---
title: "At what lithium carbonate price does energy storage become unviable?"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/286765815.md"
description: "The surge in lithium carbonate prices to 200,000 yuan/ton has placed immense pressure on battery cell manufacturers and energy storage projects. Rising cell costs are expected to drive energy storage EPC prices up to 0.97 yuan/Wh, impacting investment returns. Many cell manufacturers struggle to survive at these high prices, raising the risk of industry consolidation"
datetime: "2026-05-18T11:50:05.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/286765815.md)
  - [en](https://longbridge.com/en/news/286765815.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/286765815.md)
---

# At what lithium carbonate price does energy storage become unviable?

"Currently, almost no battery cell manufacturers are issuing quotes. Even if they do, the validity period is only one day. We don't know how to price it either."

At the Shenzhen CIBF exhibition, Lao Zhang, a sales director at a battery cell company, expressed his helplessness to us.

At this most bustling battery industry event, the skyrocketing price of lithium carbonate has become a sword hanging over everyone's head.

On May 11, the main contract for lithium carbonate futures broke through the 200,000 yuan/ton mark during trading hours. In just 11 months, the price surged by more than 230%.

Although prices have retreated slightly in recent days, they remain firmly above the high level of 190,000 yuan/ton.

Latest Lithium Carbonate Prices

While capital markets revel in euphoria, traders frantically stockpile goods, and bulls and bears engage in fierce verbal battles, it is actually the downstream end of the industrial chain that feels the heat first.

"Many energy storage projects have been paused. At current prices, the IRR calculations just don't work out," a head of a leading domestic energy storage enterprise told us.

In the global lithium battery production schedule for May 2026, the share of energy storage cells has exceeded 42%. However, a fundamental and fatal problem remains—at 200,000 yuan/ton for lithium carbonate, the economics of energy storage simply do not add up.

This is a very simple transmission formula:

According to calculations by Everbright Securities, for every 10,000 yuan/ton increase in lithium carbonate prices, cell costs rise by 0.006 yuan/Wh. When lithium prices stand at 200,000 yuan/ton, energy storage EPC prices will soar to 0.97 yuan/Wh. For every 0.02 yuan/Wh increase in EPC costs, the project's overall investment IRR drops by 0.35 percentage points.

Setting aside the noise of capital markets, what impact is the crazy surge in lithium carbonate prices actually having on cell manufacturers and energy storage system integrators?

As rising costs are passed down the chain, who is under pressure, who is being squeezed out, and who can still hold on?

With these questions in mind, we had in-depth discussions with dozens of frontline personnel from cell manufacturers and system integrators, attempting to find answers from the forefront of the industry.

## 01 Cell Manufacturers: Many Small Factories Struggled Even at 160,000 Yuan

Cell manufacturers are the first link to be scrutinized.

"Some cell manufacturers could still make a profit when lithium carbonate was at 170,000 yuan, while others might have become unviable at 160,000 yuan," Lao Zhang revealed.

From mid-2025 to present, lithium carbonate prices have surged by 230%. Meanwhile, the price of mainstream 314Ah energy storage cells has risen from 0.24 yuan/Wh to 0.36–0.39 yuan/Wh, with some leading manufacturers quoting 0.4 yuan/Wh—a increase of only 25%–35%.

The huge disparity in price increases reveals a harsh reality of the lithium battery industrial chain—**price transmission in the downstream cell segment is far slower than the rise in raw material costs.**

Cathode materials account for 40% of cell costs, and electrolytes account for over 10%. Lithium carbonate is the core raw material for both of these key components.

The chain reaction of soaring lithium prices has been transmitted from cathodes and electrolytes throughout the entire production process. Coupled with electricity costs, labor, and equipment depreciation, cost pressures have accumulated layer by layer.

Energy Storage Cell Cost Index for March 2026 (Source: Mysteel)

However, the tolerance levels vary significantly among different cell manufacturers, with small factories being continuously squeezed by larger ones.

