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The landscape of the electric vehicle sector in China is experiencing fundamental shifts, with battery costs now surpassing 40% of the overall expenses, according to the secretary-general of the China Passenger Car Association. During the era of traditional fossil fuel vehicles, automakers held the dominant control over supply chain costs. Currently, however, battery manufacturers have taken center stage, overtaking original equipment manufacturers as the industry’s new focal point, said Cui Dongshu during a recent media briefing. He also noted that recent volatility in the price of lithium carbonate has intensified cost pressures on Chinese new energy vehicle (NEV) producers who depend entirely on externally sourced batteries.
Lithium carbonate, a critical raw material for electric vehicle batteries, saw its price soar to around CNY200,000 (approximately USD29,420) per ton in mid-May, marking a two-and-a-half-year high. Subsequently, prices declined to about CNY151,750 per ton on June 29 after the leading battery manufacturer, which is the largest globally, was authorized to resume mining activities. Shortly afterward, prices bounced back to roughly CNY165,000 per ton amid rising demand for energy storage and increased procurement by battery producers aiming to boost production and retain market share.
Data from the Shanghai Metals Market indicated significant fluctuations in lithium carbonate spot prices between late June and early July. The difference between this year’s highest and lowest spot prices amounted to nearly CNY50,000 (around USD7,350) per ton, reflecting a swing of nearly 25%. While global lithium reserves are vast and supplies are theoretically nearly limitless, Cui pointed out that speculation largely drives price volatility, posing the greatest disruption to the industry. He believes that a decline in lithium prices is generally positive for the sector and that short-term price swings should not foster despair.
Increasing costs for battery materials are altering profit-sharing dynamics across the NEV supply chain. The recent rise in lithium carbonate prices has resulted in substantial earnings growth for battery manufacturers, with increased costs being passed downstream to other players. Despite nearly 20% lower retail sales of new energy passenger vehicles in the first half of the year, the industry faces persistent challenges. Domestic demand remains sluggish, leading automakers to hesitate on raising vehicle prices, while fluctuating battery prices continue to squeeze profits—especially for those dependent solely on external battery sources.
This situation emphasizes the strategic importance for carmakers to develop in-house battery technologies, offering a buffer against raw material price swings. Cui urged the industry to concentrate on core technologies such as solid-state batteries, high-voltage platforms, advanced autonomous driving, and recycling solutions. These innovations can shift focus from price wars to technological differentiation and promote a more integrated supply chain that distributes research, development, and manufacturing costs more effectively.
Despite the volatility in raw material prices, China’s battery export prices have been decreasing over recent years. The pace of decline has slowed due to intense international competition and the comparatively weaker position of Chinese manufacturers versus more established foreign competitors like Samsung and LG Chem. According to data from the China Passenger Car Association, the average export price for lithium batteries fell 26% to CNY142,900 per ton in 2024, then declined 21% to CNY112,300 per ton in 2025, and further decreased by 12% to CNY104,800 per ton in the first five months of this year. As of May, the export price decreased only 8% year-over-year to CNY105,500 per ton.
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