The world’s largest EV battery maker will cut costs for Chinese automakers – but not for Tesla
China’s CATL, the world’s largest EV battery maker, is reportedly offering significantly lower battery costs to some Chinese EV makers, according to CnEVPost today.
CATL cuts costs for Chinese automakers
CATL (Contemporary Amperex Technology Co. Ltd.), which accounted for 37.1% of global EV battery sales in 2022, is reportedly offering a deal on EV batteries for carmakers including NIO, Li Auto (Nasdaq: LI), Huawei, and Zeekr – what CATL considers “strategic clients.”
NIO signed a five-year strategic cooperation agreement with CATL on January 17.
Tesla – CATL’s largest customer – is not among CATL’s “strategic client” group, and Tesla has a gigafactory in Shanghai.
CnEVPost explains how the battery deal will work:
CATL will settle a portion of the price of power supply with automakers based on a price of RMB 200,000 [$29,116] per ton of lithium carbonate for the next three years.
At the same time, automakers signing the partnership will be required to commit about 80% of their battery purchases to CATL, according to the report.
Currently, battery-grade lithium carbonate is quoted at about RMB 470,000 [$68,427] per ton, and car companies that can purchase batteries at a cost of RMB 200,000 a ton will undoubtedly be able to significantly reduce cost pressures, the report noted.
The program will be implemented in the third quarter of 2023, and CATL has asked its material suppliers for a 10% price cut. (CATL ties its battery prices to raw material prices.)
Lithium carbonate prices have been falling since the end of 2022, and Ouyang Minggao, a member of the Chinese Academy of Sciences, said at a conference today that they may fall by as much as 20% in China in 2023.
Lithium resources are expected to return to supply-demand balance in one to two years. CnEVPost reports in a separate story today:
Morgan Stanley expected lithium carbonate prices in China to be at $67,500 per ton in the first half of 2023, falling to $47,500 per ton in the second half of 2023, the latter implying a 35% decline from spot prices at that time.
Electrek’s Take
Which of these things is not like the other?
As I wrote, Tesla is CATL’s largest customer. Does it not get this deal because it’s an American company? Or is it merely because Tesla is already tied into a production pricing agreement with CATL until 2025?
No other non-Chinese automakers appear to be getting CATL’s special deal.
The Biden administration threw down the trade-war gauntlet with the passage of the Inflation Reduction Act in 2022, so of course the Chinese are going to fight back. And Chinese companies produce more than 50% of EV batteries in the global market, so they can.
Just this week, Ford announced a $3.5 billion Michigan LFP battery factory – with CATL – in 2026. The two companies announced a Global Strategic Cooperation covering battery supply in North America, Europe, and China in July 2022.
The lithium market is expected to double by 2030 as EV demand accelerates. The race is on.
Read more: North America’s largest lithium mine can now break ground – that’s great news for EVs
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Tesla’s Q2 results are in, and they are way, way down from Q2 of 2024. At the same time, Nissan seems to be in serious trouble and the first-ever all-electric Dodge muscle car is getting recalled because its dumb engine noises are the wrong kind of dumb engine noises. All this and more on today’s deeply troubled episode of Quick Charge!
We’ve also got an awesome article from Micah Toll about a hitherto unexplored genre of electric lawn equipment, a $440 million mining equipment deal, and a list of incompetent, corrupt, and stupid politicians who voted away their constituents’ futures to line their pockets.
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OpenAI is distancing itself from Robinhood‘s latest crypto push after the trading platform began offering tokenized shares of OpenAI and SpaceX to users in Europe.
“These ‘OpenAI tokens’ are not OpenAI equity,” OpenAI wrote on X. “We did not partner with Robinhood, were not involved in this, and do not endorse it.”
The company said that “any transfer of OpenAI equity requires our approval — we did not approve any transfer,” and warned users to “please be careful.”
Robinhood announced the launch Monday from Cannes, France, as part of a broader product showcase focused on tokenized equities, staking, and a new blockchain infrastructure play. The company’s stock surged above $100 to hit a new all-time high following the news.
“These tokens give retail investors indirect exposure to private markets, opening up access, and are enabled by Robinhood’s ownership stake in a special purpose vehicle,” a Robinhood spokesperson said in response to the OpenAI post.
Robinhood offered 5 euros worth of OpenAI and SpaceX tokens to eligible EU users who signed up to trade stock tokens by July 7. The assets are issued under the EU’s looser investor restrictions via Robinhood’s crypto platform.
“This is about expanding access,” said Johann Kerbrat, Robinhood’s SVP and GM of crypto. “The goal with tokenization is to let anyone participate in this economy.”
The episode highlights the dynamic between crypto platforms seeking to democratize access to financial products and the companies whose names and equity are being represented on-chain
U.S. users cannot access these tokens due to regulatory restrictions.
Despite the warnings, BYD continues introducing new discounts. On Wednesday, BYD’s luxury off-road brand began offering over 50% Huawei’s smart driving tech.
BYD introduces new discounts on smart driving tech
After BYD cut prices again in May, the China Automobile Manufacturers Association (CAMA) warned that the ultra-low prices are “triggering a new round of price war panic.”
Although they didn’t single out BYD, it was pretty obvious. BYD slashed prices across 22 of its vehicles by up to 34%, triggering several automakers to follow suit in China.
BYD’s cheapest EV, the Seagull, typically starts at about $10,000 (66,800 yuan). After the price cuts, the Seagull is listed at under $8,000 (55,800 yuan).
It doesn’t look like China’s EV leader plans to slow down anytime soon. Fang Cheng Bao, BYD’s luxury off-road brand, introduced new discounts on Huawei’s smart driving tech on Wednesday.
The limited-time offer cuts the price of Huawei’s Qiankun Intelligent Driving High-end Function Package to just 12,000 yuan ($1,700).
Buyers who order the smart driving tech in July will save over 50% compared to its typical price of 32,000 yuan ($4,500).
Earlier this year, Fang Chang Bao launched the Tai 3, its most affordable vehicle, starting at 139,800 yuan ($19,300). The Tai 3 is about the size of the Tesla Model Y, but costs about half as much.
The Tai 3 will spearhead a new sub-brand of electric SUVs following the more premium Bao 8 and Bao 5 hybrid SUVs.
BYD’s luxury off-road brand sold 18,903 vehicles last month, up 50% from May and 605% compared to last year. Fang Cheng Bao has now sold over 10,000 vehicles for three consecutive months.
The Chinese EV giant sold 382,585 vehicles in total in June, an increase of 12% from last year. In the first half of the year, BYD’s cumulative sales reached over 2.1 million, a YOY increase of 33%.
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