As global automakers scrap or delay their electric vehicle (EV) transition plans one after another, tension is rising in Korea's battery industry. In contrast, prices of key battery raw materials such as lithium, nickel and cobalt are hitting a record high day after day, drawing a steep upward curve.
In the securities market, analysts say the rise in raw material prices could lead to higher battery selling prices, providing momentum for short-term earnings improvement.
According to Trading Economics on the 14th, the price of lithium carbonate on the 12th jumped 7,500 yuan (4.93%) from the previous day to close at 159,500 yuan per ton. Starting at 94,000 yuan on Dec. 1 last year, the lithium carbonate price has risen about 69% to date. This is the record high since November 2023.
Nickel started at $14,800 per ton in December last year and rose to $17,900 on this day, up about 20% in a month. Cobalt also surged about 15.5%, climbing to around $56,000 per ton in a little over a month after surpassing $48,500 per ton in December last year.
This raw material price trend contrasts with the recent mood in the EV market. Global automakers, unable to overcome weak demand and the burden of production expense, are not only slowing down but fully revising their strategies.
The United States abruptly scrapped EV subsidies in October last year and shifted its policy stance back toward internal combustion engines, and the European Union (EU) effectively withdrew its ban on sales of new internal combustion engine cars that had been set for 2035. Accordingly, Ford, Mercedes-Benz and Volvo partially revised their existing plans to switch to all-electric vehicles by 2030.
Cho Hyeon-ryeol of Samsung Securities said, "EV demand this year will reach 23.5 million units, up 9.4% from last year," adding, "Compared with last year's 20.7% year-over-year increase, the slowdown in EV market growth seems inevitable."
While EV demand has declined, prices of lithium, nickel and cobalt, the core raw materials, are rising day after day. That is because demand for energy storage systems (ESS) has increased, and policy changes by governments have led to a rapid cut in supply.
First, lithium prices are jumping quickly as ESS investment precedes rising power demand driven by the spread of artificial intelligence (AI). Lithium is a key raw material not only for NCM batteries for EVs but also for LFP (lithium iron phosphate) batteries mainly used in ESS. Global power demand is projected to increase to 890 terawatt-hours (TWh) in 2030, 1,800 TWh in 2040 and 3,000 TWh in 2050.
Chinese government policy also fueled the rise in lithium prices. China's Ministry of Finance said it will cut the value-added tax export rebate rate for battery products to 6% from 9% starting in April and fully abolish it from 2027. Reuters noted that, as a result, corporations moved up export volumes, concentrating lithium demand in the short term. On top of that, mine shutdowns and policies limiting output increases overlapped, adding to supply pressure.
For nickel and cobalt as well, supply constraints are a direct backdrop to price strength. Nickel had been on a long downtrend due to a surge in supply from Indonesia since 2023, but sentiment reversed when the Indonesian government said it would cut nickel mine output this year by 34% from a year earlier.
Cobalt supply is also shrinking due to export restrictions and the introduction of quotas by major producing countries. Ok Ji-hoe of Samsung Futures said, "Exportable cobalt volumes in 2026 are set to be limited to about 40% of output," adding, "Accordingly, the global cobalt market has shifted from a surplus phase to a shortage phase."
In the securities market, some say the raw material rally could be momentum for earnings improvement in the sluggish domestic battery industry. When raw material prices rise, battery selling prices increase under price indexation structures, which can translate into larger revenue.
Han Byung-hwa of Eugene Investment & Securities said, "Over the past two to three years, prices of minerals such as lithium fell excessively, and we are now in a recovery phase," adding, "If strength in key mineral prices holds, battery makers can pass higher prices on to clients and increase revenue, which is positive for the domestic battery industry." However, Han noted, "If it goes above 200,000 yuan, which CATL once mentioned as the break-even point, cost competitiveness could weaken."
There are also calls for a selective approach, given that unit sales themselves are not increasing. Jang Jeong-hoon of Samsung Securities said, "Price increases due to changes in the policy environment are clearly a boon for the secondary battery materials value chain," but added, "Front-end demand conditions remain a burden, including the end of the U.S. EV tax credit and Chinese companies' offensive in the European market." Jang went on, "A strategy focused on companies with a low share of U.S.-bound shipments or those relatively able to defend volumes thanks to de-China supply chain dynamics is desirable."