China’s Contemporary Amperex Technology Co. Ltd. (CATL), the world’s biggest EV battery maker, is reportedly offering reduced battery costs to specific Chinese EV manufacturers, according to a report by CnEVPost.
CATL, which controlled 37.1% of worldwide EV battery sales in 2022, has offered a deal on EV batteries to automakers like NIO, Li Auto, Huawei, and Zeekr, which CATL regards as its “strategic clients.” NIO and CATL signed a five-year strategic cooperation agreement on January 17. However, CATL’s most significant customer, Tesla, has not been included in its “strategic client” group, and it has a gigafactory in Shanghai.
CnEVPost elaborates on how the battery agreement will work. Automakers who sign the partnership will have to commit around 80% of their battery purchases to CATL, and in exchange, CATL will settle a part of the power supply cost based on a lithium carbonate price of RMB 200,000 [$29,116] per ton for the next three years. As per the report, companies that can purchase batteries at RMB 200,000 per ton will definitely be able to minimize cost pressures. Currently, the quoted price for battery-grade lithium carbonate is around RMB 470,000 [$68,427] per ton.
The program will be launched in Q3 2023, and CATL has sought a 10% price reduction from its raw material suppliers since the company ties its battery prices to raw material prices. Since the end of 2022, lithium carbonate prices have been declining, and it may drop by as much as 20% in China in 2023, according to Ouyang Minggao, a member of the Chinese Academy of Sciences, at a conference today. Lithium resources are expected to be in supply-demand balance in one to two years.
