For power battery makers, it's important to keep production lines running consistently, so a price war for batteries is long expected, industry watchers said.
CATL, the world's largest power battery maker, is reportedly seeing a decline in capacity utilization, which for electric vehicle (EV) makers may mean that battery prices will continue to decline.
CATL is seeing a decline in capacity utilization, a report in local media Yicai today said, citing people close to the company with knowledge of the situation.
The battery giant's 2022 semi-annual report showed its battery system capacity utilization rate at 81.25 percent.
However, CATL's installed power battery capacity in January was down 12 percent year-on-year, while its capacity utilization could decline further given continued capacity expansion, the Yicai report noted.
Ouyang Minggao, a member of the Chinese Academy of Sciences, said last March that the Chinese battery industry is expected to experience overcapacity by 2025, and that 3,000 GWh of capacity will likely see only 1,200 GWh shipped.
CATL's power battery installed base in January was 7.17 GWh, continuing to rank first in China's power battery installed base with a 44.41 percent share, according to data released last month by the China Automotive Battery Innovation Alliance (CABIA).
That figure represents a 60 percent decline from 17.89 GWh in December and a 12 percent decrease from 8.13 GWh in the same period last year.
It's important for a power battery maker to keep production lines running, Yicai said, citing a source from an unnamed battery maker, adding that a price war for batteries is long expected.
Previously there were rumors that some CALB employees were leaving because of a lack of orders, the report said.
CALB's power battery installation in China in January was 0.79 GWh, making it the third largest power battery maker in China after CATL and BYD, according to the CABIA.
On February 17, 36kr reported that CATL was promoting a lithium rebate program to a handful of core customers, including Nio (NYSE: NIO), Li Auto (NASDAQ: LI), Huawei and Zeekr.
The core terms of the partnership include that CATL will settle a portion of the price of power battery supply with car companies at a rate of RMB 200,000 per ton of lithium carbonate for the next three years.
At the same time, car companies that sign the partnership will need to commit about 80 percent of their battery purchases to CATL, according to the report.
Management of both Nio and Li Auto said in recent earnings calls that their negotiations with CATL were still ongoing and that no agreement had been signed.
Although CATL has not confirmed this information, it has already caused widespread repercussions in the battery industry.
CATL's proposed price standard of RMB 200,000 per ton has further lowered market expectations for lithium carbonate prices and accelerated the panic fall, Yicai said, citing several sources in the lithium carbonate industry.
Lithium carbonate prices in China have been falling for months with no sign of stopping.
The price of battery-grade lithium carbonate fell by RMB 2,000 per ton today to an average price of RMB 377,000 per ton. Industrial-grade lithium carbonate fell RMB 3,000 per ton to an average price of RMB 346,000 per ton, according to data from My Steel.
CATL reportedly cutting battery costs significantly for some clients including Nio, Li Auto
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