The new energy sector is slowing down, and the power battery industry is both.

"New energy vehicles" is undoubtedly one of the most frequently mentioned words in the automotive circle.

Since 2014, the new energy automotive industry has entered an explosion, with an annual growth rate of almost 50 %. At the same time, it has also driven the development of a series of related industries such as power batteries.

In particular, in 2015, the output of new-energy vehicles reached 340,500, more than four times that of 2014.

For a time, the capacity of power cells can not match the growth rate of new energy vehicles, and it is in short supply.

As a result, a large number of battery manufacturers have emerged, hoping to stand out from it, and due to the fact that power batteries are the most valuable in the industrial chain and have a short investment return cycle, they have attracted a large influx of capital.

At its most, the number of battery manufacturers can reach an astonishing 150.

But there are three main reasons why some companies risk going out of business as the new energy sector slows and policy changes are likely to resume reshuffling.

First, the cost of power cells has increased as a result of overcapacity and rising prices of upstream raw materials.

In the era of Ningde, for example, according to relevant media reports, the utilization rate of production capacity in Ningde has dropped significantly, from 96.92 % in 2015 to 75.54 % in 2017.

The Ningde era also stated that due to the rapid increase in power cell production capacity and the impact of the new energy vehicle subsidy policy, the price of the Ningde era power battery system dropped from 2.28 yuan/Wh in 2015 to 1.41 yuan/Wh in 2017, a cumulative decrease of 38.26 %.

And the profitability of upstream raw materials such as lithium and cobalt has been greatly increased. The price has continued to increase, resulting in an increase in the cost of power batteries. This should mean that the price of batteries should be increased, but automotive companies are constantly asking power batteries at this time. The company has reduced the price. Making the situation worse for some companies.

Second, the adjustment of subsidies has also caused a considerable impact on some power battery companies in the middle and lower reaches.

By the end of 2016, the state had adjusted its policy on subsidies for new energy vehicles, adding a new provision requiring non-individual users to apply for subsidies for new energy vehicles, with a total mileage of 30,000 kilometers(except for special use vehicles).

Typically, subsidies for new energy vehicles are pre-paid by companies to sell at a discounted price, and then applied for subsidies by companies themselves.

There is usually a one-year cycle from the submission of materials to the return of funds, and the operating mileage requirement is to increase the time for the return of funds. Before the subsidy is returned, the automotive company will generally pay the upstream company such as power batteries. Accounts, This also has an impact on battery companies 'funding.

The subsidy policy of February 2018 was adjusted again for the February 2018 subsidy policy, and the operating mileage requirements were adjusted and adjusted. Applications for financial subsidies for private purchases of new energy passenger vehicles, special operating vehicles(including sanitation vehicles), official vehicles of Party and government organs, and vehicles in civilspecial airports do not require operating mileage requirements, and other types of new energy vehicles apply for financial subsidies. The operating mileage requirements are adjusted to 20,000 kilometers.

It is worth mentioning that the policy also requires that the subsidy liquidation method be changed from a pre-allocation system to an ex-post liquidation system. This has once again increased the cycle of new energy vehicle subsidy refund, causing financial pressure on battery companies.

Third, multinational companies will enter the power cell market in China, which will have an impact on existing power battery companies. In particular, the Korean battery company represented by Samsung, LG, and SKI has already launched a round of investment in China in April.

Then South Korea's Samsung Electronics Vice President Lizairong came to visit BYD for business negotiations; Huayu Cobalt plans to jointly invest 4 billion yuan with LG Chemical to establish two joint ventures to produce lithium battery materials.

As early as 2014, the three giants Samsung, LG and SKI were interested in setting up large-scale power battery factories in China, but the Ministry of Industry and Information Technology set up a battery enterprise access directory in 2016. New energy vehicles made from batteries that are not included in the access catalogue can not be subsidized.

This has led to the suspension of foreign companies 'plans to establish battery factories in China. The domestic power battery industry has gained a good environment for development, and some domestic power battery companies have emerged.

But such protection is unlikely to last. The ministry of industry has said it will open the battery market by 2020. The power battery industry must be ready to face the challenges of multinational giants while facing changes in subsidy policies. The pressure is not great.

Of course, it is comforting to note that the production and sales of new-energy vehicles in China from January to March were 150000 and 143000, respectively, up 156.9 % and 154.3 % year on year, with the monthly monthly ratio rising.

This also means that the demand for power batteries in automotive companies is still growing steadily. Power battery companies still have time to adjust their structures and upgrade their technology to survive and develop in fierce competition.

In addition, oil prices also have an upward trend, which is undoubtedly a major benefit to the new energy industry.

However, the power battery industry cake is so big, under the waves, no one can be alone!

The page contains the contents of the machine translation.