In its latest investigations, TrendForce sheds light on the recent fluctuations in the battery industry, revealing a 3–4% month-over-month decline in EV battery prices in November. This descent is attributed to a notable downturn in end-user demand, coupled with a drop in prices for critical raw materials like lithium, cobalt, and nickel. Chinese EV battery cells witnessed a decrease of approximately 3–4%, while consumer LCO cells saw a 2.5% dip, and storage-type cells experienced the most significant fall at 6.8%.
TrendForce highlights a discernible slowdown in demand within the EV and storage market, prompting battery cell suppliers to adjust their capacity utilization rates to diminish inventory. Consequently, the overall industry operating rate fell below 50%, leading some companies to scale back production or even shut down operations amidst intense market competition and a dearth of orders. Additionally, heightened pressure to move products prompted some cell suppliers to adopt low-price dumping strategies, triggering a price war. Notably, in November, the lowest quoted price for storage cells in China plummeted to approximately CNY 0.4/Wh.
Following the conclusion of the Double Eleven shopping festival, demand for consumer cells plateaued as the consumer electronics market entered an off-peak procurement period. With battery cell manufacturers having ample inventory, the current focus is on inventory digestion. Concurrently, upstream material prices, including lithium and cobalt, continued their downward trajectory in November. Lithium salt prices, in particular, recorded a drop of over 10%, leading to a 2.5% month-over-month decrease in the ASP of LCO cells to CNY 6.27/Ah—a trend anticipated to persist into December.
TrendForce projects a sustained weakness in demand for the EV and storage market in the fourth quarter of 2023. Capacity utilization rates for battery cell suppliers are expected to further decline, potentially delaying inventory adjustments, and some companies may face production halts. The subdued downstream demand poses challenges in reversing the downward trend in upstream core lithium material prices. Despite a deceleration in supply growth, it fails to match the pace of declining downstream demand, resulting in persistent oversupply in the EV battery market.
Looking ahead to 2024, TrendForce anticipates a continuation of low demand in the first quarter, with a rebound likely postponed until the second quarter. This period presents an opportunity on the supply side to expedite the removal of less cost-effective capacities within the EV industry chain. This strategic approach involves addressing early-built capacities with lower 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 enhanced cost control. This strategy is expected to further decelerate the market supply growth rate and expedite the normalization of supply and demand in the EV battery market.
