Capacity development of power cells

New energy vehicles sold 507,000 vehicles in 2016, up 53 % from a year earlier, according to the China Automobile Industry Association. Driven directly by the rapid growth of new energy vehicles, the power battery industry has also ushered in a significant increase in 2016, and nearly 80 % of companies have achieved profit growth. Among them, the net profit increase of more than 100 % year-on-year reached nearly 50 companies.

But at the same time, the pattern of "small and scattered" power cell industry has not been solved, and the problem of excess capacity at the high end of the line is further increasing. In 2017, due to multiple factors such as subsidy policies, the sales of new energy vehicles in January fell sharply year-on-year, and the power battery industry was directly affected. The industry is facing a new round of integration and reorganization.

Power Battery Industry from Hot to Cold

Profits in the power battery industry have soared in 2016 as sales of new energy vehicles have soared. According to the 2016 annual report of the company, nearly 80 % of power battery companies have achieved profit growth. Among them, the largest reported net profit increase of more than 100 % year-on-year reached 48 companies, and the number of companies that forecast net profit of more than 100 million yuan was as high as 68. Industry leader BYD expects net profit in 2016 to be as high as 5.2 billion yuan.

It is precisely due to the continuous high growth of the new energy vehicle market that there has been a gap in power battery production capacity and insufficient supply. Even once, the sales volume of new energy vehicle companies was determined by the output of battery companies. Under such circumstances, domestic power battery companies will continue to invest more in 2015 and 2016, and their production capacity will continue to expand. By the end of 2016, the new production capacity of the domestic power battery industry had increased by 42 GWh(1 GWh = 1 million kilowatt-hours) compared with the same period, which was almost three times that of all shipments in 2015.

Due to the rapid increase in scale, China has become the main production base of lithium-ion power batteries for vehicles worldwide. In response, Professor Ouyangming of Tsinghua University, head of the overall expert group of the National 863 Project on Energy Conservation and New Energy Vehicles, said that the industry's production capacity is likely to reach saturation within three to five years.

In 2017, due to the combination of multiple factors, sales of new energy vehicles fell by more than 70 % year-on-year in January. Coupled with the rise in raw material prices, the power battery industry's downward pressure has soared and it has begun to fall into the throes of structural adjustment.

Prices for both lithium ternary batteries and lithium iron phosphate power cells fell by more than 15 per cent in early February compared with December 2016, according to data. As the new energy car manufacturers are still in the adjustment period, at present, the power battery companies as a whole started flat, orders dropped by more than 20 % year-on-year.

According to industry analysis, the large reduction in power batteries is due to the recent decline in sales of new energy vehicles, and on the other hand, it is also related to the overcapacity caused by the large expansion of production. Domestic new power cell capacity in 2016 was nearly three times higher than in 2015, while production grew by only 82 per cent year-on-year.

Experts said the 2017 power battery capacity overall overcapacity, the industry will face division.

High-end capacity shortage low-end excess

Minister of Industry and Information Technology Miaoyu said at the 100-person forum on electric vehicles some time ago that the new energy automotive industry is still in the initial stage of development, just as "going against the water, not advancing, or retreating", although the production and sales scale of the new energy automotive industry has achieved rapid growth. However, the core technology of power batteries still needs to be greatly improved, and the construction of charging infrastructure still needs to be accelerated. At present, there are signs of structural overcapacity in enterprises, and the problem of overcapacity in the high-end power cell is further aggravated.

At present, there is serious polarization in the power cell market, the problem of low-level duplication of construction is prominent, and the structural risks in the industry have risen. Judging from the degree of market concentration, the market share of the top 10 companies in 2015 was 75.3 %. Among the 121 companies with overall power batteries, the number of companies that can truly enter the vehicle supply system did not exceed 20.

According to the relevant information released by the China Electric Vehicle 100 People Association, the outstanding problems in the development of the automotive lithium battery industry in China include the rapid expansion of production capacity and the shortage of high-end and low-end excess; Battery announcement management has become tighter, and enterprises have not responded adequately; The performance of battery monomer is not bad, but the technology gap is obvious. The technical route is controversial and some companies are frustrated; Low power battery automation equipment level; Safety accidents occur frequently, and battery safety is urgently attached importance to. There are technical barriers to recycling, and it is very difficult to implement policies.

In this regard, Chenqingtai, chairman of the China 100 Electric Vehicles Association, said that under the impetus of positive policies, many new energy car companies are busy increasing production, competing to urge battery companies to get battery products in time and even reduce quality requirements. Some battery parts companies have also reduced quality standards, relaxed management, and slowed down the pace of technology research and development in order to ensure supply. At the same time, the industry also has the problem of "small but scattered." Due to the rapid expansion of the market and low entry barriers, a large number of small and medium-sized companies with low R&D technology levels have entered the power battery industry, but these companies have no advantage in technological innovation and profitability.

People in the industry believe that although China's power battery industry has become the world's first camp, this does not mean that there is no gap with top companies such as South Korea and Japan. According to a company leader, the current electric core products produced by Japan and South Korea giants are currently. Only three out of a million fail, and the pass rate of Chinese companies 'core products has not yet reached this level.

Power Battery Industry or Change

Some people in the industry believe that the power battery industry will have a fierce price war after overcapacity, and the decline in profits will continue to plague companies. However, high-end production capacity will be in short supply, and companies with product technology advantages, production capacity advantages and market share advantages will have better growth space. In 2017, the power battery industry is about to usher in a big wave of screening, some poor product quality, low safety factor battery manufacturers will be gradually eliminated by the market.

Wangbinggang, the head of the National new energy vehicle technology innovation project expert group, said that the power battery companies are showing structural excess, not absolute excess, and the elimination process of the three-line and four-line power battery companies will accelerate, and some companies with backward processes and low-end positioning will also be integrated mergers and acquisitions.

Mr. Miaoyu said production capacity regulation would be strengthened in the future, while further advancing technological progress. We will revise regulations governing the access of new energy automobile manufacturers and their products, raise the threshold for technology access, and strictly prevent low-level duplication of construction. In response to the pattern of "scattered, small and weak" development, we will establish a mechanism for pre-warning production capacity and guide enterprises to plan production capacity development plans in a rational manner.

Chenqingtai also believes that it is necessary to build a power battery industry chain for environmental protection, health, and sustainable development, increase research and development investment, make great efforts to achieve quality, and solve the problems exposed. In addition to manufacturing processes and other links, the gap between domestic and international advanced technologies lies in basic industries. More attention should be paid to the research of basic industries, and the gap between advanced technologies in the world should be fundamentally reduced. At the same time, through industrial policy guidance, the government should promote industrial reform, eliminate low-end production capacity, increase market concentration, and optimize the industrial structure.

The promotion of technological progress in the power battery industry and the creation of a number of new products and technologies are becoming a major way to break through the bottleneck of excess capacity. According to Lihong, a researcher at the Institute of Physics of the Chinese Academy of Sciences, the Chinese Academy of Sciences is currently conducting the development of all-solid lithium batteries. It is expected that the first batch of all-solid lithium batteries will enter the market between 2020 and 2025.

The page contains the contents of the machine translation.