SMM Survey on How Upstream and Downstream Players in Industry Chain React to CATL Offering Battery Discounts to Targeted Car Makers

SHANGHAI, Feb 22 (SMM) – Reports of global battery giant CATL offering battery discounts to targeted car makers has swept market players across the entire EV industry chain recently. SMM has gathered views of industry players as below. 

A senior upstream player: First, the target group has limitations. This price reduction strategy does not target all car companies, but rather a few ones who are growing rapidly and have established in-depth cooperation with CATL, such as Li Auto, NIO and ZEEKR. 
Second, the purpose is clear. The top goal of CATL’s latest move is to occupy more market share. This strategy is also aimed at deeply binding downstream car companies while at the same time competing with the upstream producers, as well as guiding the lithium market price down.

Another upstream supplier: Whether CATL's move will be successful remains to be seen. If successful, the bargaining power of upstream salt smelters and battery cathode producers, along with downstream companies will be significantly diminished. At present, some salt factories intend to strengthen direct cooperation with car companies out of consideration for their long-term development.

One end user: Second and third-tier battery companies who lack control over resources and have poor bargaining power will suffer even more. Exploring market opportunities in other segments may be a way out for small battery makers.

Another user: It welcomes cooperation between upstream salt factories and car companies. It warns that this strategy will put CATL at great risks, in view of the limited amounts of lithium ore resources owned by CATL. The price movement of lithium salt that is not owned by CATL will be determined by factors such as market supply and demand.

Another end-user: Under the background of increasing competition, it is reasonable to adopt price cuts to expand market share, but the plan to fix prices is risky.