Detailed Breakdown of the Cost Composition of 280Ah Energy Storage Cells; Accelerated Iteration of 300Ah+ Cells Underway in 2024

According to SMM's calculations, the current theoretical cost of the 280Ah lithium iron phosphate energy storage cell (hereinafter referred to as the 280 energy storage cell) is about 0.34 yuan/Wh, which is the same as last week on a week-on-week basis. Looking back at the cost of the 280 energy storage cell since the beginning of 2024, compared to the significant drop in 2023, it has now reached a relatively stable stage. SMM will now provide a detailed breakdown of the cost of the 280 energy storage cell.

In the cost structure of the 280 energy storage cell, it includes direct material costs and manufacturing management expenses. Among them, the direct material cost of the cell accounts for the largest proportion, about 91%, including cathode and anode active materials, binders, conductive agents, separators, and cathode and anode terminals, etc. The material systems of the 280 energy storage cells launched by various cell companies are basically similar, but there are differences in material utilization rates, procurement models, cell formulas, etc., leading to different material costs for cells among companies; the cost proportion of manufacturing management expenses is about 9%, including labor, depreciation and amortization, and production management expenses, etc. Due to differences in scale, local manpower and electricity costs, etc., there are also differences in this part of the costs.

Looking at the specific breakdown of costs:

As of January 2024, the material cost of the cathode part in the 280 energy storage cell accounted for about 42%. Among them, the cost proportion of the active material lithium iron phosphate was the highest, about 67%, followed by the cathode current collector coated aluminum foil, with a cost proportion of about 10%, and the cost proportions of the cathode conductive agent, binder, and solvent were about 8%, 3%, and 12%, respectively. It can be seen that the largest part of the cost in the 280 energy storage cell is the active material lithium iron phosphate cathode. Taking January 2023 as an example to further break down the lithium iron phosphate cathode, the cost proportion of lithium carbonate reached 83%, followed by the cost proportion of iron phosphate at about 10%, while the remaining auxiliary materials and processing fees only accounted for about 7%. According to SMM, lithium carbonate is also the central material in market price linkage. Currently, the lithium iron phosphate cathode material transactions are mostly linked to the SMM lithium carbonate price, with the remaining iron phosphate, auxiliary materials, and processing fees mostly based on agreements. With the release of lithium carbonate production capacity and the fall in prices in 2023, the cost of lithium iron phosphate cathode materials quickly slid. Compared to the 61% proportion of the total cathode material cost in January 2023, it had dropped to 42% by January 2024, and the cost proportion of lithium carbonate in lithium iron phosphate had also dropped to 56%.

As of January 2024, the material cost of the anode part in the 280 energy storage cell accounted for about 26%. Among them, the cost proportion of the anode current collector copper foil was the highest at about 41%, followed by the active material graphite, with a cost proportion of about 39%, and the cost proportions of the anode binder, thickener, and conductive agent were about 10%, 6%, and 4%, respectively. Currently, the use of graphite in China is mostly synthetic graphite. Similar to the cathode, in 2023, with the price drop due to the release of graphitization and needle coke capacity, and the accelerated replacement of medium sulfur petroleum coke as raw material, the cost of synthetic graphite also rapidly declined, but due to the high copper prices, the cost proportion of the anode remains high.

As of January 2024, the material cost of the electrolyte part in the 280 energy storage cell accounted for about 7%, as the main raw material of the electrolyte, lithium hexafluorophosphate, was affected by the fall in lithium carbonate prices, the cost proportion of the electrolyte dropped from 8% in 2023 to 7% in the current period. Meanwhile, compared to other main materials, the price of the separator is relatively stable, accounting for about 6% of the material cost in the 280 energy storage cell.

Overall, the reasons for the price of the 280 energy storage cell are the rapid release of cell capacity and the decline in material costs. Entering 2024, as the prices of major raw materials have stabilized after a rapid decline in the early stage, under the current weak market demand, the costs of the 280 energy storage cells are generally stable.

Although the 280Ah energy storage cell is currently the mainstream specification in the market, the industry consensus is to reasonably increase the capacity of energy storage cells in order to reduce the number of PACK cells, along with reducing the connectors of the energy storage system, thereby lowering the cost of energy storage and improving the consistency of cells. Taking the 300Ah+ cell as an example, most of the 300Ah+ energy storage cells still use the size of the same manufacturer's 280Ah cell (71173), thus achieving higher energy density in the same volume, which reduces the overall cost of the energy storage system and improves project profitability. In the promotion of 300Ah+ cell products by energy storage battery manufacturers, cost reduction is also one of the most prominent selling points. Against this backdrop, the ability to mass-produce 300Ah+ cells has become a reflection of the product and technical competitiveness of lithium battery companies. Leading energy storage manufacturers have launched 300Ah+ cells, sparking a competition to upgrade from 280Ah to 300Ah+. According to incomplete statistics from SMM, it is expected that manufacturers such as CATL, Zhenli New Energy, Zhongchuang Xinhang, Penghui Energy Storage, Tianneng Battery, and Chunu New Energy will mass-produce 310+Ah cells in 2024. In the context of intensifying market competition in 2024, the iteration of 300Ah+ energy storage cells is expected to accelerate.

If you have any questions regarding the industry data, or the news (e.g. how this can affect your business). Please feel free to reach out to me:

Robin He

SMM Li-ion Battery Materials Department

E: robinhe@smm.cn | T: +86-21-51595884