Analysis of global lithium battery industry pattern: China is coming in a menacing way

China energy storage network news: talking about the basic pattern of the global lithium battery industry, we first think of is the strategic situation of China, Japan and South Korea. It is not clear to many readers how this basic strategic pattern came into being and why the lithium battery industry in the United States, which has the strongest basic research on lithium battery in the world, never developed. But the international lithium electricity industry pattern development tendency, is many lithium electricity colleagues concern the question. Today, I will sort out the development status of lithium battery in China, Japan and South Korea.

China's lithium battery industry is rapidly developing and embracing global competition opportunities

Before 2015, China's lithium battery market was dominated by consumption-oriented lithium batteries, which occupied an absolutely dominant position. Since 2015, China's lithium battery industry structure has undergone significant changes, and the demand for dynamic lithium battery has been growing rapidly. In 2016, the market share of dynamic lithium battery reached 52%, and for the first time exceeded 50% and exceeded that of consumer lithium battery, which was only 47% in 2015. The market share of consumer lithium-ion batteries continues to decline, reaching 42% in 2016, 83% in 2014 and 48% in 2015. The application of energy storage lithium battery in the field of distributed photovoltaic application and mobile communication base station energy storage battery continues to expand, accounting for 6% in 2016.

Driven by the lithium battery, China's lithium battery output in 2016 again showed a high-speed growth trend. China produced 7.84 billion lithium batteries in 2016, up 40 percent year on year and the highest growth rate since 2010, according to the national bureau of statistics. In 2016, the scale of China's lithium battery industry reached 128 billion Yuan, breaking through 100 billion Yuan for the first time, with a year-on-year growth of 30%. China accounted for 40% of the global lithium battery industry in 2016, up 5% from 2015.

Driven by the booming production and sales of new energy vehicles, China's lithium ion power battery production capacity has entered a "great leap forward" since the second half of 2015, and a large number of social capital has poured in. According to incomplete statistics, the production capacity of lithium ion power battery built by relevant enterprises in China reached 100-130gwh /a in 2016. By 2017, the production capacity of power battery in China will be close to 200GWh/ year. The rapid growth of the production capacity of power battery will significantly drive the scale of the upstream lithium battery material industry, and the demand for major key materials will significantly increase.

At present, lithium electric material enterprises in China are pouring into the international front line, and some of them have become one of the global leaders. In the long run, new energy vehicles will become an important industry in China in the next few years. Chinese material enterprises are expected to accelerate their development speed and usher in global competition opportunities by virtue of the huge domestic market space.

The decline of Japan's lithium battery industry

Nissan's sale of an AESC stake marks a complete loss of value for the Japanese power battery industry. Japan's high-end lithium battery strategy has been incompatible with the current global lithium battery industry development stage.

The world's first lithium ion battery was first mass-produced by Japan's SONY in 1991, which established Japan's dominant position in the global lithium battery industry. It is reasonable to say that the United States is the world's pioneer in basic research of lithium battery. Almost all electrode materials were reported or invented by Americans. But why did the United States fail to produce lithium ion batteries in mass production?

In fact, there are many similar cases in the United States not only in the lithium battery industry, but also in other fields. What I want to say is that americans have the spirit of innovation, the drive to take the lead in industrialization and success, but they lack the patience to perfect the industry. The lithium - ion industry is a case in point.

From its birth in Japan in 1991 to 2005, lithium battery industry has been regarded as a high-tech industry in the past 15 years (high-tech in the broad sense rather than narrow sense), and Japanese enterprises have also made high profits due to their monopoly of technology and market. After 2000, with the spread of lithium battery technology to China and South Korea, the low-end market was gradually nibbled by China and South Korea, but this period had little impact on the lithium battery industry in Japan.

However, after 2005, the mid-end market was gradually occupied by South Korea, and the overall profit of Japanese lithium battery industry declined rapidly, leading to the business difficulties of many enterprises. In response, Japanese materials and battery companies are investing in China to shift low-end production capacity, hoping to reduce operating costs.

On the other hand, the Japanese lithium industry has carried out several mergers and acquisitions and restructuring, the number of battery companies reduced to about five or six. However, the overall effect is very little. The decline of Japanese lithium battery industry in recent years is more and more obvious, and shows an irreversible trend. In the author's opinion, this is mainly due to the following reasons:

1) the management style of Japanese enterprises is generally conservative. In order to reduce the manufacturing cost of enterprises, Japanese lithium electric enterprises generally set up factories in China earlier than South Korea, and in the material and cell both involved. Such as mitsubishi chemical (MCC), Asahi chemical (AGCSeimiChemical), UBE (UBE), MitsuiChem (MitsuiChem.), JFE chemical, HitachiChem (HitachiChem.), SONY and Panasonic and so on.

