Lithium prices hit a new low, with industrial-grade lithium carbonate falling from RMB 7,500 per ton to RMB 302,500 per ton.
As battery raw material prices decline, China’s power battery giant CATL is expected to reach new price agreements with local automakers this month, solidifying their partnership.
Lithium rebate policy advances steadily
According to insiders, CATL’s lithium rebate policy is moving forward steadily, with the battery giant now signing agreements with some car companies, as reported by local media Cailian today. The source indicated that a resolution is anticipated to be achieved by the end of this month at the earliest.
According to a report by 36kr on February 17, CATL’s plan is focused on strategic customers like NIO (NYSE: NIO), Li Auto (NASDAQ: LI), Huawei and Zeekr, and not intended for all customers.
Partnership agreement
The partnership deal outlines that CATL will cover a portion of the cost of power battery supply to car companies, with a set rate of RMB 200,000 ($28,970) per ton of lithium carbonate for the next three years. Moreover, the car companies that join hands with CATL must commit to buying about 80% of their batteries from the company.
CATL acknowledges the Lithium sharing plan for long-term strategic customers
During CATL’s earnings call on March 9, management acknowledged their plan to share some of their lithium resources with long-term strategic customers. This plan is not aimed at lowering prices, as CATL already possesses some mineral resources and does not intend to make excessive profits from them. The company wishes to communicate its proposal to its strategic customers and is moving forward with discussions. Li Auto and NIO mentioned their ongoing discussions with CATL during their respective earnings calls.
This plan comes as lithium carbonate prices have been declining for months, with industrial-grade lithium carbonate and battery-grade lithium carbonate prices both down RMB 7,500 per ton, according to My Steel.
