Panasonic launch of China's capacity expansion plan China, Japan and South Korea power battery hegemony

The world's largest new energy car market is about to open to competition, attracting more than just the three Koreas. Japan's Matsushita has recently launched an expansion of its production capacity in line with Tesla's plans to start production in China. The most exciting competition between China, Japan and South Korea in the field of new energy car power batteries has already been triggered.

For local battery makers, the good times may be coming to an end. At the end of 2017, it was also known as the Korean power battery that was completely defeated in China. In the spring of 2018, it was already a turning point. Three major Korean battery companies, including Samsung, LG and SK（SKInnovatio）, have broken their silence and launched a high-profile new round of investments in China since April, as China's new energy car subsidies enter their final two-year countdown.

On April 11, the listed company Huayou Cobalt announced that it plans to jointly invest RMB 4 billion with LG Chem to establish two joint ventures to produce lithium battery materials. The two parties will each hold one of the joint ventures. At the same time, it is reported that Chinese automakers are negotiating with South Korean LG chemical battery manufacturers to prepare their products. In fact, although the Korean battery will not be subsidized, the Korean battery has appeared in the catalogue of the 307th new energy models released by the Ministry of Industry and Information in mid-April.

SKI also announced in the near future that it will invest 86.4 billion won to restart the new joint venture plan announced in 2016, and the new joint venture will also produce battery materials. The Economic Observer reported that it was only a year after the suspension of production "hibernation", SK and Beijing Automotive's joint venture company Beijing Electric Controls Aisi Technology Co., Ltd. (BESK) are also preparing to restart.

On May 2, South Korea's Samsung Electronics Vice President Li visited BYD in Shenzhen. There was speculation that Samsung, as a shareholder of BYD, is expected to cooperate with BYD in the field of electric vehicles in order to seize China's new energy vehicle opportunities. The company also sent a clear signal -- in its first-quarter earnings report, Samsung SDI, the group's battery business unit, said: "We will prepare for the end of [China's] new energy car subsidy policy by 2020. "

In the past two years or so, Korean power batteries have staged three unexpected steps in China: high-profile entry, large-scale investment, and an abrupt end. Since the end of 2016, it has hit a double "minefield" of policies and markets. The power cell business of the big three in China is almost zero. Of the nearly 560,000 new energy passenger vehicles in China in 2017, only 5,648 were using Korean LG batteries.

The exit of the Korean power battery directly contributed to the rapid growth of the share of Chinese local battery companies represented by the "Ningde myth." However, according to the plan, after four years of retreat, China's new energy car subsidy policy will be completely cancelled by 2020, and the double points system will also be implemented in 2019. "Korean battery companies are huge in volume. At present, their corporate strength and development capabilities are difficult for domestic companies to compete with. " said Wang zidong, director of the Power Battery Laboratory at China's Northern Vehicle Research Institute and director of the National 863 Electric Vehicle Major Special Power Battery Test Center.

The world's largest new energy car market is about to open to competition, attracting more than just the three Koreas. Japan's Matsushita has recently launched an expansion of its production capacity in line with Tesla's plans to start production in China. The most exciting competition between China, Japan and South Korea in the field of new energy car power batteries has already been triggered.

At the time of the release, the relevant heads of LG's China business responded to its new investment with "no explanation". The Samsung SDI plant also told the Economic Observer that it is not in a position to respond to its current situation and investment plan in China.

Will the business stagnation of the last two years end?

"As things stand, we're thinking about restarting the joint venture," Beijing Auto told the Economic Observer at the April 25 auto show. The joint venture factory he mentioned refers to the battery company BESK established by Beijing Electronics Holding Co., Ltd., Beiqi Group and South Korea SKI jointly invested 350 million yuan at the end of 2013, of which SKI's shares account for 40 <UNK>, and the two Chinese shareholders jointly hold 60 <UNK>, after it was put into production in June 2014, The factory, which assembles South Korean electric cores into lithium-ion battery packs and then makes battery kits for BAIC's new energy models, is expected to generate an annual revenue of 50 billion won($45 million). However, BESK announced the suspension of production in early 2017 due to a sharp drop in orders from the end of 2016.

Like SKI, Samsung and LG launched a large-scale investment in power batteries in China as early as 2014. In October 2015, Samsung SDI Xi'an Battery Base, the first phase of Samsung Huanxin Automobile Power Battery Project, was put into operation. The project, which will total $600 million by 2020, was described as the largest power battery base in China at the time, with an annual production of 40,000 electric vehicles, with the goal of achieving annual sales of $1 billion. At the time of completion, it has signed supply agreements with more than 10 local Chinese commercial car and car companies such as Yutong and Tian.

Following the footsteps of Samsung SDI, LG Chemical's Nanjing Power Battery Project (also known as the Nanjing Lejin Chemical New Energy Battery Joint Venture) with a total investment of 3.5 billion U.S. dollars was also completed at the end of the year, becoming LG's largest power battery base in the world.

