At present, the domestic power battery industry as a whole has become light, except for the mainstream lithium battery companies are relatively active. On March 26, the "Notice on Further Improving the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles" was released, and the new policy on the new energy subsidy standard was slashed by about 50% on average. 50% on average. As a result, domestic sales of new energy vehicles grew by only 1.8% in May, compared with 109.7% year-on-year growth from January to March. The pressure brought by the subsidies to the host plant was quickly transferred to the core components power battery. GGII data show that in May, China's total installed power battery capacity was about 5.68GWh, up 26% year-on-year, with a significant slowdown in growth. From January to March this year, the total domestic battery shipments increased by 81.67% year-on-year.
Wu Hui, general manager of the research department of Ivey Institute of Economic Research, said that the recent lithium battery prices have declined slightly compared with the same period last year, but the magnitude is not large, for example, the current price of the core is about 0.9 yuan / Wh. And previously the price of the core fell from 3 yuan to the current 0.9 yuan, only four or five years. This shows that the cycle of high-speed growth in the field of lithium batteries has ended, the profit margin is getting smaller and smaller, and even drop can not be reduced, some small and medium-sized enterprises retreat to take orders from consumer electronics products to renew their lives.
At the same time, many car companies have accelerated the pace of electrification, one after another to throw new orders to the power battery suppliers of the best. The horse effect is highlighted, the stronger the stronger, the weaker the weaker.
The industry is highly concentrated ice and fire
The power battery industry reshuffle is increasingly intensified, last month the news of the imminent closure of the top ten domestic Nengeng battery, Neng battery subsequently issued a clarification announcement that this is a rumor.
However, it is worth noting that at present, affected by the macro situation and subsidies, Chinese power battery companies are generally facing the pressure of financial constraints, and some companies can no longer hold up. As the former top three Li-ion batteries, Wotema is deep in debt and on the verge of bankruptcy in 2018. In addition, Henan Huanyu Power, which is one of the world's professional manufacturers of secondary batteries, filed for bankruptcy liquidation in November 2018.
In 2016, the number of Chinese power battery companies reached 155, which dropped to about 130 by 2017. Some institutions predict that in 2018, there may be only 105 power battery companies left in China. In the process of rapid technological iterations and continuous price drops, once technology or capital cannot keep up with the pace of market development, enterprises will have the crisis of being eliminated from the market.
Battery supporting enterprises are also decreasing. The latest data from the China Automotive Power Battery Industry Innovation Alliance shows that in May this year, a total of 41 power battery companies in China's new energy vehicle market achieved installed support, 2 fewer than in April, and a significant reduction of 20 compared to 61 in the same period last year.
Yu Qingjiao, secretary-general of Zhongguancun New Battery Technology Innovation Alliance, said that in the process of contacting with domestic battery enterprises, he found that the current production capacity of most battery enterprises is low-end capacity.
Huang Shilin, vice chairman of Ningde Times (300750.SZ), has talked at the 2018 China Lithium Industry and Power Battery International Summit Forum that the overall planning capacity of domestic power batteries from 2013 to 2017 reached 228 GWh, while only 37 GWh was actually used in 2017, and at this stage, power batteries have shown some structural overcapacity. The excess capacity is expected to continue beyond 2020, and how to optimize production capacity and improve the level of technology has become a very important issue in the next two to three years.
In fact, in recent years, with the development of new energy vehicles, the power battery market is also growing rapidly. ggii data show that in 2018, the global power battery shipments 106GWh, an increase of 55.2% year-on-year. Power batteries are mainly concentrated in China, Japan and South Korea. Since 2015, China has overtaken Japan to become the world's largest power battery shipment country.In 2018, the total installed power battery power in China was about 56.98 GWh, up 56% year-on-year.
After overtaking Panasonic in 2017, Ningde Times ranked first in the world again in 2018 with 23.4GWh and a 23% global market share, 2 percentage points higher than second-ranked Panasonic, 10 percentage points and 15 percentage points higher than third-ranked BYD (002594.SZ) and fourth-ranked LG Chem.
