China’s top EV battery maker CATL’s big discounts to Nio, Li Auto could force rivals to cut prices, with benefits cascading to consumers
- Ningde-based CATL has agreed to offer top clients like Nio, Li Auto, Huawei and Zeekr batteries at sharply lower prices for the next three years, industry sources said
- CATL, China’s dominant EV battery maker, has seen smaller rivals like Sunwoda and Svolt lure away some long-term clients
CATL, based in Ningde, east China’s Fujian province, last week agreed to offer many of its major clients – including Nio, Li Auto, Huawei and Zeekr – batteries based on the lithium carbonate price of 200,000 yuan (US$29,163) per ton under a three-year contract, according to two industry sources.
The surging price of lithium last year, a major material used in EV batteries, has increased production costs for carmakers, hurting their profitability. Lithium carbonate, which peaked at 597,500 yuan a ton in China in November, has since retreated, dropping to 425,000 yuan per ton last week, about 30 per cent shy of the peak.
CATL’s dominance allows it to lock in prices with some miners at below-market average, the sources added.
“Prices of EV batteries will continue to drop this year because of the lower lithium costs,” said Davis Zhang, a senior executive at Suzhou Hazardtex, a supplier of specialised vehicle batteries. “A downward trend [of EV battery price] is shaping up that will benefit carmakers and buyers.”