EV Battery Prices Drop 3–4% in November, Market Demand Expected to Rebound in 2Q24, Says TrendForce

TrendForce’s latest investigations reveal that the battery industry’s operating rate fell in November due to a significant cooling in end-user demand. Falling prices of key raw materials like lithium, cobalt, and nickel led to a consistent downward trend in battery cell prices. In November, prices of Chinese EV battery cells dropped by approximately 3–4% MoM, consumer LCO cells decreased by 2.5%, and storage-type cells fell the hardest at 6.8%.

TrendForce noted a slowdown in demand for the EV and storage market. To reduce inventory, battery cell suppliers have decreased their capacity utilization rates, leading to an overall industry operating rate falling below 50%. Some companies—amid intense market competition and a lack of orders—are facing reduced production or shutdowns. Furthermore, due to increased pressure to ship products, some cell suppliers have adopted low-price dumping strategies to enhance inventory liquidation, resulting in a price war. Notably, in November, the lowest quoted price for storage cells in China dropped to around CNY 0.4/Wh. 

Post the Double Eleven shopping festival, demand for consumer cells turned flat, with the consumer electronics market entering an off-peak procurement period. Since battery cell manufacturers had adequately stocked earlier, their focus is now on inventory digestion. Meanwhile, the prices of upstream materials such as lithium and cobalt, continued to decline in November. Particularly, lithium salt prices fell by over 10%, leading to a 2.5% MoM decrease in the ASP of LCO cells to CNY 6.27/Ah—a trend expected to continue into December.

TrendForce predicts that demand in the EV and storage market will remain weak in 4Q23. Battery cell suppliers’ capacity utilization rates will continue to decline, potentially delaying inventory adjustments, with some companies possibly facing production halts. The subdued downstream demand makes it difficult to reverse the downward trend in upstream core lithium material prices. Even with a slowing supply growth rate, it is not keeping pace with the deceleration in downstream demand, leading to persistent oversupply in the EV battery market. 

Looking ahead to 2024, TrendForce expects demand to remain low in the first quarter, with a rebound expected to be delayed until Q2. There’s an opportunity on the supply side to accelerate the clearing out of less cost-effective capacities within the EV industry chain. This includes early-built capacities that lag in energy consumption and production efficiency, smaller-scale operations, and those lacking a comprehensive layout in core raw materials and dependent on external purchases, ultimately leading to weaker cost control. This strategic approach is expected to further slow the market supply growth rate and hasten the normalization of supply and demand in the EV battery market.

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