Battery Cells Also See Up to 10% Drop
Due to a slowdown in global demand for electric vehicles, leading to an “oversupply,” the prices of battery materials have significantly fallen. Companies in this sector are noticeably tense. According to Taiwan’s market research firm TrendForce on Jan. 14, in December last year, the prices of lithium-ion battery cells for electric vehicles in China dropped by 6% to 10% compared to the previous month. Battery cells, composed of electrolytes, cathodes, and anodes, are the fundamental units of secondary batteries.
By cell type, the price per watt-hour (Wh) of prismatic lithium iron phosphate (LFP) cells fell the most, dropping by 10.1% to 0.45 yuan. Prismatic nickel-cobalt-manganese (NCM) cells decreased by 6.7% to 0.51 yuan, and pouch-type NCM cells dropped by 7.0% to 0.55 yuan.
Battery cell prices have been on a downward trend since October and November of last year, falling by 2% and 4%, respectively, continuing the decline throughout the fourth quarter.
TrendForce stated, “In December last year, the electric vehicle battery market pursued a strategy of inventory reduction, further decreasing cell demand. This led to low-price sales strategies due to a lack of market orders and suppliers’ need for cash stabilization, resulting in a drop in various product prices.”
Prices of minerals used as key materials for secondary batteries, such as lithium, nickel, and graphite, also decreased. According to global raw material market research firm Benchmark Mineral Intelligence, lithium prices fell by more than 60% last year, while nickel, graphite, and cobalt prices each dropped by about 30%.
The growth momentum of the electric vehicle industry, a leading sector, is slowing down. Major producing countries like China and Indonesia have increased nickel production, leading to a price decline.
Experts believe that challenges like insufficient charging infrastructure and the high cost of batteries have put brakes on the rapidly growing electric vehicle market. In the market, there is an increased interest in hybrid vehicles, seen as a more practical alternative to electric vehicles and a midway point from moving away from internal combustion engines.
Energy market research firm Bloomberg New Energy Finance (BNEF) has lowered its growth rate forecast for the global electric vehicle market this year by 4 percentage points to 20%, compared to its original estimate.
Domestic battery companies, which had unprecedented high performance last year, also faced a shock in their fourth-quarter earnings due to the slowdown in electric vehicle demand and the decline in battery material prices.
LG Energy Solution’s operating profit in the fourth quarter of last year increased by 42.5% compared to the same period the previous year but decreased by 53.7% from the previous quarter to 338.2 billion won. The operating profit recorded an earnings shock of 42% below the market expectation of 587.7 billion won.
The industry anticipates that following LG Energy Solution, Samsung SDI and SK on will also disclose annual performances that fall short of expectations.