However, if we carefully analyze the cases of these Japanese lithium battery companies, we will find that their business methods are generally conservative. For example, negative electrode companies only put the back-end process in China, which is to say, they are wary of technology flowing into China just for the sake of obtaining cheap graphite resources in China. Positive enterprises only transfer some low-end technology and production capacity and do not involve in high-end products and processes, cell factories generally only produce low-end goods.

Japan's lithium industry believes this is the only way to prevent technology leakage. In extreme cases, Japanese battery manufacturing equipment companies have never set up factories in China. At the same time, the localization of Japanese enterprises in China is not enough, and they lack in-depth communication with domestic enterprises and industrial chain. As a result, their product positioning and price are generally high, which can only meet part of high-end demand, but are not favored in the middle and low-end market.

In my opinion, these relatively conservative measures cannot effectively reduce the operating costs of Japanese enterprises. With the general conservative mentality of Japanese people and the deteriorating and irreversible china-japan relations, the author is not optimistic about the development prospect of Japanese lithium battery industry in China. Even ATL is eager to set up CATL to distinguish itself from the Japanese investment background.

2) Japan is a very closed island society, and some business models, marketing concepts and ways of thinking are hard for outsiders to understand. For example, Japanese battery factories absolutely give priority to purchasing raw materials produced by domestic enterprises, even though the cost performance is much lower than that of similar products in other countries, which is in sharp contrast to SamsungSDI and LG's global raw material procurement strategy.

This also makes it difficult for foreign raw material companies to survive in Japan, and Japanese battery companies themselves cannot effectively reduce costs. In addition, Japan generally has more commercial circulation links than Europe, America, China and South Korea, which increases the operating cost to a considerable extent. These questions all involve the traditional culture of Japan, which is almost impossible to change, although it seems inconceivable to outsiders.

3) due to historical reasons, the Japanese lithium battery industry has always regarded the European and American market as a god, but not too much attention to the huge Chinese market. Chinese domestic electric car market has become increasingly popular in recent years, with the south Korean lithium electricity enterprise in the Chinese market positive, in contrast to several Japanese mainstream power battery enterprises in China has not made a strategic layout, only the Panasonic in 2016 to invest 50 billion yen (RMB 2.7 billion) opened in Dalian power plant (built in 2017 is expected), while South Korea SamsungSDI and LG has been put into production as early as 2015, strange enough attitude toward China that Japanese firms.

At a time when Japan's lithium battery industry is struggling to survive, only the huge Chinese market may delay the decline of Japan's lithium battery industry. To my surprise, the Japanese lithium industry has been indifferent to the Chinese market. In fact, the Japanese crowd themselves out of China, the world's largest lithium market. This is actually the most classic interpretation of nozuonodie.

As a matter of fact, the advantage of Japanese lithium battery enterprises lies in leading technology, which is hard to catch up with China and South Korea in the short term. Therefore, for Japanese enterprises, if they want to survive and develop, they can only go ahead of Korean enterprises through continuous technological innovation, and make enough profits before each specific technology is spread (copied), then they can have the capital to compete with Korean enterprises in price war.

However, the reality is quite cruel. As the author has analyzed in the previous two chapters, China and South Korea do not need to surpass Japan in technological innovation to surpass Japan in terms of lithium power. As long as China and South Korea through copycat + low-level repetitive construction, so that Japanese or European companies innovative technology or products can not recover the cost of innovation is enough. In this way, Japanese enterprises have no incentive to continue to innovate, and the innovation speed becomes slower and slower, which is finally caught up by China and South Korea.

As the author has analyzed, the current lithium battery technology is in a period of slow or even relative stagnation. It is because of this special period that faced with the rapid development of lithium battery industry in China and South Korea, the situation of lithium battery industry in Japan became more difficult after 2010. As a result, SONY was forced to sell its lithium battery business in 2016.

Although the slow start of the international electric vehicle market in the past few years, especially the strong demand of Tesla, has alleviated the business difficulties of Japanese lithium battery enterprises to some extent, the author is still pessimistic about the long-term development prospect of the lithium battery industry in Japan. Because today's lithium battery industry has entered the mature stage, to the cost of the king depends on the era of cost-effective, Japan's high-end line in the squeeze of China and South Korea will be more difficult. As for the influence of cost on lithium battery industry, the author has discussed in detail in chapter 3.

In 2015, Panasonic announced the closure of its lithium battery factory in Beijing and withdrew from the digital battery market, which means the complete collapse of the Japanese lithium battery industry in the middle and low-end applications. The Nissan leaf, the world's largest all-electric car by sales, also announced that its next generation will be powered by lithium-ion batteries from South Korea's LG chem, rather than the AESC, a joint venture between Nissan and NEC. These two events are, in my view, the most serious warning signs for the decline of Japan's lithium battery industry.

In the second half of 2016, SONY sold its lithium power business unit to Japan springfield production co., ltd. for only 1.1 billion Yuan. In June 2017, Nissan sold its 51% stake in AESC to China Jinshajiang capital for 1 billion dollars. The decline of SONY is directly related to its over-concentration on 3C field and neglect of the development strategy error of power battery. However, if we put SONY in the context of the international lithium battery industry, its failure is actually the epitome of the decline of the entire lithium battery industry in Japan.

