[Bojo, Battery] Chinese CATL Sells 43% Cheaper Than Global Average... Endless Chicken Game

Chinese Media 36kr, Citing Sources
"CATL to Supply Battery Cells at 400 Yuan per kWh"
Equivalent to About 75 Dollars per Pack

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Graphic display prices are based on per cell.

The global number one battery company, China’s CATL, is engaging in an endless chicken game. It plans to supply batteries about 43% cheaper than the global average price this year.

On the 26th, Chinese media 36kr cited recent sources reporting, "CATL will supply prismatic batteries at around $55.8 per kWh (cell basis, converted from yuan to dollars) by mid-year," adding, "These batteries target electric vehicles priced between 100,000 and 200,000 yuan (approximately 18.62 million to 37.25 million KRW)." The source said, "Considering the upstream (raw material mining and refining) structure, CATL is currently the only company capable of producing ‘2C batteries (fast charging within 30 minutes)’ at this price level."

At the beginning of last year, the average price of prismatic LFP cells sold by CATL and other Chinese companies was about $111.6 to $125.5 per kWh. By August of the same year, it dropped to approximately $83.7 per kWh. Currently, it stands at about $69.7, and CATL plans to lower it further to $55.8 by mid-year. This means batteries will be supplied at half the price compared to early last year. Considering that battery cell prices generally account for about 80% of pack prices, the estimated CATL battery pack price is around $75 per kWh. Given that Bloomberg NEF, an energy market research firm, predicted this year’s battery pack price at about $133 per kWh, CATL’s battery price is approximately 43% cheaper than the global average.

The price decline coincides with oversupply. Although production increased due to the removal of electric vehicle subsidies in China and the proliferation of battery companies, demand did not keep pace. Since last year, CATL and another Chinese company, BYD, have streamlined production lines to reduce costs and conducted competitive bidding for battery material procurement, implementing intensive cost-cutting measures.

CATL’s battery ‘chicken game’ is expected to intensify alongside electric vehicles. Price competition in the EV industry began in early last year amid high interest rates and signs of a global recession. Tesla led the price reduction trend early last year, and Chinese companies like CATL and BYD joined the price-cutting race leveraging their raw material procurement competitiveness. Elon Musk, CEO of Tesla, recently warned after last year’s earnings conference call, "If there were no trade barriers, Chinese EV companies would annihilate their competitors." BYD, which produces both electric vehicles and batteries, surpassed Tesla in global EV sales in the fourth quarter of last year.

Domestic battery industry contraction due to price competition is inevitable. The NCM (Nickel-Cobalt-Manganese) batteries produced by the three Korean companies have higher energy density than LFP but involve expensive raw materials for cathodes, making supply chain management complex and rapid price reductions difficult. The three Korean battery companies are diversifying battery form factors and accelerating mass production of mid-nickel and LFP batteries. According to SNE Research, from January to November last year, the market share of the three Korean battery companies in the global EV battery market excluding China fell below 50%. This is a result of CATL and BYD rapidly increasing their market share by leveraging price competitiveness.