The price of lithium carbonate has fallen below the 500,000 yuan mark. Can consumers buy cars cheaper?

　　China News Service, January 16th (China News Finance and Economics Ge Cheng) Affected by factors such as changes in supply and demand, the price of lithium carbonate, which has always been strong, has recently fallen below the 500,000 yuan per ton mark.

As an important raw material for new energy vehicles, what impact will the price reduction of lithium carbonate have on the new energy vehicle market?

Who will benefit from its price drop?

Data map: Lithium carbonate.

Photo courtesy of Salt Lake Group

The "value" of lithium carbonate has recently fallen by more than 20% 

　　According to the quotation of Shanghai Nonferrous Metals Network, on the 16th, the average price of battery-grade lithium carbonate was 476,500 yuan per ton, a drop of more than 20% from the highest point in early November 2022.

　　Looking back at the price trend, the value of lithium carbonate has risen more than ten times in about two years.

　　At the beginning of 2021, the price of battery-grade lithium carbonate was only about 50,000 yuan per ton, and by the end of 2022, it would rise to nearly 600,000 yuan per ton.

Entering 2023, the price will fall back and fall below the 500,000 yuan per ton mark.

　　As a large consumer of lithium batteries, new energy vehicles continue to affect the supply and demand relationship of lithium carbonate, and play a role in fueling the price changes.

　　According to data from the China Automotive Power Battery Industry Innovation Alliance, in 2022, the cumulative output of power batteries in my country will be 545.9GWh, a year-on-year increase of 148.5%; the cumulative installed capacity of power batteries will be 294.6GWh, a year-on-year increase of 90.7%.

　　According to Chen Shihua, deputy secretary-general of the China Automobile Association, the price change of lithium carbonate is closely related to the relationship between supply and demand.

Previously,

　　Industry insiders believe that in the future, the supply and demand pattern of lithium carbonate may still be in a tight balance.

The price reduction of lithium carbonate is not over yet,

.

　　"At present, the price of lithium carbonate has dropped below 400,000 yuan (per ton) on the futures side." According to Cui Dongshu, secretary-general of the Passenger Federation, the price of lithium carbonate will return to around 200,000 yuan per ton in the future, or even lower .

　　Guotai Junan recently released a new energy vehicle industry research report, pointing out that in 2023, the lithium battery industry chain may experience overcapacity, which will further intensify competition.

"Every link in the lithium battery industry chain has different levels of production capacity release. If the new production capacity greatly exceeds the industry demand, it may lead to overcapacity in the industry chain, which will affect the competition pattern and profitability."

Data map: Automobile transportation.

Photo by Wang Yizhao

Will it be cheaper to buy new energy vehicles?

Expert: Price reduction is a long-term trend

　　The price of lithium carbonate has fallen, will it be cheaper to buy new energy vehicles?

　　Cui Dongshu believes that considering factors such as the decline in raw material prices, manufacturing scale, and industrial innovation,

.

　　According to his analysis, the price drop of new energy vehicles may be affected by two factors.

On the one hand, the withdrawal of new energy subsidies will help companies focus on the market and reduce market growth expectations; on the other hand, the supply brought about by upstream mineral investment will be sufficient, and the return of lithium carbonate prices to the middle and low levels will help the reasonable return of vehicle prices.

　　Zhongxin Finance has noticed that recently, some car companies have chosen to seize the market by reducing terminal prices.

　　At the beginning of 2023, the news of Tesla's price cuts has attracted widespread attention.

Among them, the starting price of Model 3 has dropped to 229,900 yuan, and the starting price of Model Y has dropped to 259,900 yuan. The two domestic models have dropped to the lowest prices in history.

　　On the 12th local time, Tesla’s US official website also lowered the prices of all models.

Among them, the base Model 3 price was reduced by US$3,000 to US$43,990, a decrease of 6%, the price of the Model S base version was reduced by US$10,000 to US$94,990, a decrease of 10%, and the price of the Model X base version was reduced by US$11,000, a decrease of 9%.

The biggest drop was on the base Model Y, which dropped $13,000 to $52,990, a 20% drop.

　　Guotai Junan mentioned in the research report that under the background of Tesla's price reduction, new energy vehicles are expected to be effectively released on the demand side.

Among them, the Chinese and American markets will contribute the main increase. It is estimated that the global sales of new energy vehicles are expected to reach 14 million in 2023, and the sales of new energy vehicles in China will reach more than 8.8 million.

A car production line in Jinzhong, Shanxi.

(Data map) Photo by Zhang Yun

The international competitiveness of

China's new energy vehicles is

　　In 2023, if the price of lithium carbonate can return to a reasonable range, who will benefit from it?

First of all, in the process of purchasing new energy vehicles, consumers are expected to enjoy more discounts.

Secondly, the price reduction of lithium carbonate will bring huge room for growth in the middle and lower reaches of the industry, and the industry chain is expected to fully benefit.

　　Industry insiders believe that with the return of lithium carbonate prices, industries such as energy storage, OEMs, and new energy vehicles are expected to accelerate development, and the industrial structure will be healthier.

　　Cui Dongshu said that the cost of batteries in the next few months will inevitably drop significantly, which will bring great benefits to improving the profitability of vehicle companies.

"A large amount of battery investment in the early stage, coupled with the lowering of upstream expectations, will help reduce resource prices."

Finally, China's new energy vehicles are also expected to further enhance the overall international competitiveness.

　　Cui Dongshu believes that although the brand advantages of European, American, Japanese and Korean companies are obvious, the low-cost competitiveness of my country's new energy vehicles has become prominent, and low-cost price competition must be the core competitiveness to change the world's automobile pattern.

"The new energy automobile industry chain is separated from the original international parts supplier system, and China's power in the auto parts system will become increasingly stronger." (End)