The EV battery market in December pursued its inventory reduction strategy, resulting in a further decrease in cell demand. A combination of a lack of market orders and the suppliers’ need to stabilize cash flow led to widespread low-price sales strategies. This caused a continuous decline in prices across various product categories. TrendForce reveals that the ASP of Chinese EV cells saw a 6–10% decrease in December. The prices for EV square ternary cells, LFP cells, and pouch ternary power cells fell to CNY 0.51/Wh, CNY 0.45/Wh, and CNY 0.55/Wh, respectively.
In the ESS cell sector, a combination of lower-than-expected market demand and rapid capacity expansion led to oversupply and significant inventory build-up, evident since the third quarter of 2023. This resulted in the ASP of Chinese ESS cells dropping to CNY 0.45/Wh in December—a monthly decline of about 4%. Moreover, intense competition in the bidding process pushed centralized procurement prices (bulk orders negotiated on price) below CNY 0.40/Wh, undercutting the production costs of some manufacturers.
In the consumer cell segment, demand continued to cool in December, with cell manufacturers offloading their inventory at low prices to actively reduce stock, keeping the operating rate low. The ASP of LCO cells dropped by approximately 8%, down to CNY 5.77/Ah. With the ongoing price decrease in raw material lithium carbonate, the cost of LCO cells is also on a downward trajectory. Looking toward the off-season demand in 1Q24, cell prices are expected to continue declining in January. However, with a recent slight increase in cobalt raw material prices, the drop in consumer cell prices might slow down in January.
TrendForce notes that in 2023, the Li-ion battery industry experienced a significant release of capacity. However, due to slowing end demand, the industry entered an oversupply cycle, leading to a significant reduction in the prices of lithium battery raw materials. By the end of 2023, the price of lithium carbonate had fallen below CNY 100,000/ton, contributing to a continuous decrease in cell material costs.
Compared to the beginning of 2023, by December, the ASP of power cells had fallen by more than 50%. The EV battery market is projected to continue growing in 2024, with an estimated annual growth rate of about 15-20%. As inventory across the supply chain gradually normalizes, stock levels are expected to return to healthy levels by the second quarter, leading to a stabilization in lithium battery product prices.
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