China tells EV battery chain it wants ‘rational’ lithium prices

China is telling its electric-car battery supply chain that it wants lithium prices to return to sustainable levels.

The government called in a range of market participants last week — from lithium producers to the main carmakers’ association — to discuss “a rational return” for lithium prices, according to a statement from the Ministry of Industry and Information Technology late Friday. 

Lithium has soared nearly 500% in the past year, adding to cost pressures for EV producers.

The seminar on March 16 and 17 was aimed at discussing surging costs and promoting what the ministry called the healthy development of the new-energy vehicle and battery sectors. It also addressed supply bottlenecks, how lithium is priced, as well as measures to steady prices and secure supply.

The meeting underscores how Beijing is getting nervous about lithium’s prolonged surge, and it’s also in line with a broader push to manage soaring commodity prices. Earlier, some manufacturers were also summoned for a meeting after prices of rare earths jumped.

Lithium has powered through records in China as an acceleration in demand from EV manufacturers outstrips supply. The burgeoning EV industry is grappling with growing risks around cost inflation, with some carmakers starting to feel the pain and raising their own price tags.

Participants at last week’s gathering included officials from the China Nonferrous Metals Industry Association, China Association of Automobile Manufacturers, China Industry Technology Innovation Strategic Alliance for Electric Vehicles and other organizations, as well as key lithium suppliers, cathode companies and EV-battery firms.

(By Annie Lee)