China’s energy storage firms, battered by a three-year price war, have been jolted by lithium battery maker Deegares, which has announced plans to raise prices by 15 per cent, a move that is sparking debate over whether the sector could be the first to break free from the “involution” cycle.
Rising lithium costs were the immediate trigger, with at least three other battery makers reported in recent weeks to be planning similar increases. Prices of the metal, crucial to rechargeable batteries, have rebounded about 70 per cent from this year’s trough, boosted by a global investment boom in artificial intelligence and a rush of electric vehicle purchases in mainland China.
The price rise comes as Beijing’s “anti-involution campaign” spread to battery manufacturing. In late November, the Ministry of Industry and Information Technology met 12 industry leaders, including BYD chairman Wang Chuanfu, and pledged to roll out measures faster to curb “irrational” competition.
“It is not easy to see significant improvement, as the domestic supply remains at a high level,” said Pierre Lau Hin-tat, China equity strategist at Citigroup Global Markets.
Envision Group, a leader in the energy storage sector, complained in August that around one-third of system integrators were selling products below cost, contributing to an 80 per cent slump in selling prices over three years.
Investment bank Bocom International forecast that the anti-involution campaign would continue despite the recent rally.