Ningde Times overtook Panasonic, which has Tesla orders in hand, thanks to the accelerated advance of new energy vehicles in China. 2018 saw the production of about 1.22 million new energy vehicles in China, up 50% year-on-year. Among them, the top 10 power battery companies ranked by total domestic installed power combined about 47.20 GWh, accounting for 83% of the overall, up by up to 9 percentage points from the combined share of TOP10 companies last year, with a clear trend of market concentration. Ningde Time, ranked first, and BYD, ranked second, accounted for 12.23% and 4.54% respectively of the total installed power battery capacity in China compared with the previous year. Ningde Time's capacity utilization rate of more than 70% is still far ahead in the industry, while some domestic second-tier power battery companies have less than 30%. The report of Anxin Securities shows that the capacity utilization rate of power battery enterprises outside the TOP 10 in China is less than 10%.
With core technology advantages and sustainable R&D capabilities in the fields of battery materials, battery systems and battery recycling, Ningde Times, in addition to major customers such as Yutong Bus (600066.SH), Beiqi New Energy, Geely (00175.HK), SAIC Group (600104.SH), Chery, BMW, etc., in 2018 and international car companies such as Volkswagen, Jaguar Land Rover and Daimler reached cooperation. This year, Ningde Times has continued to add new partners, announcing in February that it will cooperate with Honda Motor to develop lithium-ion batteries for electric vehicles, planning to set up a factory in Tochigi Prefecture, Japan, in the first half of this year, and will supply 56 Gwh of batteries to Honda by 2027. Last month, Ningde Times was also announced as one of the global partners for Volvo's electric vehicle batteries.
BYD has started to break the closed model of self-production and self-sales since 2017 when it was taken away from the top position of domestic power batteries by Ningde Times, and last year established strategic cooperation with Changan and other OEMs to accelerate its grab for the power battery market. Following the construction of production bases in Huizhou, Shenzhen, Xining and other batteries, BYD signed an investment agreement in Guangzhou Zengcheng on June 2, investing 4 billion yuan to build a lithium battery Zengcheng production base.
Seeing the rapid development of China's lithium battery technology, has been working with Panasonic Toyota suddenly adjust the pace to create a more diverse supply chain of key components, June 7 announced an alliance with five battery supply field, in addition to the Japanese Panasonic, Toshiba and Yuasa, Ningde Time and BYD is also listed.
Subsidies retreat domestic power battery internal and external worries
However, even in the global ranking of the first, Ningde Times is not resting on its laurels, there are many unpredictable factors ahead, especially after 2020, the domestic new energy vehicle subsidies or all canceled.
The subsidies are retreating or even canceled in the reverse power battery prices down. CICC research report that the average price of ternary lithium is expected to fall 15% to 20% in 2019, lithium iron prices fell 20% to 30%, cost-oriented models will shift to lithium iron batteries, new energy vehicles gross margin gradually converge to traditional fuel cars will be the trend. Lithium bargaining power is further concentrated in the leading will also make the two sides of the game lithium prices will be orderly decline.
Battery price decline is the trend. Previously, the cost of power batteries in electric vehicles accounted for 50% to 60%; nowadays, the specific circumstances of different models are different, for example, a more than 100,000 yuan of electric passenger cars, power battery costs about 30,000 yuan, accounting for about 20% to 30%.
Guangzhou Automobile Group (601238.SH) has assessed the market competitiveness of electric passenger cars, electric passenger cars can replace fuel cars of the same class, one of the conditions to be met is that the battery price is lower than 0.6 yuan / Wh. However, from 0.9 yuan to 0.6 yuan or even lower, which is geometrically more difficult in terms of technology and materials, etc., Ningde Time and other power battery vendors will be under certain future pressure, and the advantage will be weakened.
In 2018, Ningde Times achieved operating revenue of 29.611 billion yuan, up 48.08% year-on-year; net profit attributable to shareholders of listed companies was 3.387 billion yuan, down 12.66% year-on-year. The subsidies retreat and falling battery prices will inevitably eat into profits, and the way to cope with this is not only to improve technology, but also to expand scale. In the first quarter of this year, Ningde Times achieved operating income of 9.982 billion yuan, up 168.93% year-on-year; net profit attributable to shareholders of the listed company was 1.047 billion yuan, up 153.35% year-on-year. Ningde Times pointed out that the main reason for the rise in performance was the increase in domestic power battery market demand compared with the same period last year, as well as the company's strengthening of market development, the release of the capacity of the pull line invested in the early stage, and the corresponding increase in production and sales.
