China's CATL Offers EV Battery Discounts in China - Sources

ev battery discounts

China’s CATL, the world’s largest battery maker, has offered discounts to some Chinese automakers it supplies, reflecting a downturn in the price of lithium and a bid to win more orders, three people with knowledge of the offers said.

Battery costs are the most expensive component in electric vehicles (EV) and a move toward lower prices by CATL, which had 37% of the global market last year, would ease a major cost pressure on automakers.

CATL, which counts Tesla, Nio and Volkswagen among its largest clients, is offering targeted rebates, said the people, who declined to be named as the matter is private.

In one case, CATL offered a discount of 7% from established prices to a Chinese EV maker in January, one of the people said. At the same time, CATL has been negotiating with its material suppliers to bring its own prices down, a second person said.

CATL did not immediately respond to a request for comment. Chinese tech news outlet 36Kr first reported the discounts earlier on Friday.

Battery prices had been falling for more than a decade before turning higher in 2022.

But the price of lithium carbonate peaked at 597,500 yuan ($86,832.05) per tonne in China in November. It has since fallen to 425,000 yuan a tonne, down almost 30% from the peak.

It was not immediately clear whether CATL would follow its offer of discounts to Chinese automakers with similar proposals for its growing roster of customers outside China, a group that includes BMW and Ford.

China ended a more than decade-long national subsidy for EV purchases at the beginning of this year. Shortly after, automakers including Tesla began to offer discounts to spur demand and defend share in the world’s largest EV market.

Tesla slashed prices of its best-selling Model 3 and Model Y cars by up to 14% in January, starting what analysts called a price war in China’s EV market with Xpeng and Huawei-backed Seres following Tesla’s lead.

Sales of new energy cars, a category including both pure electric cars and plug-in hybrids, fell 6.3% in January after growth of 90% in 2022, according to the China Passenger Car Association.

CATL has faced calls from its customers in China, most which are still loss-making, to bring prices down and accept a lower profit margin in exchange for more sales.

The gross profit margin for CATL’s EV battery products was 15% in the first half of 2022, 8% lower than the same period a year ago.

($1 = 6.8811 Chinese yuan renminbi)

SHANGHAI (Reuters)

Inside Telecom provides you with an extensive list of content covering all aspects of the Tech industry. Keep an eye on our News section to stay informed and updated with our daily articles.