CATL’s ‘price war’ shows its power, and China’s EV edge

The world’s largest battery maker, has offered to cut costs for Chinese automakers, a move that demonstrates its market power and could also widen China’s cost advantage in electric vehicles.

China’s CATL has offered smaller domestic electric-vehicle makers discounted prices on batteries, according to four people with knowledge of the terms.

The discount offers included a clause that shocked the auto industry after a year of rising prices: a built-in assumption that prices of lithium carbonate, a key component in auto batteries, would more than halve, three of the people said.

CATL has faced some pushback from Chinese automakers for its market dominance and pricing. It was not immediately clear how China’s regulators would view CATL’s offer of lower prices in exchange for a fixed share of future orders.

China’s government cost and price regulatory agency said on Thursday its officials had visited CATL earlier this month and said it would “strengthen cooperation” with the company, without providing further details.

CATL’s offer follows a downturn in lithium prices linked to a slowdown in EV sales in China, which accounted for two-thirds of all battery-powered cars sold in 2022.

For consumers, that could bring prices down after a year when manufacturers struggled with supply chains and rising prices for batteries, the largest single cost in an EV.