In my opinion, Nissan's selling of AESC shares marks that the Japanese power battery industry has completely lost its value for money. As previously analyzed by the author in the first three chapters, Japan's high-end lithium battery strategy has been incompatible with the current global lithium battery industry development stage.

It is an indisputable fact that the international market share of Japanese lithium battery has been declining since 2005. In 2016, the global market share of Japanese lithium battery has dropped to about 15%, which is a shocking speed of decline. If we stand in the perspective of economic globalization, the current plight of Japan's lithium battery industry actually indicates that the competitiveness of Japanese manufacturing enterprises leading the trend of The Times and the direction of development is rapidly declining, while the rapid rise of China's economy undoubtedly accelerates this process.

The rise of the lithium battery industry in South Korea

The lithium battery industry in South Korea started nearly 10 years later than that in Japan. At the end of last century, the lithium battery industry in South Korea began to develop at the same time as that in China. However, the lithium battery industry of South Korea has come from behind and gained some market share in the global power battery market. It has extended its reach to every corner of the world and has extensive cooperation with the world's top automobile manufacturers.

At present, South Korea not only fully occupy the middle market, but also in the high-end areas of the inherent market of Japan, South Korea lithium battery in the past few years of rapid development momentum. In the author's opinion, the rapid development of lithium battery industry in South Korea is mainly due to the following reasons:

1) unlike China, which followed the us in developing lithium iron phosphate battery technology decades ago, South Korea follows Japan in terms of operation and technology. Of course, this has a lot to do with Korean politics/culture, as well as SamsungSDI, LG and SK's many core technologies and managers who have worked in Japanese companies.

As a result, the lithium battery industry in South Korea has not taken many detours in terms of technology and management in recent years, so as to make full use of the "advantage of late development". On the contrary, China closely follows the United States in vigorously developing the technology of lithium iron phosphate power battery, which leads to a huge waste of human resources, financial resources and resources. This major strategic mistake directly leads to the overall technical level of lithium battery in China at least three years behind that of South Korea.

2) the south Korean government has been vigorously supporting SamsungSDI and LG(later joined by SK) in terms of policies and funds for many years with the goal of three leading enterprises to occupy the no.1 position in the world in lithium ion batteries.

With the support and coordination of the government, the lithium battery industry in South Korea is highly concentrated and monopolized by Samsung SDI, LG chem. and SK, forming a benign competition and cooperative relationship and jointly promoting the development of the industry. In contrast, in the past ten years, two or three hundred lithium battery enterprises have sprung up all over the country. Such low-level repeated construction is obviously not beneficial to the improvement of the overall industrial level of China's lithium battery industry.

In the author's opinion, the rapid development of lithium battery industry in South Korea, in addition to following Japan to avoid detours, another fundamental reason is that south Korean battery enterprises have a good grasp of the balance between the quality and cost of finished products. Unlike Chinese companies, which use semi-manual and semi-mechanical production methods to reduce manufacturing costs, south Korean companies first rely on production automation to reduce manufacturing costs. Thanks to favorable geographical conditions and close economic and trade ties, Korean companies are often able to copy Japanese battery production equipment in the shortest time and at a lower cost.

While Japanese companies have been forced to cut equipment costs in an effort to lower the price of lithium-ion batteries, south Korean companies have started to further reduce the manufacturing costs of lithium-ion batteries by sourcing large quantities of positive and negative materials from China. This strategy roughly began to purchase the anode materials of dang sheng technology in 2008, and later expanded to several mainstream anode manufacturers in China.

Thanks to tax rebates, south Korean battery makers were able to get lower prices than in China, a crucial factor for Samsung SDI and LG as they rapidly expanded their international market share in the past few years, a strategy that Japanese companies didn't expect.

However, Japanese enterprises are thinking more about reducing costs by relying on technological innovation, such as material improvement or substitution, such as replacing lithium cobalt oxide (LCO) with NMC ternary material. Now it seems that the effect is not very ideal, and the market reaction does not fully agree with the Japanese idea.

South Korean lithium battery enterprises make full use of its "big bully shop" advantage in technology and cost control of Chinese raw material suppliers. Combined with the large-scale investment in domestic plants by SDI, LG chem and SK, these measures have undoubtedly significantly reduced the production cost, and at the same time occupied a stable market, the lithium industry in South Korea is better than the Japanese enterprises in improving the product cost performance.

It can be said that the lithium battery enterprises in South Korea not only followed the right teacher and concentrated on resource allocation, but also succeeded in cost control, which is the fundamental reason why the lithium battery industry in South Korea has developed rapidly in recent years. The experience of the rapid development of the lithium battery industry in South Korea in recent years is worthy of consideration and reference by the lithium battery industry in China.

The page contains the contents of the machine translation.