In response to the rumor that “Chinese battery factories plan to reduce production because the price of lithium carbonate exceeds 600,000 yuan ($85,156)/ton”, a spokesperson of Chinese battery maker EVE Energy said that the company is currently operating as per usual and that the last two months (in terms of production scheduling) have been basically the same, mainly aiming at hitting delivery times. Another firm, Gotion Hi-Tech, said that it is still in full production and sales as planned, and the company’s production capacity is also continuously improving to ensure supply, China Securities Journal reported on November 15.
A lack of computer chips and expensive batteries is lurking like a ghost under the prosperous scenery of new energy vehicles in China. From 2015 to 2021, the sales volume of new energy vehicles in China continued to rise, reaching 3.521 million vehicles last year, up 1.6 times year-on-year. According to the forecast of China Association of Automobile Manufacturers, the production and sales of China’s new energy vehicle market will exceed 6 million units in 2022, achieving a growth rate of about 50%, accounting for 60% of the global market, with a market penetration rate close to 25% and a possession of 15 million-16 million vehicles.
However, the cost of batteries now accounts for 40% to 60% of the price of a new energy vehicle. The price of battery-grade lithium carbonate has risen sharply from 53,000 yuan/ton at the beginning of 2021 to nearly 600,000 yuan/ton at present, an increase of more than 10 times. Some industry insiders revealed that, for every 10,000 yuan/ton increase in the price of battery-grade lithium carbonate, the price of power batteries will increase by at least 7%. Furthermore, battery enterprises implementing the linkage mechanism of raw material prices will transfer the cost pressure to automakers by raising the overall battery price.
Chinese media outlet The Paper also learned that under the situation of tight supply and high price of battery-grade lithium carbonate, some enterprises in the industry chain have paid the advance payment for products for the whole of next year in order to ensure production capacity.
In recent years, lithium battery giants and mining enterprises have continued to increase the layout of their lithium resources, seeking independent control.
On the supply side of lithium resources, leading enterprises represented by Tianqi Lithium, Qinghai Salt Lake Potash and Ganfeng Lithium have continuously increased their self-sufficiency rate of resources and maintain low costs through their own supply guarantee. Among them, Tianqi Lithium is the only lithium enterprise with 100% self-sufficiency in raw materials in China’s ore lithium extraction industry at present.
In the industry chain, CATL, Sunwoda, Gotion Hi-Tech, EVE Lithium, etc. have extended their layout to the upstream resources, and EVE Lithium has laid out relevant salt lake projects through shareholding cooperation. Gotion Hi-Tech has laid out the Yichun lepidolite project and a salt lake project in Argentine. As for CATL, the leader of power battery companies, the company has been continuing to distribute global lithium resources through equity participation and began to control its own lithium mines in 2022.
In addition, new energy automobile enterprises such as NIO and GAC Aion have also laid out lithium carbonate products.