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The cost of upstream materials has fallen, and the profit distribution has flowed to the battery link

published: 2024-05-08 15:55

From 2023, upstream material prices has fallen sharply with the easing of supply and demand. From 2023, the keypoint of the lithium battery materials  is "price reduction". Due to the release of new production capacity in the industry, the supply and demand situation has changed, resulting in a sharp drop in prices of the main materials of lithium. From the beginning of 2023 to the end of the first quarter of 2024, the decline in lithium battery main materials is generally more than 40%. The upstream lithium carbonate price fell from 515,000 yuan/ton to 110,000 yuan/ton, a decrease of nearly 80%. In the midstream material link, lithium iron phosphate, electrolyte, and ternary cathode decreased greatly. With the change in the price of upstream materials, the price of battery has dropped from about 1 yuan/wh at the beginning of 2023 to about 0.4 yuan/wh at the end of 2024Q1. From a quarterly point of view, lithium carbonate rose slightly in 2024Q1, mainly affected by the recovery of downstream demand and industry supply and demand. Also, the separator began to decline significantly from 2023Q3.

As the cost of upstream materials fell back, the price of battery dropped by about 50%. With the fall of upstream raw material prices, battery prices also fell significantly. By the end of the first quarter of 2024, the prices of battery cells fell back to below $0.5/wh, a price reduction of approximately 50% compared to the high point.

CATL's first-quarter report exceeded expectations again, and its earnings remained stable. In 24Q1, CATL achieved operating income of 79.771 billion yuan, -10% year-on-year and -25% month-on-month. Its net profit was attributable to the parent company of 10.510 billion yuan, +7% year-on-year and -19% month-on-month. The net profit after deduction of non-attributable to the parent company was 9.247 billion yuan, +19% year-on-year and -29% month-on-month. Battery sales were about 95 GWh, a year-on-year increase of about 35%. Among them, the power was about 76 Gwh, accounting for 80% and the energy storage was about 19 Gwh, accounting for 20%. It is estimated that the company's average unit profit is about 0.1 yuan/wh, which is relatively stable.

The gross profit margin of the battery segment has increased steadily. CATL's gross profit margin has bucked the trend and has grown for several consecutive quarters, with stable profitability. EVE and Gotion's gross profit margin is around 18%. Farasis Energy's gross profit margin has also increased to a certain extent and is currently above 10%.

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