Author: Liangyue Li Ting Source: Securities Daily

Since the beginning of this year, the power battery industry has been concerned, on the one hand, the rapid decline in the price of upstream battery-grade lithium carbonate has brought about a decline in the cost of power batteries, and on the other hand, the increase in battery demand caused by the production and sales of downstream new energy vehicles.

It seems that the power battery industry ushered in a two-way positive, but in fact, there has been an accelerated reshuffle, "inventory" has become the hidden pain of the industry.

In the 2023 20th Shanghai International Automobile Industry Exhibition held recently, the Securities Daily reporter saw the hot of China's new energy vehicles, but also felt that the power battery industry ushered in unprecedented changes.

As the leader of the power battery, known as the "King of Ning", Ningde era, also feel the challenges and opportunities of the industry, through "innovation" and "going to sea" to break the first, for the power battery industry to open up a new road to development.

Unordered expansion triggers periodic "inventories"

As early as last year, the lithium battery industry has seen a wave of expansion. In this regard, Lin Boqiang, dean of the China Energy Policy Research Institute at Xiamen University, told the Securities Daily reporter: "Due to the rapid development of the new energy lithium battery plate in the early stage, as well as higher prices and profits, capital rushed into the track, which led to the formation of inventory, which is also the result of the cyclical mass products." According to the data of the China Automotive Power Battery Industry Innovation Alliance, in 2022, the cumulative output of China's power battery is 545.9GWh, while the cumulative sales of power battery is 465.5GWh, and the cumulative loading capacity is only 294.6GWh.

The imbalance between supply and demand has increased the pressure on power battery destocking in 2023. Some A-share companies even announced the abandonment of lithium battery business. Jiawei New Energy announced in February that it will no longer use lithium battery production as its future development direction.

The relevant person in charge of Honeycomb Energy, which ranked seventh in the domestic power battery loading volume in March this year, admitted in an interview with the Securities Daily reporter: "The lithium industry stage destocking has a certain impact on the company, but because the company has got more fixed customers, and the production capacity has been in a climbing state, destocking has a limited impact on the company."

True lithium research chief analyst Mo Ke told the Securities Daily reporter: "Due to the impact of the previous battery pricing mechanism (linked to resources), making some power battery companies maintain a certain profit, but as the adjustment continues, industry competition will highlight the Matthew effect, that is, the strong constant strong, the shuffle intensified."

Backward production capacity faces reshuffle

In fact, the extensive expansion of early inventory has led to a shortage of orders for some power battery companies. People close to the Ningde era said that the capacity utilization rate in the Ningde era has declined.

Some insiders have analyzed that in the inventory clearance stage, the life of small battery factories will be more difficult.

According to the data of the China Automotive power battery Industry Innovation Alliance, in 2022, the power battery market share of Ningde era is 48.20%, which continues to lead, and the top 10 power battery companies such as BYD, Zhongchuang New Aviation, Guoxun High-tech, Xinwang Da, have a total market share of 95%. The remaining 5% of the market share will be competed for by the remaining dozens of enterprises, the competition is not not fierce.

In this regard, the person in charge of a battery PACK factory in South China said: "When the industry is growing rapidly, a few people can be dug, but when everyone has no orders, suppliers begin to desperately dig stock customers, competition is very fierce."

Qi Haishen, president of Beijing Sunshine New Energy Technology Co., LTD., told the Securities Daily reporter: "Inventory is mainly concentrated in backward production capacity, advanced production capacity is insufficient, the order of the head enterprise is very full, the pressure of the waist enterprise is relatively large, and the tail enterprise will face the possibility of being eliminated."

"Securities Daily" reporter visited the world's largest lithium new energy production base - Ningde lithium new energy town, in the face of increased industry competition, Ningde times deputy general manager, secretary Jiang Li is not afraid, he told reporters: "quality products are what customers really need, therefore, quality power battery capacity is scarce." Ningde era continues to invest in research and development and technology, and the technical level, quality level and manufacturing level of its products have been in a leading position.

Entering the Z base of Ningde Times headquarters, the reporter can see the intelligent automatic production equipment running on its own, material mixing, closed battery coating, automatic forklift transport, etc., all show the intelligence and advanced nature of Ningde Times production line. "Our equipment is designed and researched by ourselves, and only a small number of people go through the system to check whether there is a problem with the product to ensure product quality and safety." According to the relevant person in charge of Ningde Times Z factory told reporters, "Smart factories not only shorten the production time, but also greatly reduce the product scrap rate."

Qi Haishen believes that the lithium battery industry is a capital-intensive, technology-intensive industry, the industry internal competition is very fierce, industrial investment will face "energy density efficiency and production costs" two-way competition.

"The first-line products of lithium battery safety and efficiency will be more than 5% premium than ordinary products, and some products in subdivisions will even be more than double, which will lead to strong demand and serious shortage of efficient and high-quality production capacity, and low-level products may be uninterested." Qi Haichen said.

Some insiders predict that with the continuous expansion of power battery head enterprises, the industry overcapacity problem will be highlighted in the next two years, the industry reshuffle will also intensify, and some low-end production capacity without core technology is at risk of being eliminated by the market.

Accelerate innovation and overseas layout

At the 2023 Shanghai Auto Show, the Securities Daily reporter saw that overseas auto executives were interested in China's new energy vehicle booth, and overseas auto companies themselves were also developing new energy vehicles and displaying them at the auto show. This is a signal of the acceleration of the global electrification transformation, which means that the global competition for domestic power batteries will intensify.

On April 4, the first overseas factory of Ningde Times in Thuringia, Germany, officially obtained the cell production license. In addition to the Ningde times, Guoxuan High-tech, Honeycomb Energy, billion Wei lithium energy, Zhongchuang New Aviation, vision power, etc. have laid out overseas factories, and mainly concentrated in Europe, seizing the European market has become the consensus of China's power battery companies.

Ningde Times said, "With the company's continued introduction of overseas fixed-point new models, the production of German factories, the construction of Hungarian factories and the promotion of cooperation with Ford, the future of the company's overseas competitive advantages are more and more obvious, reflected in technological innovation, supply chain layout, extreme manufacturing and other aspects."

In the view of the industry, the construction of overseas factories can meet the nearby supporting supply of automobile oems, and can also open up more international customers. However, in order to open up overseas markets, we also need the continuous iteration of core technologies and the export of high-end production capacity.

Reprinted from http://www.batterychn.com/newinfo-1020-2