Domestic EV battery prices rise as export prices fall

Over the past year, domestic power battery prices in China have continued to rise, driven significantly by increasing raw material costs. On June 23, the domestic market price for battery-grade lithium carbonate reached RMB 157,000 per ton, up 161.7% year-on-year. As a result, multiple battery manufacturers have gradually raised their product prices since late 2022, with increases ranging from 10% to 15%. The current price for domestically produced lithium iron phosphate (LFP) in 400-kilogram packaging has surpassed RMB 25,000 per ton—more than double the level of the same period last year. In contrast, export prices for power batteries have followed an opposite trend. Although the average export price per unit saw a slight month-on-month rebound recently, it has continued to decline year-on-year and remains at a historical low. In April this year, China exported 520,000 tons of lithium-ion batteries, generating USD 8 billion in export revenue. While total export value has shown an upward trajectory, the unit price has been trending downward. On the demand side, domestic power battery installations in vehicles have maintained steady growth. In May, installed capacity reached 71.9 GWh, up 15.2% month-on-month and 25.9% year-on-year. Cumulative installations from January to May totaled 259.1 GWh, representing a 7.3% year-on-year increase. Demand for lithium-ion batteries is also expanding in overseas markets. Key factors driving domestic price increases include: China’s reliance on imported lithium resources—approximately 58% of its supply—making lithium prices vulnerable to international influences; the long lead time required for lithium mining projects; surging demand from both the new energy vehicle (NEV) and energy storage sectors, which intensifies pressure on raw material supplies; and the structure of the lithium battery supply chain, which enables leading enterprises to pass cost pressures down to downstream customers. The decline in export prices stems primarily from intense international competition, prompting Chinese companies to adopt a “volume-over-price” strategy to capture greater market share. Additionally, overseas trade protection measures and exchange rate fluctuations have further constrained pricing flexibility for exporters. Analysts expect that tight supply conditions for lithium battery raw materials will persist through 2028, keeping prices elevated. However, over the next three to five years, advancements in technology, expanded production capacity, and a more stable global competitive landscape could alleviate the current polarization between domestic and export pricing. In the long term, technological innovation and economies of scale are expected to reshape the battery pricing system, potentially enhancing Chinese companies’ influence within the global supply chain.