**The industry's common pricing model is "Cost + Processing Fee," meaning quotes are adjusted in real-time based on costs. The advantages of leading players are vividly demonstrated here:**

① Extreme Yield Rates: Leading enterprises can achieve yield rates of 95% or even over 99%. With less waste, the cost allocated to each cell is naturally lower;

② Self-Sufficient Resources: Leading enterprises also have layouts in lithium mines. For example, CATL's Jianxiawo lepidolite mine in Yichun, Jiangxi, has a cash cost per ton of lithium carbonate of only 87,700 yuan, far below the market price.

In contrast, small and medium-sized manufacturers have weak bargaining power and cannot suppress upstream costs. Their production equipment also lags behind larger factories, resulting in lower yield rates and continuously narrowing profit margins.

When lithium carbonate reached 160,000 yuan, many small factories already had negligible profits left.

When costs rise, is raising prices the solution?

The problem lies in the transparency of cell prices. Who raised prices and by how much—customers can obtain comparative quotes from three competitors the next day.

Cell manufacturers are eyeing each other's market shares, so price adjustments are made cautiously.

Trend of Energy Storage Cell Price Changes from 2025 to February 2026 Source: Hangjia Shuo Energy Storage

Some small companies try to reduce costs through other means, such as refurbishing dismantled cells and changing their appearance to sell them as energy storage cells, capturing a price difference of nearly 2,000 yuan.

But these maneuvers have limited scope—when lithium carbonate truly surges, no one can stop it.

In fact, since the beginning of this year, leading cell manufacturers have remained in a state of supply shortage. Orders for leading energy storage cell enterprises like CATL, EVE Energy, and BYD have been booked until 2027 or even 2028.

Wang Pengcheng, Co-founder of Hithium, stated that orders are booked until 2027

"Currently, cell transactions are basically cash-on-delivery. If you have good connections, maybe you can get a two-week credit period," an engineer at a battery pack factory told us.

**In contrast, small and medium-sized cell manufacturers face a double squeeze from payment terms and costs.**

On one hand, they must advance funds to buy lithium carbonate at high prices; on the other, they must wait painfully for payments from downstream clients.

"Most payment terms range from one month to three months. The huge cash flow gap in between is entirely filled by the company's own capital pool." The speed of cash flow rupture is much faster than the rise in costs.

**The pattern of divergence, where the strong get stronger, is accelerating.**

## **02** **Energy Storage Integrators: Pressing the Pause Button on Projects**

If cell manufacturers still have some room to pass on costs, system integrators are thoroughly stuck in the middle. The rise in lithium prices has been directly reflected in the declining gross margins of energy storage companies.

"I have a bunch of projects on hand, but they have all been stopped. The current price of lithium carbonate is too awkward," a head of an energy storage company told us.

Continuing means certain losses for the project; abandoning it means sinking the initial investment.

Currently, the two hottest application scenarios for domestic energy storage projects are commercial and industrial (C&I) storage and independent storage. Their commonality is that both require strict IRR calculations.

C&I storage typically serves individual factories, industrial parks, or commercial complexes, with scales ranging from hundreds of kWh to tens of MWh. The relatively small scale means their bargaining power is very weak.

Furthermore, the adjustment of domestic time-of-use electricity prices starting in 2025 has led to a sharp drop in IRR for C&I storage projects. An investor bitterly joked, "The impact of rising lithium carbonate prices is manageable; anyway, hardly anyone is investing in C&I storage projects anymore."

"Independent storage projects are even more sensitive to IRR," an investor told us.

With lithium carbonate at 200,000 yuan/ton, the IRR for independent storage projects in most provinces across the country will fall below the 6% or even 5% return red line, leading to widespread delays or cancellations.

**For traditional large-scale storage projects subject to bidding, the transmission time for lithium carbonate prices is longer, and pricing flexibility is lower.**

According to a business supervisor for integrated project general contracting, the cycle for a large-scale storage project from bidding to delivery is usually 6–12 months.

Taking the Zero-Carbon Energy Storage Integrated Project in the New Material Industrial Park of Fangchenggang Economic Development Zone as an example, a full month passed just from the release of the tender announcement to the public notice of successful bid candidates. Adding processes like bid opening and evaluation, online public notices, and contract negotiations would only extend the timeline further.

