Written by Market Lead at Cling Systems, Eden Yates.
Lithium-ion batteries sit in an unusual space. They are standardised and compatible enough to trade across borders. And yet, the market is still illiquid and not transparent for the majority of players, and lacks the right tools for the 21st century and the age of AI: WhatsApp threads, excels, PDFs and scattered data is commonplace and very frustrating. Despite fantastic work by the likes of BloombergNEF and Benchmark Mineral Intelligence et al, live price discovery, and publicly available pricing benchmarks are some distance away, or are not practical.
Like many other commodities or near-commodities, it’s been variously a sellers market and a buyers market. Right now, unarguably, it’s a buyer’s market. This article will:
Lithium pricing has levelled out. Battery-grade lithium carbonate averaged ≈ RMB 60 500 / $8,350 per tonne in June this year, a four-year low according to Caixin Global.
Fastmarkets also recently made a call that China would replace Australia as the world’s #1 producer. Chinese strategy is all-in on securing adequate supply of Lithium for its own reasons, see Matt Fernley's recent piece.
Battery costs have continued their downward trend. BNEF’s survey last year came in at $115/kilowatt-hour for pack prices. Will 2025 see sub $100 across the board?
Excess capacity is sizeable. BCG's Minjee Kim in December last year pointed to demand in 2024 at 1,234 Gigawatt-hours vs factory capacity at 2,456 Gigawatt-hours, largely driven by China's pace of execution and the lower take-up of EVs.
Deals that previously took weeks, due to scarcity or the perception of scarcity, now can take months and containerised multi-Megawatt hour BESS solutions are becoming increasingly visible in some regions. Adding to this are the very bullish warranty claims across the board which in some cases stretch out many years.
Also adding to this are greater chemistry choice being brought to the market e.g. lithium iron phosphate variants like lithium manganese iron phosphate, low-/mid-nickel formulas, the emergence of lithium manganese-rich, and sodium-ion lurking in the background.
We only need to go back a couple of years and recall when there was a critical shortage of li-ion batteries, or the perception of a critical shortage. BNEF tracked an increase in pack pricing to $151 Kilowatt-hours for the first time since 2010.
One example is an article from Reuters in June 2022, entitled “Insight: How a battery shortage is hampering the U.S. switch to wind, solar power” highlighting how BESS developers were delaying projects due to scarcity:
“Prices for lithium-ion batteries, three-quarters of which are produced in China, have soared as much as 20% since last year as lithium and nickel costs rise, COVID-19 lockdowns disrupt manufacturing, and transport constraints slow shipments… Energy research firm Rystad said that given the large appetite for batteries from a surging EV market, global supplies for utility storage projects are not expected to be able to meet demand in the medium-term.”
See McKinsey article in October 2022, entitled “Power spike: How battery makers can respond to surging demand from Evs.”
“As the world shifts up a gear in its transition to electric vehicles, the demand for batteries has skyrocketed in major automotive markets in Europe and the United States. Automotive and battery manufacturers face a difficult period of uncertainty in the battery supply chain, and many are turning to building their own battery gigafactories or forming joint ventures to address squeezed supply.”
Both accurate or reasonable takes at the time, which feel very distant only a couple of years later.
Today’s market is oversupplied; pricing and industry experience confirm that. The question is whether that state endures. The most plausible challenge is Lithium swinging back into deficit. A secondary challenge is regional concentration risk of the other parts of the value chain (cell/cathode/anode production, refining, recycling etc) if the market becomes tight again and a tense political environment.
Our ambition: Scale the leading platform for frictionless battery transactions, throughout the value chain. Four pain points we eliminate via our S1 product are below. These are pains and friction that we have experienced ourselves.
So in either a buyers market or a sellers market, Cling offers a place to transact and to do so in an efficient, transparent manner, reducing headaches. All predictions are wrong but making the battery transaction process easier is an enduring job to be done.
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