or even offset the impact of rising lithium ion battery price to a certain extent.