Historical lows! Global average price of lithium battery packs down 20% year-on-year

Recently, a new report released by Goldman Sachs shows that at the battery pack level, the global average battery price has dropped from 153 USD/kWh in 2022 to 149 USD/kWh in 2023.

Goldman Sachs predicts that by the end of this year, the average global battery price is expected to drop to 111 USD/kWh, and further drop to 80 USD/kWh by 2026. That is to say, by 2026, the global average battery price will have fallen by nearly 50 per cent compared to 2023, which will help EVs to achieve cost parity with fuel vehicles without subsidies in the U.S. By 2030, the battery price may further fall to 64 USD/kWh.

A report recently released by Bloomberg New Energy Finance also mentioned that the price of lithium iron phosphate battery in China will be 105 USD/kWh in 2022, 121 USD/kWh in 2023 and 54 USD/kWh in 2024 respectively.

As we all know, changes of supply and demand is one of the core factors that affect the price fluctuations, and the decline of battery price is mainly attributed to the game between upstream and downstream supply and demand market. 

1) The price of upstream material went down

The data shows that in the first three quarters of this year, the average price of battery-grade lithium carbonate in the domestic spot market was 96,000 yuan/ton, down 68.2% year-on-year; The average price of nickel in the domestic spot market was 135,000 yuan/ton, down 25.0% year-on-year; The average price of cobalt in the domestic spot market was 212,000 yuan/tonne, a year-on-year decline of 25.3%.

The latest market data shows that the price of battery-grade lithium carbonate in the domestic spot market has moved down to below RMB 80,000/tonne, with an average price of about RMB 76,000/tonne on 13 December, which has touched the cost line of some lithium salt producers. At the same time, the price reduction space including anode materials, electrolyte and other midstream materials is very limited.

Soochow securities previously analyzed and calculated that according to the price of lithium carbonate of 80,000 yuan, the cost of leading lithium core is expected to be around 0.32 yuan /Wh (excluding tax), and the cost of leading ternary 523 core is expected to be around 0.45 yuan /Wh (excluding tax); The costs of lithium iron and ternary core of secondary manufacturers are about 0.37/Wh and 0.50/Wh respectively. 

2) Downstream cost reduction and pressure conduction

On December 8, Cui Dongshu, Secretary General of china automobile dealers association Passenger Car Association Branch, said in an article that the price war in the national passenger car market will continue to be fierce in 2024, and the promotion peak of new energy vehicle has risen by 7 points, and it will be solidified into price reduction. 2024 january-November cuts in the scale of 195 models, has exceeded the scale of 150 models in the whole year of 2023, and also significantly exceeded the total price cuts in the 95 models in 2022 scale.

Among them, from January to November 2024, the price reduction of new plug-in hybrid vehicles reached 15,000 USD, with a price reduction rate of 8.5%; The price reduction of pure electric new models reached 20,000 USD, and the price reduction of new car was 10%; The price reduction of new extended-range hybrid vehicle reached 15,800 USD, with a price reduction of 6.1%; The new hybrid vehicle reached 10,500 USD, and the price was reduced by 4.3%; The new regular models reached 10,500 USD, and the price was reduced by 4.3%; The new models of the regular models reached 10,500 USD, and the price was reduced by 4.3%. The amplitude reached 4.3%; The average price reduction of new conventional fuel vehicles and reduced-price vehicles is 13,400 yuan, with an average price reduction of 7.3%.

In the field of energy storage, public data show that the price of lithium iron phosphate energy storage core has dropped from 0.9 yuan/Wh-1. 0 yuan/Wh at the beginning of 2023 to the current 0.3 yuan/Wh-0. 4 yuan/Wh; The average unit price of the energy storage system has dropped from about 1.5 yuan/Wh to today's 0.5 yuan. The average unit price of the energy storage system has dropped from around 1.5 yuan/Wh to 0.5 yuan/Wh today - 0.6 yuan/Wh, and the bidding price of some energy storage systems has been lower than 0.5 yuan/Wh. 

The first quarter is the traditional off-season for lithium battery dispatching. The industry predicts that the battery price may still drop early next year.

But the current part of the new car price reduction has also long exceeded the downward speed of manufacturing costs. Xiao Zhengsan, president of China Automobile Circulation Association, has mentioned that the automobile market presents a strange phenomenon of increasing volume without increasing revenue and increasing revenue without increasing profit. As a means to stimulate automobile sales, price reduction has gradually failed, and its negative effects far exceeded expectations.

Bloomberg New Energy Finance also pointed out that the decline in the manufacturing cost of lithium battery has failed to keep up with the decline in the prices of battery, and the gap between the two has become smaller and smaller, which means that the profit margin of lithium-ion batteries in China continues to decline.

At the same time, the upstream lithium salt and cobalt salt, as well as materials including anode materials and electrolyte in the middle reaches, have very limited room for price reduction, and some materials have bottomed out.

Early in September this year, industry insiders have mentioned when talking about changes in the cost of lithium batteries, lithium battery costs should be the rapid decline in the cycle should be over, the future, in the cost of raw materials, the cost of mines do not have big fluctuations, through the enhancement of technology, process improvement, industry chain integration, lithium battery cost there is still room for decline. With the cost decreases, the application scenarios will be further expanded.

The cycle of rapid decline in the price of lithium batteries has indeed passed, because the industry development has entered a mature stage. 'On December 12, Wu Hui, president of China Battery Industry Research Institute, told Battery. com, 'During the 10-year period from 2011 to 2020, the price of lithium batteries dropped by nearly 85%, from 3,800 yuan/kWh to 578 yuan/kWh. Since 2021, due to the sharp rise in the price of raw materials such as lithium carbonate, the average price of lithium batteries has risen to 1.2 yuan /Wh in 2022, and since 2023, with the decline in the price of raw materials such as lithium carbonate, the average price of lithium batteries has fallen back to the current level of about 0.4 yuan /Wh..

For the future trend of battery prices, Wu Hui predicted that, due to the gradual maturity of the industry, the probability will not appear before the big ups and downs of the price. In general, it is a steady decline in the trend, with the level of automation, superimposed on the scale effect and technological advances, the price of lithium batteries will still continue to go down.