When will the price war in the power battery industry start?

The price war in the power battery industry is imminent.

The price war of new energy vehicles is spreading to the power battery industry. With the slowdown in the production and sales of new energy vehicles in the downstream of the industrial chain and the drop in the price of lithium carbonate caused by the release of upstream lithium mine capacity, a price war in the power battery industry in the middle of the industrial chain is imminent.

According to reports, in order to secure orders and grab shares, Ningde Times, the world's largest manufacturer of power batteries, will implement a plan called "Lithium Mine Rebate" to reduce the price of power batteries. The core terms of the "Lithium Mine Rebate" plan of the Ningde era are: in the next three years, the price of lithium carbonate for some power batteries will be settled at 200,000 yuan/ton.

In recent years, thanks to the popularity of the new energy vehicle market, the price of lithium carbonate has skyrocketed. Last year, it once exceeded 600,000 yuan/ton. After several months of decline, it is still as high as more than 400,000 yuan/ton. In the future, if the Ningde era settles the price of lithium carbonate at 200,000 yuan/ton, it will be equivalent to a 50% discount on the current price of lithium carbonate, which will be hugely attractive to car companies.

However, Ningde Times also set its own conditions: car companies must purchase at least 80% of Ningde Times' batteries in the next three years, and must pay a certain percentage of advance payment.

The industry believes that in recent years, the price of lithium carbonate has risen mainly due to strong demand, short supply, and the impact of the epidemic. In the second half of this year, it is expected to return to a rational level of 350,000-400,000 yuan/ton; RMB 10,000/ton or so. At present, in the context of the downward price of upstream lithium mines, Ningde era, the overlord of power batteries, has a greater "right to speak".

In recent years, in order to ensure the stability of its raw materials for power batteries, Ningde Times has also continued to expand upstream lithium mines. Ningde Times' "Lithium Mine Rebate" plan is to rely on its lithium ore resources and power battery dominance to promote lithium carbonate. The return of the price, in order to reduce the price of the power battery, while expanding the new energy vehicle market, maintain its dominance in the power battery industry.

In recent years, the price increase of lithium resources and power batteries has made Ningde era a lot of money. However, the high cost of power batteries has also led downstream car companies to seek alternative suppliers, especially the rise of power battery suppliers such as BYD, which has brought considerable pressure to CATL.

The data shows that in the whole year of 2022, CATL will rank first with a market share of 48.2%, while BYD will rank second with a market share of 23.45%. In January this year, BYD's monthly market share increased to 34.12%, exceeding the market share of last year by more than 10 percentage points. In addition, other second-tier power battery manufacturers are also investing in expanding production to grab market share.

Data show that by 2025, the power battery production capacity required by China's new energy vehicle market will be about 1,000-1,200 GWh. However, the production capacity plans announced by battery factories, OEMs and other cross-border enterprises have reached 4,800 GWh, which is more than four times the expected production capacity. This means that in the context of overcapacity, only by locking in current and future orders can CATL's dominance remain unshakable.

At present, it is still unknown whether the "lithium mine rebate" plan actively launched by Ningde era can be unanimously signed by car companies. However, the price war in the power battery industry is imminent. Recently, Honeycomb Energy has launched a 10% price reduction plan, and some suppliers have received emails from the company requesting to cooperate with the price reduction. Yiwei Lithium Energy also stated that downstream customers are basically still not yet profitable, so as a major supplier, the company will give certain support in strategy and partly benefit downstream in terms of profits. The market expects that in the future, under the background of the gradual release of upstream production capacity and the slowdown of downstream demand growth, the competition in the power battery industry will further intensify.