The Pricing Power at LFP Producers Increased with its Cost-effectiveness on Rising Costs

SHANGHAI, Oct 21 (SMM) – The raw material prices, such as lithium carbonate, lithium hexafluorophosphate, solvents, and PVDF, have increased further since Q3. Prices of battery-grade and industrial-grade lithium carbonate rose 49% and 52% respectively MoM in September. LFP prices increased 23%, ternary cathode material prices gained 12% and electrolyte rose 15-18%. Ternary cathode material battery cell costs increased 8.3% in September and LFP battery cell rose 7.2% on the back of rising battery material prices. 

Increasing car companies and battery plants have prepared LFP battery for their ternary battery models amid the cost-effectiveness. For example, Tesla’s Model 3 and Model Y produced in China have been equipped with LFP battery. At present, most domestic car companies use two battery versions, so do joint ventures and overseas car companies. It is difficult for battery cell companies to pass through price increases into automakers amid rising raw material prices. Traditional domestic car companies only accept re-negotiation of new orders for 2022 and 2023, and the orders in 2021 maintained that determined early 2021. The pricing power LFP and battery plants has been shifted into LFP producers since August. 

The contradiction between the supply and demand of battery raw materials is still difficult to alleviate in Q4. The prices of lithium carbonate and lithium hexafluorophosphate are likely to rise slightly, and the costs of battery cells to further rise. The downstream demand for LFP remains high. The price increase of LFP is likely to be higher than ternary cathode materials.