Recently, the share prices of lithium miners including Albemarle, SQM, Livent, Piedmont Lithium and Lithium Americas took a dive, dropping as much as 9% on a day when the S&P 500 only lost a fraction of a point. This sudden plunge left investors scratching their heads, until analysts revealed that the world’s largest EV battery maker, China’s Contemporary Amperex Technology (CATL), had changed its pricing strategy.
CATL announced that it would now price its batteries on a lithium price-linked basis, with 50% of the batteries embedding a price of 200,000 yuan (about $30,000) per metric ton of lithium carbonate, and the rest of the batteries embedding the lithium carbonate spot market price (which is currently around 428,000 yuan per metric ton). This move is expected to lower battery prices, at least for now, as CATL is able to sacrifice earnings from its mining operations in order to sell more batteries.
Analysts are now wondering if this could lead to a lithium price war. While EV sales are expected to remain high and drive up demand for lithium, most analysts don’t expect prices to drop significantly in the long run. Citi analyst Jack Shang believes that other battery-makers may follow CATL’s lead in order to gain market share.
The chain from lithium to batteries to EVs is complex and ever-changing, as Western automakers look to develop domestic sources of raw materials. Ultimately, CATL’s new pricing strategy is likely to mean lower profits for battery-makers, slightly higher profits for carmakers—and good news for lithium miners.
FAQ
Q1: Are electric car batteries recyclable?
A1: Yes, electric car batteries are recyclable.
Q2: Are electric car chargers free?
A2: It depends on the charger and the location. Some electric car chargers are free, while others may require a fee.
Q3: Can electric car batteries be rebuilt?
A3: Yes, electric car batteries can be rebuilt with the right tools and knowledge.
