Analysts give an explanation for how falling lithium carbonate expenses influence EV prices

For an EV with a 70-kWh pack, the price of the battery is now RMB 12,300 – RMB 14,500 not up to when lithium carbonate expenses had been at their earlier prime, analysts say.

Falling lithium carbonate expenses are recognized to profit the profitability of electrical car (EV) makers. So how will this value trade influence the price of EVs? A brand new analysis observe supplies a just right research.

An EV powered by means of a lithium iron phosphate (LFP) battery usually makes use of 30-40 kilograms of lithium carbonate, whilst an EV with a ternary lithium battery consumes 50-70 kilograms of the fabric, stated Haitong Global Securities analyst Yang Bin’s crew in a analysis observe these days.

When the cost of lithium carbonate drops by means of RMB 100,000 ($14,540) according to ton, the price of ternary lithium batteries and LFP batteries will see marginal decreases of RMB 60 to RMB 70 according to kWh, respectively, the crew’s calculations display.

On this case, the battery price can be RMB 4,200 to RMB 4,900 decrease for an all-electric car with a 70-kWh battery capability.

Because of this the present battery price of an all-electric car with a 70-kWh battery capability is already RMB 12,300 – RMB 14,500 not up to when lithium carbonate expenses had been at their earlier prime, the crew stated.

As a backdrop, lithium carbonate expenses have by no means noticed a unmarried day of beneficial properties in China this 12 months and proceed to fall by means of a number of thousand RMB these days, consistent with information from Mysteel.

The common value of battery-grade lithium carbonate according to ton in China fell by means of RMB 7,500 to RMB 256,500 these days, down about 57 % from RMB 590,000,000 final November. The common value of commercial grade lithium carbonate according to ton additionally fell by means of RMB 7,500 to RMB 210,000 these days.

Falling battery prices will power down the entire price of EVs, which can permit automakers to look their gross margins restore, consistent with Haitong’s analysis observe.

On the other hand, the crew additionally famous that ultimately, automakers want to reach era upgrades, cut back prices and make stronger competitiveness as a way to seize enough marketplace proportion and profitability, bearing in mind EV penetration is already prime in China.

With decrease lithium carbonate expenses, EV makers can have extra space for pricing as they achieve larger benefit margins, the crew stated, including that that is anticipated so they can achieve larger marketplace proportion by means of chopping expenses.

Even though the cost of lithium carbonate has fallen by means of greater than part from its prime a couple of months in the past, the crew believes there’s nonetheless room to fall.

In 2022, China’s lithium useful resource provide used to be 727,000 heaps and insist used to be 796,000 heaps, the crew stated.

In 2023, China’s lithium useful resource provide is predicted to achieve 1.088 million heaps and insist is predicted to be 1.034 million heaps, consistent with the crew.

With the provision of lithium assets outstripping call for, there’s nonetheless room for lithium carbonate expenses to fall, with the cost of battery grade lithium carbonate anticipated to fall to round RMB 200,000 according to ton by means of the top of 2023, the crew stated.

($1 = RMB 6.8772)

This text used to be first printed by means of Phate Zhang on CnEVPost, a web page that specialize in new power car information from China.