In-depth Analysis of the Impact of Cobalt Price Fluctuations on Gross Margins of Battery Manufacturers

Cobalt price fluctuations have a significant impact on the gross margins of battery manufacturers, but the magnitude of the impact depends on

and . According to historical data analysis, for every 10% increase in cobalt prices, the gross margin of manufacturers using NCM523/622 batteries decreases by approximately 0.18 percentage points; for every 50% increase in cobalt prices, the impact on gross margin is about 0.88 percentage points.

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Year	CATL’s Gross Margin (%)	Cobalt Price ($/ton)	Correlation
2020	27.76	32,000	Base Year
2021	26.28	52,000 (+62.5%)	Negative Correlation
2022	20.25	80,000 (+53.8%)	Significant Negative Correlation
2023	22.91	35,000 (-56.2%)	Negative Correlation (Recovery)
2024	22.18	28,000 (-20.0%)	Continuous Recovery

: During the cobalt price surge from 2021 to 2022, CATL’s gross margin plummeted from 27.76% to 20.25%, , fully reflecting the significant impact of cobalt prices on profitability [0][1].

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The proportion of cobalt in battery costs varies greatly depending on the technology route:

Battery Type	Cobalt Content	Proportion of Cobalt Cost in Total Cost	Impact on Gross Margin When Cobalt Prices Rise by 50%
NCM111	33.3%	18.5%	-2.04 pts
NCM523	20.0%	11.2%	-1.23 pts
NCM622	20.0%	11.0%	-1.21 pts
NCM811	10.0%	5.5%	-0.61 pts
LFP	0%	0%	No Impact

(NCM523/622 mix): Cobalt cost accounts for about 8% of total cost; a 50% increase in cobalt prices leads to a decrease of approximately 0.88 percentage points in gross margin [0].

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Based on CATL’s 2024 financial data [0]:

• Revenue Scale
  : Approximately 362 billion RMB
• Cobalt Price Change
  : Q1 $28,000 → Q4 $25,400 (
  9.3% decline
  )
• Cost Savings
  : About 2.7 billion RMB
• Gross Margin Improvement
  : Approximately
  0.74 percentage points

Cobalt prices fell overall in 2024, supporting the profitability of battery manufacturers [2].

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Cobalt Price Change (%)  Gross Margin Impact (pts)  New Gross Margin (%)
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
   +10%        -0.18          21.8%
   +20%        -0.35          21.6%
   +30%        -0.53          21.5%
   +40%        -0.70          21.3%
   +50%        -0.88          21.1%
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

: Base gross margin 22%, cobalt cost accounts for 8% of total cost

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1. Technology Upgrade
   : Transition from NCM111/523 to NCM811/LFP to significantly reduce cobalt dependence
2. Vertical Integration
   : Layout upstream cobalt mine resources to smooth price fluctuations
3. Long-term Agreement Pricing
   : Sign long-term procurement agreements with suppliers to lock in costs
4. Product Structure Optimization
   : Increase the proportion of LFP batteries (lower cost, no cobalt)

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• Short-term
  : Mild fluctuations in cobalt prices have limited impact on leading manufacturers (<1% change in gross margin)
• Medium-term
  : Technology route switching (NCM811/LFP) significantly reduces cobalt sensitivity
• Long-term
  : Under the expectation of oversupply, cobalt prices are unlikely to see a surge like in 2021-2022 [3]

Chart Description: The above chart shows (1) the inverse trend between CATL’s gross margin and cobalt prices; (2) comparison of cobalt content among different battery models; (3) sensitivity analysis of cobalt price changes on gross margin; (4) differences in gross margin sensitivity among batteries with different cobalt proportions [0]

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[0] Gilin API Data - CATL Financial Analysis, Cobalt Price Trend Data

[1] Wall Street Journal - Chart Analysis of “Impact of Cobalt Price Fluctuations on Lithium Battery Manufacturers” (https://www.wsj.com)

[2] Yahoo Finance - “Citi: Battery Supply Chain Uptrend Has Been Largely Reflected” (https://hk.finance.yahoo.com)

[3] Bloomberg - “Why Global Battery Prices Are Expected to Fall in 2026” (https://www.bloomberg.com)