Analysis of Lithium Electric Equipment Industry in the Next 4 Years

According to statistics, 70 % of China's oil is used for automobiles, and 50 % of urban air pollutants come from automobiles. The dependence of crude oil on foreign countries has been rising all the time, and it has now reached more than 60 %. In contrast, on the one hand, new energy vehicles meet the objective requirements of environmental protection and energy security. On the other hand, the new energy automotive industry has been vigorously promoted by various countries as an important economic growth point, including the Freedomcar plan launched by the United States, the smart grid plan, and Japan's NEDO plan.

As the seven strategic emerging industries in China, the new energy auto industry is strongly supported by policies. In February 2016, the State Council further clarified its support for the development of the new energy vehicle industry, and proposed measures such as promoting the establishment of innovative power battery platforms, accelerating the construction of charging facilities, and expanding the proportion of new energy vehicles used in urban public transport. With the decrease in the cost of lithium batteries, the increasing abundance of models and the continuous improvement of supporting facilities, the new energy automotive industry is expected to accelerate its growth. According to data from the China Automobile Industry Association, by November 2016, China's total output of new energy vehicles reached 42,700 vehicles(340,000 pure electric vehicles and 87,000 plug-in hybrid vehicles), up 61.38 percent year-on-year.

Taking into account that the average battery capacity of all-electric passenger vehicles is about 25 kW, the average battery capacity of passenger cars is about 150-250 kW, the average battery capacity of special vehicles is about 30-40 kW, the average battery capacity of hybrid passenger vehicles is about 15 kW, and the passenger car is about 30 kW. Based on stock turnover and new demand, it is estimated that the total demand for lithium power for 16 years will reach 30 GWh, an increase of nearly 100 %.

Production capacity of lithium battery manufacturers continues to expand, boosting demand for lithium electric equipment

Benefiting from the rapid increase in the volume of new energy vehicles, lithium battery manufacturers have expanded their production capacity. Taking the lead in the lithium battery industry as an example, the company actively deployed production lines, and the production line of the third phase of 450 million ampere hours is in an accelerated construction period.

In addition to Guoxuan, other companies such as CATL, BYD, Lishen, Lifan, etc. have also launched expansion plans. According to grassroots research and statistics on high-capacity lithium electricity, the planned production capacity of related lithium power companies in 2016 is about 50 GWh, of which the first-line high-end production capacity is about 30 GWh. The high prosperity of the lithium power industry continues to drive the demand for lithium power equipment. In addition, in February 2016, Jianrui Fire announced that it intends to acquire 100 % equity of Wotema, a lithium power company, and at the same time raised 400 million yuan to invest in lithium battery production line projects. The attraction of capital markets also reflects the attraction of the lithium-ion battery industry.

The lithium battery industry entered the integration window period, and the second expansion boosted the demand for lithium battery equipment. On November 22, 2016, the Ministry of Industry and Information Technology issued the "Regulations for Automotive power battery Industry (2017) (Draft for Comment)", the first time to set clear requirements for power battery companies and power battery system enterprises: lithium battery cells The annual production capacity is not less than 8GWh; the power battery system enterprise capacity is not less than 80,000 sets or 4GWh. The draft for comments has greatly increased the demand for production capacity, and the industry threshold has been greatly improved, which will help the industry to increase its concentration. At the same time, leading enterprises and threshold marginal enterprises will set off a new wave of expansion.

At present, major lithium battery manufacturers have launched expansion plans. CATL, Guoxuan, and Lishen have planned production capacity of 12.6, 9.7, and 6.6 GWh respectively for 17 years. It is expected that the total production capacity of major manufacturers in 16 and 17 years will reach 52.2 GWh and 82.1 GWh, respectively. China's total output of new energy vehicles was 427,000 in November this year. Even if the growth rate is maintained next year, the corresponding battery demand will still be lower than the industry's production capacity. At present, the low-end lithium power production capacity of the industry may appear surplus, while high-end lithium power is still in short supply, Sanyo, Panasonic's three-part lithium battery capacity can already achieve 3.1 AH, while most domestic is about 2.2 AH.

With the lithium battery industry entering the consolidation period, the new wave of production expansion will help the demand for lithium power equipment continue to increase.

Lithium Electric Manufacturing Center to Domestic Transfer, Domestic Equipment Advantages

In the global market, the international mainstream battery manufacturers mainly come from Japan and South Korea. Samsung, Panasonic, LG, Sony and other giants have an absolute advantage. The main reason is that downstream applications, especially new energy vehicles, have higher requirements for lithium battery quality. The domestic lithium battery manufacturing industry is relatively fragmented. The main manufacturers include CATL, BYD, Lishen, Guangyu, and Bic.

Although domestic companies still account for a small share of the entire international market, the lithium ion battery manufacturing center has continued to shift to the domestic market. In the context of continuous optimization of the domestic investment environment and relatively low labor costs, the lithium ion battery manufacturing center has transferred to China according to the path of materials, batteries, and vehicles.

Foreign manufacturers of lithium electric equipment started earlier, especially Japan and South Korea's basic mechanical processing strength, products fine, high degree of automation. The foreign lithium-electric equipment enterprises mainly adopt a single product competition strategy and provide a single link production equipment in the production process of lithium-electric power. Although there is still a certain gap between domestic lithium electric equipment technology and foreign countries, domestic lithium electric equipment has the characteristics of more complete product line and short delivery cycle.

The equipment quality is excellent, and the price effectiveness advantage gradually appears. Foreign equipment research and development started early, and equipment precision and automation are relatively high. However, domestic battery model transformation is relatively large, and the conversion cost of choosing foreign equipment is very high. Domestic equipment is developed and manufactured according to the characteristics of battery production in China, and its adaptability is strong. The price of domestic equipment of the same type is generally only half that of imported equipment. With the continuous improvement of lithium-electric equipment technology, the advantages of cost effectiveness and the substitution effect on imported equipment will become more and more obvious.

Domestic equipment delivery cycle is short. The delivery cycle of domestic equipment is generally 3-6 months, which is much lower than the delivery cycle of imported equipment. Domestic equipment has natural regional advantages.

The product line is full, the whole line solution ability is strong. Foreign equipment manufacturers often provide a single link of equipment, and domestic equipment manufacturers can timely installation and commissioning according to the needs of the company. In addition, the full-line solution can avoid the problems caused by the integration of different links of equipment, which has more advantages.

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