Lithium Batteries Rise 5-15%, Price Hikes May Continue Until 2023

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According to a report by Digitimes last Wednesday, battery module factories have been notified that the prices of cylindrical lithium battery cells will rise again by 5%-15% early next year due to the rising downstream demand for electric vehicles and energy storage.

In addition, according to the latest survey by Bloomberg New Energy Finance (BNEF), the average price of a lithium-ion battery pack is $132 per kWh, down 6% year-on-year. However, due to the increasing pressure on material costs, the price of battery packs may rise to $135 per kWh next year, further slowing down the cost reduction process of electric vehicles. Another report by Taiwan Electronic Times added that the trend of price hikes of batteries could continue until 2023.

The Bloomberg report pointed out that, although the overall price of batteries has dropped this year, if only the second half of the year is taken into account, then the price has actually been rising.

At present, the price of a NMC (811) battery is nearly $110 per kWh, and it is estimated that the price in Q4 will be $10 higher per kWh than that of Q1. The lithium iron phosphate battery, which is known for its high cost performance, has increased by 10%-20% in China since September.

According to the report, the price hikes of batteries will not stop here, and other recent news from throughout the supply chain seem to confirm Bloomberg’s prediction that prices will continue to rise.

Leading battery factories that resisted raising prices last year are now charging their minds, many of them are now informing customers that their price quotes will be raised by about 20%. Some manufacturers predict that the entire industry will see higher pricesin 2022.

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According to a research report released by Changhong NewEnergy at the end of last month, the company’s lithium battery business has seen strong demand. Although the company has raised prices for some of its products, it “cannot completely cover” the price increase of raw materials, yet some orders that will increase price will not take effect until 2022.

BNEF previously predicted that the average price of battery packs will fall below $100 per kWh in 2024. By then, even without subsidies, the selling price and profit of electric vehicles will be equal to those of fuel vehicles. In other words, they will be more cost competitive.

However, under the expectation that the average price of battery packs will continue to rise, the time it takes to see an average price of $100 may be postponed for another two years into 2026, while the popularity of electric vehicles, profits of car companies, and energy storage programs, will be affected.