Why is the European and American lithium electric industry being "kicked out"?

Talking about the basic pattern of the global lithium power industry today, the first thing that comes to mind is the three-pronged strategic situation between China, Japan and the ROK. As to how this basic strategic pattern was formed, and why the lithium power industry in the United States, which is the most basic research on lithium power in the world, has not developed, many readers are not clear. The development trend of the international lithium-electric industry pattern is a matter of concern to many lithium-electric colleagues.

The Dilemma of the European and American Lithium Electric Industry

The theoretical innovations and basic technological breakthroughs of lithium-ion batteries are mostly started in universities and research institutions in countries such as the United States, France, and Canada, but the final industrialization has landed in East Asia far away. This seems to be a strange thing. If we put it in the context of the times, it is not surprising.

The United States has been leading the world's scientific and technological innovation and business model changes with its powerful comprehensive national strength. However, due to high labor, environmental protection, and social costs, the U.S. manufacturing industry has been hollowed out for decades. The decline of the automotive industry is a typical example, and the United States high-tech industry, the financial industry to form a sharp contrast. Precision manufacturing looks at Germany and Japan, while large-scale manufacturing looks at China and South Korea.

Lithium-ion battery industry is a typical labor-intensive and technology-intensive industry. It requires a large number of labor forces, has a certain technical threshold, and requires a large amount of capital investment. It is only natural that China, Japan and the ROK will eventually win the global competition by accumulating labor, industrial systems, technical talents and capital. Similar to the lithium battery industry, there are many physical manufacturing industries, such as shipbuilding and home appliances.

The development of lithium power in Europe and the United States is very different from that of China, Japan and Korea, which is mainly due to historical reasons. Developed countries in Europe and the United States have long been at the top of the global industrial chain for high profits. They believe that the secondary battery industry is a low-value-added industry is an Asian matter. The European and American countries are essentially disdainful of developing this low-margin real economy. The long-term lack of attention has caused the lack of large-scale lithium power companies in Europe and North America, and the lithium power industry chain has not been established.

Although European and American countries are very weak in the production of lithium-ion batteries, they can still be seen in the basic materials industry. For example, Umicore in Belgium has been the world leader of positive materials since 2009, and Celgard in the United States is one of the three global diaphragm. Belgian Solvay's binders, Swiss Timcal and American Cabot's conductive agents all have a high market share, which is related to the strong chemical industry base in Europe and the United States.

But in battery production, Europe has little to show for it. Saft is the only European electric core company with a certain scale, but Saft started with special power sources (military andspecial) and its development strategy has always been very special. Unlike the development model of mainstream lithium enterprises in China, Japan, and South Korea, Saft tried to bypass the 3C mobile phone battery business and directly cut into power batteries at the end of the last century. It should be said that its development strategy is quite advanced.

Saft began to develop large NCA power batteries around 2000 and was suspended in 2005 because the NCA system was not suitable for large-capacity power batteries (Tesla took the 1865/21700 small battery route). The failure of the power battery business has greatly affected Saft's operations and has had to retreat to the special power business, relying on the monopoly position of the franchise to maintain higher profits.

In 2008, Saft and Johnson Contractors (JCI) established a joint venture to produce power batteries, but due to market development, business philosophy, and technical routes, the two sides later parted ways. Later, Saft continued to open up the market in North America, but the results have not been satisfactory and are basically at a standstill. Saft's extremely slow development over the years is actually a microcosm of the conservative and unambitious lithium industry in Europe.

Around 2008, due to the influence of the development strategy of electric vehicles in the United States, Europe also had a round of "Great Leap Forward" in the lithium electric industry. The author has discussed in detail in chapter III (3.5 The background and consequences of the Great Leap Forward in the International Lithium Electric Industry).

In general, the European power battery industry no longer has the possibility of revitalization, I personally believe that the European lithium industry has basically been eliminated. I would also like to point out that some domestic media have recently reported that German Volkswagen, Mercedes-Benz and BMW are building "lithium-ion battery" factories. After verifying the German source, I confirmed that these companies are actually building Pack plants. Not electric core plants. This is due to errors in translation by non-professional journalists.

The situation in North America is not quite the same as in Europe. The Canadian E-one Moli and the US A123 are the only two companies in North America that have a certain scale of lithium power. Due to historical reasons, the proportion of Chinese employees in these two companies is relatively high, which contributes to the lithium power industry in China. A lot of lithium electricity "returning to the sea", For a period of time, these two companies are familiar with the benchmark of the "international first-class lithium power company" in the eyes of the Chinese people, although Moli and A123 are at second-rate international levels in terms of production capacity and technology. The history of the two companies has also been extremely bumpy, and each merger has been accompanied by a major loss of talent and technology.

