Power battery，who's the boss?

The development of the upstream supply chain of lithium electricity industry is improving day by day. With the increasing maturity of the technology in the lithium power industry, the number of patent applications related to lithium power began to decline in 2014. The competition of power lithium leads to the rapid development of the upstream industrial chain. Each kind of raw materials and equipment has a number of strong suppliers.

Lithium-electric energy density exists in the ceiling, and the technical advantage gradually disappears, and it will inevitably become standardized. Lithium electricity belongs to chemical energy and is different from IC products. IC process technology is advancing in a straight line, so that IC products can continue to reduce costs, so that IC companies can maintain technological advantages. Lithium electricity is similar to photovoltaic components, and the development of technology is limited by the energy density of materials. The final product will inevitably tend to homogenize and standardize.

Product homogenization in the standardization industry, the cost is the core competitiveness of the enterprise. The enterprise's system, scale, technical route, supply chain management, etc. will affect the cost of the product to a certain extent, thus determining the competitiveness of the enterprise.

The system, scale, technology route, supply chain management and late-stage advantages determine the cost advantage. Companies with a market-oriented system, leading scale, correct technical route, scientific supply chain management, and the full advantage of lithium battery equipment have lower costs. We believe that some of the power lithium battery upstarts have an advantage in cost. The power battery production line is updated and iteratively fast, and the new production line has high production capacity and is easy to maintain, which helps enterprises to reduce the average fixed cost.

1. The development of lithium electricity industry is becoming more and more perfect, and the supporting equipment is gradually mature

The development of lithium-ion battery industry has gradually matured, and the growth rate of related patent applications has declined. Lithium-ion batteries have been developed for nearly three decades since Sony commercialized them in 1992. Before 2008, the number of patent applications in the field of lithium-ion batteries in China was very small. Since 2008, the number of applications has risen rapidly and has entered a stage of rapid development. With the development of the lithium battery industry, the growth rate of patent applications declined in 2014.

The upstream supply chain of lithium-ion battery industry is developing rapidly and improving day by day. In the upper reaches of the supply chain, it is necessary to complete the process of mining, smelting, and chemical production of the initial ore raw materials, and convert the original mineral into a secondary battery material suitable for the production of power batteries. Including positive materials, negative materials, electrolytes, battery diaphragm and aluminum foil, copper foil and other accessories. Lithium-electric production process includes nearly 20 steps such as mixing, coating, winding, and packaging. The corresponding devices involved are diverse. Along with the development of lithium-ion batteries, the upstream industrial chain has also developed rapidly. Each kind of raw material and equipment has a number of strong suppliers.

2. The technical advantage will gradually disappear and will be standardized

Lithium-ion batteries belong to chemical energy and energy density exists in the ceiling. The mass of the battery is inversely proportional to the energy and molar mass of the active material, and is proportional to the number of electrons per unit mass of active material participating in the reaction and the battery voltage. At present, the main factor that restricts the development of lithium-ion batteries is the energy density of positive polar materials. However, most positive polar materials contain transitional metal elements, making their molar mass larger and limiting their energy density. In addition, increasing the battery voltage can also increase the energy density, but the electrolytes currently used will face decomposition if they are used under high voltage. In addition, the materials that can meet the many requirements of lithium-ion batteries are extremely limited. Without changing the battery system, it is difficult for lithium-ion batteries to continue to increase their energy density.

Lithium electric energy density depends on positive electrode materials, and the technological advantages of lithium electric manufacturing are disappearing. The negative electrode of lithium-ion batteries is dominated by graphite, and the future trend is silicon-carbon materials. The energy density of the negative electrode material is much higher than that of the positive electrode material. In addition to the positive and negative active substances, electrolytes, isolation membranes, binders, conductive agents, collection fluids, shell materials, etc., account for about 40 % of the total battery weight. If you can reduce the weight of these materials without affecting the performance of the battery, you can also increase the energy density of lithium ion batteries. The impact of these above needs to rely on the technology of upstream suppliers. For lithium power manufacturers, there is not much room for technical improvement, and technological advantages are gradually disappearing.

