Electric Vehicle Battery Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)Report

Electric Vehicle Battery Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

  • Published Date: Feb, 2024
  • Base Year for Estimate: 2022
  • Report ID: GVR-P-10508
  • Format: Electronic (PDF)
  • Historical Data: 2020 - 2021
  • Number of Pages: 60

The pricing and cost analysis helps in deriving and forecasting the actual cost of products or services over the forecast period. It considers all the cost components and provides a competitive edge during supplier negotiations. Moreover, the outcome helps procurement leaders understand detailed and fact-based cost drivers for the category.

In this electric vehicle battery procurement intelligence report, we have estimated the key cost components associated with battery production. The key cost components include raw materials, materials, energy, labor, packaging, depreciation, facilities and utilities, insurance and marketing. Raw materials can include a variety of chemicals such as lithium, nickel, cobalt, and manganese for cathode, graphite for anode, and polyolefin materials for separators. The components located outside of the cathode constitute almost 49% of the cost of a cell. As people move towards sustainable transportation, the cost of EV batteries has become a crucial factor to consider. Various factors can impact the total cost; however, the chemical composition of the battery is the most important factor. For instance, the cost of lithium iron phosphate (LFP) batteries, which are less energy-density batteries, have a lower average price of USD 98.5 per kWh compared to NMC and NCA batteries at USD 112 – 120 kWh range.

According to the IEA EV 2023 report, the impact of rising battery material costs varied across different battery types in 2022. The most significant increase was seen in LFP batteries, which rose by over 25%. Meanwhile, Nickel Manganese Cobalt (NMC) batteries saw an increase of less than 15% in 2022. LFP batteries do not contain nickel or cobalt, which are more expensive than iron and phosphorus. Therefore, the price of lithium has a relatively greater effect on the final cost of LFP batteries. In 2022, prices of lithium increased at a higher rate compared to nickel and cobalt. As a result, prices of LFP batteries rose steadily more than NMC batteries.

Every organization and its procurement team look forward to negotiating the best deal while procuring a set of products or subscribing to services. Rate benchmarking involves price/cost comparison of more than one set of products/services to analyze the most efficient combination that can potentially help the procurement team in getting the optimum rate.

The geographical location, supply chain complexities, and scale of business play a vital factor in analyzing the rate benchmarking of the electric vehicle battery category. Battery prices differ across regions. On average, China has the lowest prices for batteries, while the rest of the Asia Pacific region has the highest. This price gap is because China manufactures around 65% of battery cells and almost 80% of cathodes.

According to the Economic Times, in 2023, regional battery prices will be a crucial factor in the future as countries and companies aim to establish the battery supply chain locally. The cost of battery packs is the lowest in China, at USD 126 per kWh, while it is 11% and 20% more expensive in the U.S. and Europe respectively. The higher prices in the U.S. and Europe are due to their relatively immature markets, higher production costs, lower volumes, a diverse range of applications, and battery imports.

To gain a comprehensive understanding of other aspects of rate benchmarking, please subscribe to our services and get access to the complete report.

Labor cost is one of the key components of the total incurred costs while offering a product or service. Therefore, an organization must decide on whether the focus category should be retained in-house or outsourced if the organization is providing its products or services at competitive prices. If the organization decides in favor of outsourcing, it must understand the difference in the salary structures of suppliers before selecting a supplier and formulating a negotiation strategy.

According to our research, battery engineers at Tesla and LG Energy Solution receive a 10 - 12% higher base salary compared to the salary received by battery engineers working in companies such as Panasonic and Toshiba Corporation. However, the year-on-year increment rate in all these companies majorly depends on the Key Result Areas (KRAs).

Organizations may find it cumbersome to track all the latest developments in their supplier landscape continuously. Outsourcing the activities related to gathering intelligence allows organizations to focus on their core offerings. At this juncture, our newsletter service can help organizations stay updated with the latest developments and innovations and subsequently assist in preventing disruptions in the supply chain. We have identified the following developments within the electric vehicle battery category over the last two years:

  • In November 2023, Stellantis announced a Memorandum Of Understanding (MoU) agreement with CATL. As part of the deal, the latter would be responsible for supplying LFP battery cells and modules to Stellantis’s EVs. The agreement states that the two involved companies would develop a technology roadmap to support Stellantis’s electrification strategy by strengthening the battery value chain.

  • In August 2023, CATL announced the launch of its LFP battery, named Shenxing. This superfast charging 4C battery can deliver a 400 km range of driving within 10 minutes of charging. On a single full charge, it can cover up to 700 km in range. The battery consists of a cathode using “super-electronic network technology” and an LFP cathode material which has been “fully nano-crystallized”. The main aim of this EV battery, Shenxing, is to create a network that eases the extraction of lithium ions and rapidly responds to charging signals.

  • In April 2023, Tesla Power announced its partnership with Indian Oil for distribution of battery in India. Through this cooperation, Tesla Power USA batteries will be able to sell and service their batteries at more than 36,000 IOCL gas stations in India. This would offer customers convenience and availability when buying and maintaining car batteries. Both lead-acid batteries and Lithium batteries will be offered by Tesla and the company will cater to all automotive and EV segments.

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Add-on Services

Should Cost Analysis

Component wise cost break down for better negotiation for the client, highlights the key cost drivers in the market with future price fluctuation for different materials (e.g.: steel, aluminum, etc.) used in the production process

Rate Benchmarking

Offering cost transparency for different products / services procured by the client. A typical report involves 2-3 case scenarios helping clients to select the best suited engagement with the supplier

Salary Benchmarking

Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.

Supplier Newsletter

A typical newsletter study by capturing latest information for specific suppliers related to: M&As, technological innovations, expansion, litigations, bankruptcy etc.

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