In 2008, the U.S. government shifted its strategic direction in electric vehicles from hydrogen energy and fuel cells to lithium-ion batteries. The "Great Leap Forward" of lithium power in the United States is mainly reflected in two aspects. On the one hand, the United States has established a number of small battery related venture companies. These startups are mainly concentrated in the West Coast of California, Silicon Valley, and near Boston on the East Coast. According to incomplete statistics, there are as many as hundreds.

Lithium statup with a certain reputation has Envia,Ambri，ImprintEnergy，AlveoEnergy，SilaNanotechnologies，BoulderIonics，PrietoBattery，Sakti3，Xilectric，Am, and so on.

Due to the fact that the lithium industry in the United States is very weak, most of these lithium statups are mainly aimed at opening up the Chinese market. On the other hand, many large companies in Europe and the United States have entered the lithium industry chain. For details, see the analysis of the third chapter of the author (3.5 background and consequences of the Great Leap Forward in the International Lithium Industry).

Tesla's Giga-factory was officially launched in 2017, so some readers may not agree with my research on the decline of the lithium industry in North America. In view of the particularity of Giga-factory in the global lithium-electric and electric vehicle fields, it is necessary for me to discuss Giga-factory separately.

In fact, Tesla did not previously plan to build its own core plant, but in October 2013, Tesla and Matsushita signed the second 18650 core supply contract, Matsushita unilaterally significantly increased the core price, it eventually forced Musk to decide to build its own Giga-factory to completely get rid of Panasonic's control over Tesla core supply. The construction period of Giga-factory has already been after the Great Leap Forward in the lithium industry in Europe and the United States.

In my personal opinion, Tesla's giga-factory is a successful but very special example of Japan's lithium-ion industry working closely with American capital. Giga-factory provides production technology from Panasonic and is responsible for training related technicians. The US financial community provides financial support, but Tesla has also carried out a large number of engineering modifications to Panasonic's production lines and equipment.

Senior colleagues in the lithium battery industry should understand that the background and mode of operation of Giga-factory is actually very special, and there is almost no replicable in the European and American industries. Therefore, the author personally believes that the success of Giga-factory does not prove the revival of the US lithium battery industry, because the current US industry has no conditions in terms of capital, technology and talent.

The author analyzed in the third chapter that the "Great Leap Forward" of lithium batteries in Europe and America a few years ago ended in failure. Looking back at the development history of the international lithium battery industry in the past 25 years, after 2005, the market share of leading enterprises in the whole market is actually increasing, and the oligopoly effect is increasingly prominent. For example, in terms of electrode materials, layered positive electrodes and graphite materials still occupy nearly 70% and 99% of the market share of positive and negative electrodes.

In the foreseeable future, the mainstream position of layered positive electrode materials and the monopoly position of graphite negative electrode materials will run through the life cycle of the entire lithium electric industry (the scientific truth behind this hope that readers will seriously think).

On the other hand, in the entire lithium industry chain, production capacity, markets, technology and intellectual property rights are increasingly concentrated in a few multinational companies. For example, Umicore, Nichia, L&F; The sales volume of the four companies of F and Hunan fir accounted for more than 50 % of the global positive market share in 2016. The concentration of negative poles is higher, and four companies, Hitachi Chemical, Mitsubishi Chemical, BTR, and Sequoia, supply more than 80 % of the world's negative materials. Electrolyte, diaphragm and aluminum plastic film and other basic materials, the market is also a higher and higher degree of monopoly.

The market concentration in the power core is even more pronounced. The six companies SONY, Panasonic, Samsung SDI, LG plus ATL/CATL and BYD have a capacity of nearly 70 % of the global battery market share. If you consider Tesla's Gigafactor is about to reach design capacity, Then the concentration of power core capacity will reach an unprecedented new height.

In fact, production capacity is only one aspect, and the big companies are still competing behind intellectual property rights, the patent situation is even less optimistic. For example, the core patents for LFP are entirely owned by Johnson Matthew, and the main patents of practical value for LCO, NMC, and NCA are in the hands of 3M, Umicore, Nichia, Samsung SDI, Panasonic, and SMM.

