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Dropping Prices Of Lithium Carbonate: Implications For The Electric Vehicle And Device Battery Industries

The lithium carbonate industry has experienced significant changes recently: the price for batteries has reached new lows and this is expected to impact the cost of batteries for electric vehicles and electronic devices. The spot price of lithium carbonate for batteries has suffered its biggest drop so far this year, falling below 44,000 dollars/ton.

Lithium is one of the essential raw materials for the current batteries of any electric vehicle, in addition to the batteries of electronic devices. Its price sets the trend for the cost of batteries and, after a brilliant rise in 2022, the reference price in China has fallen to figures that have not been seen for more than a year.

The fall of lithium carbonate prices over the past few months has been staggering indeed. With a 24.4% drop in March and a 35.8% drop for the year, the price has plummeted more than 46% since its historical high in November. The average price for batteries is now barely exceeding 300,000 yuan and may even fall below this figure in the coming days. Moreover, the price of lithium carbonate for batteries in China, the index used as a reference in the industry, has suffered the biggest daily drop so far this year, falling 1,700 dollars per tonne (about 12,500 yuan) in a single day.

Megapack, courtesy of Tesla Inc.

After the fall suffered last Friday, the price of lithium carbonate is slightly below 320,000 yuan/ton, just under 43,500 dollars per ton at the current exchange rate. Such a low price of lithium carbonate has not been seen since January 2022.

As mentioned before, the spot price of lithium carbonate for batteries accumulates a fall of 24.4% in the month of March and 35.8% in the accumulated year, according to data from Trading Economics. Compared to its historical maximum reached last November, when it reached almost 600,000 yuan per ton (more than 81,000 dollars/ton), the price of lithium carbonate has fallen more than 46%.

This precious material for electric vehicles actually reached its peak on November 23, 2022, multiplying its price by 14 in just a year and a half (in June 2020 it was trading at approximately 41,000 yuan/ton). However, as mentioned above, the price has been in a continuous decline.

Tesla Model X, courtesy of Tesla Inc.

The fall in lithium carbonate prices should reduce pressure on the cost of batteries, although it may not be reflected immediately, since manufacturers usually close contracts with a certain price and term. On the other hand, the average price of industrial grade lithium carbonate fell to 295,000 yuan per ton ( roughly equivalent to 40,100 dollars).

As industrial-grade lithium carbonate prices fall dramatically for the first time in this bearish cycle, the lithium carbonate industry faces potential challenges: lower prices may lead to reduced profits for mining and production companies, possibly affecting their ability to invest in the exploration and development of new lithium sources.

Tesla Powerwall, courtesy of Tesla Inc.

While the sharp decline in lithium carbonate prices may provide some relief to electric vehicle and electronic device battery manufacturers, it also raises concerns for the overall health and sustainability of the lithium carbonate industry. The industry will need to adapt to these changing market conditions and find innovative ways to ensure the long-term supply of this essential raw material, while balancing the needs of manufacturers and consumers.

In the meantime, companies and consumers can cautiously enjoy the benefits of lower battery costs, keeping an eye on the lithium carbonate industry's developments and their potential future impacts.

Source: tradingeconomics

All images courtesy of Tesla Inc.

Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.