The surge in prices of lithium, the key battery material used to power electric vehicles, is seemingly unstoppable.
Lithium carbonate hit a fresh record of 500,500 yuan ($71,315) a ton in China on Friday, according to data from Asian Metal Inc. Prices more than tripled in the past year, inflating the cost of batteries used in EVs, with recent gains driven by strong demand and disruptions at a domestic producing hub.
Consumer support for new-energy vehicles has been gathering pace amid a global transition away from fossil fuels. The China Passenger Car Association has raised its forecast for sales of EVs to a record 6 million this year, double the total in 2021, while battery usage in the nation is also expected to almost double, according to Bloomberg Intelligence.
Meanwhile, a power crunch during August in Sichuan province -- home to more than one-fifth of China’s lithium production -- caused two weeks of electricity cuts, hampering supply in an already-squeezed market.
“EV production and sales have held steady in recent months,” according to Rystad Energy, a research firm, which added there are concerns over whether China’s power crisis could return this winter when demand for heating rises. “This could lead to new power shortages and hit lithium operations,” it wrote, expecting prices to stay firm around this level through to the end of the year.
China held a meeting to review developments on Thursday and asked the top companies to help stabilize prices, according to the Ministry of Industry and Information Technology.
Producers should not collude on pricing and not quote prices that deviate a lot from costs, it said. The government will take steps to encourage exploration, stabilize imports and promote recycling, it added.
On Thursday, Soc. Quimica & Minera de Chile SA, the world’s No. 2 lithium producer, predicted a “very tight market” in the years ahead. SQM sees “slightly higher” prices this quarter from the previous three months and expects prices to stay at similar levels in the fourth quarter, according to a presentation to investors in New York.
Battery-makers and the auto industry have been rushing to lock in reliable and stable supplies of lithium. Still, the raw-material price hikes are likely to stoke inflation concerns and add cost pressures to the automotive supply chain.
A battery-making unit of China’s top producer, Ganfeng Lithium Co., told customers last week that prices for new orders would be reassessed amid a substantial hike in power-cell costs. The company supplies small polymer lithium batteries for smart wearable products and Bluetooth headset batteries for companies including Xiaomi Corp.
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.
Please enter a valid email address.
Please enter your email address.
Please select at least one newsletter to subscribe.
See more newsletter options at autonews.com/newsletters. You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.
Sign up and get the best of Automotive News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.
Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.
The Automotive News mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in North America.
1155 Gratiot Avenue Detroit, Michigan 48207-2997
Automotive News ISSN 0005-1551 (print) ISSN 1557-7686 (online)
Fixed Ops Journal ISSN 2576-1064 (print) ISSN 2576-1072 (online)