Ningde Times is setting up battery joint ventures with a number of domestic and foreign OEMs one after another. Although this reduces the investment risk to a certain extent, but it is not a foolproof strategy.
Host plants are also avoiding risks and gradually no longer put their eggs in one basket. Toyota allied with five battery suppliers in one breath; Volkswagen, in addition to holding hands with Ningde Time, also plans to set up a battery factory with Swedish battery maker Northvolt in Salzgitter, Germany; Geely, after setting up a joint venture with Ningde Time, recently announced that it will set up a joint venture with LG Chem.
Japanese and Korean battery companies are making a comeback, after Samsung, LG, SKI, Panasonic and other battery companies did not enter China's "automotive power battery industry specification conditions" business list, so do not enjoy subsidies and not selected by independent car companies as suppliers. However, with the subsidies significantly back slope or even the future cancellation, Japan and South Korea battery companies ushered in a new opportunity, and accelerate the layout in China.
Last year, LG Chem invested $2 billion to build a power battery project in Nanjing; Samsung SDI also restarted the second phase of Xi'an power battery production base at the end of last year in a low-profile manner. According to an analysis report of the Korean securities industry, the foreign investment of Korean power battery companies will reach 10 trillion won in the next three years, of which nearly 40% will be invested in the Chinese market. Korean companies through joint ventures with Chinese companies to set up factories, it is estimated that the cost in the Chinese market can be reduced by about 15% to 20%, and the cost gap between similar products in China and South Korea is being further reduced.
Compared with Chinese power batteries, Japanese and Korean power batteries have certain advantages in terms of technology and stability. South Korea SKI CEO Kim Jun recently said, to try to fully develop a new generation of NCM (nickel, cobalt, manganese) electric car battery cells, three metal materials ratio of 9: 0.5: 0.5. Improve the battery nickel metal content means that the vehicle range will increase with the increase in energy density, but this requires the latest technology to achieve the stability of the battery. The vast majority of domestic battery factories have not yet developed 811 (nickel, cobalt, manganese, ratio of 8:1:1), and Ningde Time will only start supplying NCM811 system in bulk in 2019.
Japanese and Korean companies will steal some of the high-end passenger car power battery electric orders from local battery companies. At the same time, host plants are waiting for an opportunity to move while associating with power battery companies. Host plant and battery parts business relationship is delicate, both cooperation and potential competition.
Toyota, Geely and other car companies have their own battery factories, while Tesla, which does not have its own factory, has acquired battery manufacturer Maxwell (Maxwell) in addition to cooperating with Panasonic, and has the possibility of establishing a battery factory in China to support its Shanghai super factory. Tesla CEO Elon Musk said bluntly, "We need to control our own destiny, so make our own batteries." Evergrande, a new entrant into the car-making field, has taken ownership of power battery company Kanai and plans to build a 50GWh production scale power battery super factory in Nansha. In the future, as the electric vehicle market becomes more and more mature, some host plants will take more initiative in the hands of the core component of power battery, in addition to outsourcing part of the battery.
The host plant is currently bundled with the battery supplier friendly, to some extent, with the new energy vehicle profits are not yet attractive enough, we feel the stones together to reduce the risk. The "seven inches" of the electric car is the safety issue, only the battery and other safety issues are relatively completely solved, consumers to dispel the concerns about the safety of electric vehicles, electric vehicles will be popularized. However, both the old drivers of electric cars, Tesla, BYD, and the new car makers, Azera, have had electric car fires, and Azera has had three fires or smoking accidents in recent months. The Azera battery supplier is Ningde Time, and the cause of the Azera electric car fires is still under investigation and has not been released to the public. In view of the urgent need to address the safety hazards of new energy vehicles, the Ministry of Industry and Information Technology recently issued a notice on the investigation of the safety hazards of new energy vehicles.
In addition to safety hazards, new energy vehicles also have path problems. Hydrogen fuel cells have attracted much attention this year, and although commercialization will take time, they are invariably a potentially strong rival to lithium batteries. It is noteworthy that companies with a reputation for lithium batteries, whether BYD or Ningde Time, no longer continue to bet their chips on cars alone, BYD's power batteries are beginning to be used in new areas such as cloud rail, while Ningde Time has recently followed up on the market for electric ships following its cooperation with Haro Bike in the field of electric two-wheelers.
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