In 2015, China became the world's largest consumer market for new energy vehicles for the first time. In particular, the mass production of new energy passenger cars caused by huge subsidies has brought unprecedented business opportunities for Korean three-way batteries. SDI, LG Chemical, and SKI at the time had provided new energy automotive power batteries to almost all mainstream car manufacturers in the world, including BMW, Mercedes, Audi, Volkswagen, GM, Ford, Renault, and Hyundai Kia. The market will be determined.

But the Chinese market has not followed the lead of the big three battery giants. At the beginning of 2016, the outbreak of new energy fraud and the subsequent ban of three-yuan batteries on passenger cars directly pushed the supervision of power batteries to the forefront. In 2016, a "white battery list" announced the elimination of Korean batteries. The Chinese government has successively introduced amendments to the "new energy vehicle access rules" and a catalogue of standards for the inspection of automotive powered batteries. And thus formed the fact that the "white list" of power battery companies is linked to government subsidies.

Because of the "white list" of 57 companies, there is no foreign battery company. In the following months, the use of Samsung's Jianghuai and Guangqi, Beiqi, which uses SK batteries, and Great Wall, SAIC, and Huachen, which are equipped with LG batteries, have all adopted emergency replacement battery suppliers. Switching countermeasures.

From the end of 2016 to 2017, the three major Korean battery companies have stagnate in China's new energy battery business. Bad news continued to come - Samsung SDI Xi'an plant suspended the expansion of new production lines, Wuxi factory extension, BESK also stopped production, the under-operated LG Nanjing factory even once reported that it will be resold to SAIC.

In October 2017, due to losses and insolvency, the two major Chinese shareholders of Samsung (Tianjin) Battery Co., Ltd. listed and sold 30 shares of the joint venture company. The reporter found out that in March 2018, the listed equity had been taken over by Samsung Electric (Hong Kong) Co., Ltd., and Tianjin Jingkai officially withdrew from the joint venture company.

The industry generally believes that LG's core price, which was as low as 1 yuan / Wh that year, and the Korean market share ambition, which was too urgent, was a hand that pushed it out of the Chinese market. However, some experts also denied this analysis.

Create a new joint venture for 2020

Billions of dollars of investment were suddenly pressed the pause button, a blow to the Korean battery companies is fatal. But in the face of the world's biggest new energy car market, there is no way out. The only thing they can do is wait.

In 2017, the world's total sales of new energy vehicles were 1.42 million vehicles, of which China contributed 777,000 vehicles, accounting for more than half. The demand for batteries increased by 30 units year-on-year, and this big cake was basically divided by domestic battery companies in China. However, in less than two years, China's new energy subsidies will eventually withdraw, and by 2020, China will have to fully guarantee the sales of 2 million new energy vehicles. That gives Korean batteries a chance to re-enter the Chinese company's battery list, and this year is naturally the best time to expand capacity.

In fact, even if it is temporarily "dormant," the three Korean batteries have never stopped the layout of China's new energy car market. In April 2016, SKI stated that it was negotiating with several companies to build a battery factory for electric vehicles in China. At the end of 2017, SKI established a legal person in China, "SK Battery China Holding Company (hereinafter referred to as SK Holdings)", which is specifically responsible for investing in China's battery business. In early 2018, SK Holdings was renamed "SK Lanlong Energy". It also announced that it will invest 86.4 billion won in establishing a joint venture in the production of battery materials in China.

Drawing lessons from the past, in this round of investment, the three major Korean companies began to seek cooperation with local companies on the industrial chain, and began to invest in the upstream of the battery industry chain -- battery material production, including SKI's new joint venture project, and LG's two new joint venture batteries. company, It's all the same. While avoiding market and policy risks, it will also stretch the industrial chain based on previous investments. SKI's previous joint venture with Beiqi produced battery packs, and Samsung Xi'an battery plant produced electric cores and automotive power cell modules. The two new joint ventures of LG and Huayou Cobalt respectively produce lithium electric ternary precursors and ternary positive materials, which are directly linked to LG Nanjing Battery Factory. On the official website of Nanjing Lejin Chemical New Energy Battery Company, the recruitment of talents for various positions is also continuing.

The plan for Samsung SDI to continue to build large and medium-sized battery factories in China also seems to have not stopped. It is reported that the Wuxi plant will be mass-produced in 2019, and Samsung SDI plans to do so by 2023. The production of Xi'an, South Korea's Tianan and Ulsan factories was transferred to Wuxi. However, in response to the above information, China's Samsung Public Relations Department people said that at present can not respond.