As long as a careful analysis of the development of the lithium industry in the past 20 years, it will be very clear that the trend of concentration. The reason behind this is that, on the one hand, after nearly 25 years of development, the lithium power industry has entered a mature period from the growth period. On the other hand, because global advances in chemical power technology have slowed, the next revolutionary breakthrough is far from yet.

From this point of view, the Great Leap Forward in lithium power that began in Europe and the United States in 2008, including the wave of lithium iron phosphate power batteries that began before China, and a large number of SMEs and even multinational companies that have not accumulated in any industry have entered the lithium power industry. In the author's view, it is essentially contrary to the trend, because it violates the basic development law of this industry. A mature industry needs higher concentration, not the other way around.

It is worth mentioning that after 2008, European and American countries have found a point of force in the power battery industry chain, namely Pack, BMS, and battery test certification.

In fact, this is also well understood. Since it has completely lagged behind China, Japan, and South Korea in battery production, the final link in the industry chain of Pack, BMS, and testing and certification must not be handed over. Electronics and software have always been Western strengths. Although there is not much sophisticated technology in Pack, MBS, and battery testing certification, Western vehicle companies can block Chinese companies through mandatory standard barriers. Naturally, Europe and the United States will not give up on this last area where the voice is displayed and profits are higher. This completely compounds the traditional style of Western developed countries.

In 2016, Daimler-Benz announced that it will invest 240 million euros in the establishment of a lithium-ion battery Pack factory in Germany (previously mistakenly translated into a battery production plant) to provide battery packs for its electric vehicle and Mercedes-Benz energy reserve departments. SAIC GM also officially announced in 2016 that it will invest 1.72 billion yuan to build a lithium battery Pack assembly plant in Shanghai Jinqiao to achieve the localization of its new energy vehicle battery system. At the same time, the plant will also be GM's global production of new energy vehicles. Lithium battery packs. Recently, German Volkswagen, BMW and Ford of the United States all announced similar plans for the construction of the Pack factory.

Of course, some readers may ask whether it is possible to make a revolutionary breakthrough with a "magical" material (such as graphene) or new technology (such as lithium sulfur, lithium empty batteries, or solid-state battery technology). European and American companies can turn the tide.

The answer is: the odds are slim. Once an industry has reached maturity, it is all about production capacity and costs, just like the previous industries such as steel, shipbuilding, home appliances and computers. At this time, the rules of the game entered the era of the strong, and this "Matthew effect" made it difficult or almost impossible for new companies to enter the industry.

The lithium electricity industry is a capital and technology-intensive high-tech industry, which belongs to the typical category of the real economy, so the technological progress in the industrial sense of lithium power is still very slow. It is difficult to achieve revolutionary breakthroughs that require huge amounts of funding and solve a series of difficult problems in science and engineering. This is a big difference between the real economy and the IT industry. There are deep reasons why the Internet startup myths like Facebook and Google can not be replicated in the battery industry.

From the industrial point of view, the lithium-ion power battery industry is a typical technology + capital-intensive physical economic field. The construction of large-scale lithium power plants requires huge capital investment, considerable technological accumulation, and a large number of lithium power professionals.

As I mentioned earlier, Tesla's Giga-factory can be seen as a successful but special case of the Japanese lithium industry working closely with US capital, but Giga-factory is not replicable. Because the current European and North American industries are not qualified in terms of capital, technology, and talent. What is more important is that the author has analyzed in detail in the previous chapter, Europe and North America at this stage in fact no longer need to develop lithium electricity industry, which is determined by the development stage of the international lithium electricity industry.

I personally believe that the current lithium-ion battery industry has been monopolized by China, Japan and South Korea, and this basic strategic pattern is almost impossible to break. Mr Obama's ambitious attempt to break the three-nation monopoly on the lithium-ion battery industry to match America's strategy for electric vehicles seems to have largely failed.

In fact, European and American governments and businesses have also recognized this problem. On the one hand, they hope to gain some experience in battery manufacturing through cooperation with Asian companies, such as the development models of such star companies as BASF, BOSCH, and Tesla.

On the other hand, the European and American business community hopes to achieve a leading position in the next generation of lithium ion battery technology, such as all-solid batteries, lithium sulfur batteries, and lithium air batteries. Its development strategy depends on the unreliability of that is to take a personal view. I believe that readers should have their own thoughts on these issues after reading the first three chapters of this series of articles.

Japanese companies want to stay ahead of technology while making the highest possible profits. South Korean companies use their cost strategy to be able to track the development of new technologies in Japan. Chinese companies are trying to open up new application areas and markets to shift the cost competitive pressure of Korean companies.

The page contains the contents of the machine translation.