Public Notice on the Bidding and Tendering Public Service Platform

The key issue is: "**Integrators' quotes must be fixed at the time of bidding, and procurement projects usually adopt the lowest-bid-wins method.**"

**Once the contract is signed, renegotiation is difficult. Therefore, cost increases are mainly borne by system integrators, while whether cell manufacturers share the burden depends on negotiation outcomes.**

As lithium prices rose from 90,000 to 200,000 yuan, the cost of an 800MWh large-scale project increased by 30–40 million yuan out of thin air.

The "locked-in bid price, delivered at actual cost" model forces integrators to fulfill contracts signed months ago at low prices using today's high-priced cells.

For every additional Wh installed, another cent is lost.

**In the era of mandatory storage allocation, there were rigid requirements for grid connection timelines, forcing progress even at a loss. Now, as energy storage moves into the asset era, if the numbers don't add up, demand could terminate at any moment.**

**03 Overseas Markets: A Different Landscape**

While domestic energy storage is experiencing "extreme survival mode," the overseas market presents a different picture.

"The rise in lithium carbonate prices has little impact on overseas energy storage projects," said a head of a medium-sized cell manufacturer.

**Overseas markets provide energy storage players with greater buffer space, sufficient to absorb the pressure of rising lithium prices.**

In Europe, the average C&I electricity price in Germany is about 0.27 euros/kWh (approximately 2.1 yuan/kWh), and in the UK, it is about 0.22 pounds/kWh (approximately 2.05 yuan/kWh). The peak-valley price difference is generally above 0.2 euros/kWh, offering extremely lucrative arbitrage opportunities for energy storage.

Calculations show that in Germany, for a 1MWh C&I energy storage project, even if system costs rise to 1.2 yuan/Wh, the project IRR can still exceed 12%.

More importantly, **the proportion of hardware costs in the total cost of overseas energy storage projects is far lower than in China.**

Capital Expenditure for 4-Hour LFP Utility-Scale Energy Storage Systems (Comparison of 2025 and 2026) (Data Source: S&P Global Senior Chief Research Analyst)

Data shows that around 2026, even as lithium carbonate prices soared by over 102% in six months and LFP cell costs rose by 15%–30%, **the total capital expenditure increase for utility-scale BESS projects in the United States, Germany, and China was less than 15%.**

Why? Because the largest cost component for projects in Europe and the US is no longer batteries, but permits, grid connection, and compliance.

Within this broader framework, the impact of battery cost increases is naturally significantly diluted.

In the United States, the situation is even more unique.

The explosive growth of AI data centers has brought huge electricity demand. Energy storage is no longer just a "money-saving tool" but critical infrastructure for ensuring power supply reliability. Customers value delivery speed and product quality more than the marginal cost of hardware.

In this context, whether lithium carbonate rises to 200,000 or 250,000 yuan has almost no impact on the feasibility of large-scale projects in Europe and the US; it is merely a question of profit margins.

**Those truly sensitive to rising lithium prices are emerging markets such as Southeast Asia, South America, the Middle East, and Africa.**

An S&P Global Senior Chief Research Analyst stated in an article that price sensitivity remains high in these regions, and the amount of upfront capital expenditure is still the primary driver of procurement decisions.

**04 Conclusion**

"The current price of lithium carbonate has become meaningless; everyone is waiting and seeing," Lao Zhang said.

No one knows how high lithium prices will go next, nor how long this surge will last.

Leading cell manufacturers have built moats through yield rates and mining rights, while overseas markets have absorbed costs through high electricity prices and high barriers. Meanwhile, domestic small players and integrators trapped in the "scissors difference" are paying for this cycle with real money.

**The energy storage business will not perish due to rising lithium carbonate prices. But many people doing energy storage business will.**

Source: New Energy Industry Leader

Risk Warning and Disclaimer

The market carries risks; investment requires caution. This article does not constitute personal investment advice, nor does it consider the specific investment objectives, financial status, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this content is at the user's own risk.

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