In addition to Korean batteries, Panasonic, a Tesla battery supplier, recently revealed plans to invest in China. "Tesla will be fully operational in China in the future, and we can jointly produce lithium batteries," Panasonic CEO Guan Jinhe told the company's annual earnings meeting. However, the latest news said that Panasonic internal hesitation. However, this does not affect Matsushita's plan. Matsushita has announced at the end of 2017 that it will mass-produce in-vehicle batteries such as electric motorcycles and low-speed electric vehicles at the original digital cylindrical battery base in Wuxi, China, and plans to start in 2018. Supply to Chinese companies through local battery manufacturers.

China and South Korea battery companies have a war?

In a sense, today's domestic new energy car power battery leader Ningde era should be grateful for the temporary exit of the Korean Department. With the goal of nurturing China's own power battery leading companies, the umbrella built by the power battery "white list" has won valuable development and catching up time for local battery companies. But will the missed 2017 in Korean batteries be the key to changing the competitive landscape? Will Korean batteries again squeeze local battery companies with technology and price advantages?

"Korean batteries are coming back? It will have to wait until after Ningde goes public, "said one domestic battery industry person. The Ningde era with the background of Japanese advanced battery technology has become the biggest winner after the withdrawal of the Korean Department. It is not too much to describe it as receiving orders. On November 10, 2017, the Ningde era IPO prospectus showed that its valuation exceeded 130 billion yuan, that is, only half a year, and the valuation of Ningde era rose by 50. After the "Lightning" meeting in April 2018, the Ningde era will be formally listed on the GEM in May. After its listing, the market value is considered to exceed 300 billion yuan. The "Ningde myth" is about to be staged.

According to the "New Energy Vehicle Industry Chain Database" released by GGII, in 2017, the total installed power of new energy passenger car batteries in China was approximately 13.71 GWh, an increase of 50 <UNK> year-on-year. The Ningde era, BYD, Voneng Technology, Guoxuan Gaoke, and Bic batteries were ranked in the top five, including 4.112 GWh in the Ningde era, accounting for 30 of the country's total installed capacity. Among the top three players in the Korean series, only LG Chemical was shortlisted in the top 20, ranking 19th. In 2017, the installed power battery capacity was only 5,648 units. Supporting car companies include SAIC General Motors, Zhejiang Pride Automobile, FAW Volkswagen and Shanghai Automobile.

But the only few car companies to choose also show the competitiveness of Korean batteries on the other hand. Since the LG battery used did not enter the power battery directory, SAIC GM's Cadillac CT6 plug-in hybrid and Buick Velite5 extension hybrid could not receive new energy subsidies in 2017, but for this, according to sources, SAIC's official response is that domestic batteries still need to be improved in terms of energy density and consistency, and Velite5's pricing is not afraid of new energy subsidies. This is considered to convey two messages. One is that the domestic battery product technical capabilities still can not compete with the Korean system. The second is that in addition to technology, Korean batteries also have advantages in cost control, and domestic battery manufacturers can not play a price war.

"The cost of purchasing raw materials and controlling the production process are lower than ours. In addition, the degree of automation of the production process is high. From the perspective of mass production, the production cost of the Korean line is indeed lower than ours. "Wang zidong believes that the subsidies of the central government in these years have not been very effective in stimulating domestic companies to work hard in technology. Most companies are thinking about how they can obtain dividends during the policy window period." 18650, 21700 circular core; VDA standard square battery; Soft package core, which one of our own development? We're always following the others. "

It is worth noting that the joint venture with Chinese domestic car companies to produce battery materials will bring new cost advantages to Korean batteries. The three Korean teams have their own exclusive core technology and have built a complete business system from cell units to battery packs.

But for now, subsidies remain irreplaceable for car companies, including new forces to build cars. One of the reasons why every minute is a matter of time is to catch the last bus subsidy, so the choice of batteries is still based on local companies. In addition to BMW, Mercedes-Benz, and Volkswagen, which have locked in the era of Ningde in China's battery factories, Weimar, Batten, and Aichi have also chosen the era of Ningde. Xiaopeng and Yundu have chosen Bic, and the electric coffee has chosen Chaowei. Only Weilai chose two suppliers, the Ningde era and Samsung SDI.

However, there is a view that as subsidies continue to shrink, once the vehicle manufacturer believes that the cost and technical advantages of Korean batteries are sufficient to make up for the subsidies, the meaning of the "white list" will also be invalidated. In April 2017, in the 307 batches of announcements published in mid-April, South Korean battery companies have appeared. The 307 batches of catalogue announcements show that the power cells of the two plug-in hybrid cars of Dongfeng Yueda Kia were provided by the Ningde era and Nanjing Lejin Chemistry (LG Chemistry) respectively; Dongfeng Renault declared that the 4 types of Fengnuo brand pure electric cars are all equipped with three power batteries by Nanjing Lejin Chemistry.

“Korean battery companies have been branding these years, and many domestic companies are still at the stage of making products. Their brand premium ability and supporting service capabilities are stronger than our ability. If you choose as a vehicle company Battery supplier, who would you choose?" Prince Winter asked worriedly.

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