The technology development speed of lithium electricity industry slows down, provide fertile soil for standardization. Lithium-ion battery-related technology is difficult to make major breakthroughs, and the development of the industry is in a stable period. Lithium-ion battery core technology patents have expired one after another, and the market has further opened up to more companies. When China's cottage machines were popular in 2008, the size of mobile phones was varied, and the size of square lithium batteries reached almost hundreds of thousands, resulting in great waste of resources. According to high-tech lithium battery statistics, at the end of 2016, there were more than 500 domestic consumer Li-electricity enterprises and nearly 150 power Li-electricity enterprises. At present, lithium has basically formed three camps: cylinders, squares, and soft packs. The camp is basically homogenous. For example, there is no obvious difference in the nature of the 18650 camp. The difference in energy density lies in the material system; Each square aluminum shell also follows the VDA German Automobile Industry Federation standard and is exactly the same size.

Unlike IC products, lithium electricity technology is not obvious. IC process technology is carried forward in a straight line, allowing IC products to continuously reduce costs, improve performance, and increase functionality. Therefore, every year and a half, IC output can be doubled, that is, Moore's Law. The reason behind this is that semiconductors are based on the band theory derived from quantum mechanics, and their physical foundation is more profound; The development of lithium electricity and materials is limited by the limits of chemical energy and can not continue to provide impetus for the technological development of lithium electricity. Therefore, semiconductors can produce continuous competitive advantages, resulting in near-monopoly companies such as Intel and TSMC. The reason is that their physical foundation is more profound. The existence of Moore's Law can continuously consolidate the moat brought about by technical barriers.

The development of lithium and photovoltaic components is more similar. Photovoltaic components are similar to lithium power, and technological development is constrained by the mobility of Silicon carriers. For the current photovoltaic component industry, each product is basically homogenized. Similarly, we can think that the future of the lithium power industry is similar to the status quo of photovoltaic components. similar, That is, each family produces a product that is approximately standardized.

3. Cost is the core competitiveness of lithium enterprises

In the standardization industry, product homogenization is an inevitable trend, and in the end it is still necessary to win with cost. The enterprise's system, scale, technical route, supply chain management, etc. will affect the cost of the product to a certain extent, thus determining the competitiveness of the enterprise.

3.1 Institutional importance and competitiveness of market-oriented private enterprises

An efficient system is essential for cost control of enterprises. The disadvantages of state-owned enterprises lead to high resource waste costs and are not repeated here. Listed companies have stricter disclosure requirements, which has improved the efficiency of the company in order to improve the company's governance, management and operating systems, and the company's operations are more standardized. The share price of the secondary market of listed companies guides the allocation of resources in the primary market so that resources can be used more efficiently.

Compared with Woterma and Li Shen, listed companies are more advantageous in the system. Of the current five shareholders of Lishen, two companies are removed, and the remaining three shareholders are state-owned enterprises. Lishen has been established for 20 years and has been strongly supported by the government during the development process. The 2016 Lithium power shipment volume was 1.7 GWh, and it entered the Ministry of Industry and Information Technology in the first six batches of recommended catalogue models in 2017. Woterma was listed on the GEM reorganization in July 2016(Kennedy). In 2002, he established a company system and maintained the nature of a private enterprise in history. Woterma's 2016 power battery shipment was 2.5 GWh, and it entered the Ministry of Industry and Information Technology's first six batches of recommended car models in 2017.

3.2 Manufacturing can not be separated from scale, with scale advantages giving rise to cost advantages

Increase in size and reduce average fixed costs. Fixed costs such as factory rental, depreciation of equipment, even if the enterprise does not produce. Only when the capacity utilization ratio increases can the average fixed cost per person be reduced, thus gaining the cost advantage of economies of scale. In 2016, the capacity utilization rate of leading lithium-powered enterprises reached 80 %, while the capacity utilization rate of small and medium-sized battery plants was only 15 %. There is no doubt that the average cost of leading power lithium-electric enterprises is lower than that of small and medium-sized battery plants. In addition, the small and medium-sized enterprises that do not have the 8GWh capacity entry threshold can not enter the Ministry of Industry and Information Technology recommendation catalogue and get corresponding subsidies, further increasing their own costs.

Increase the scale and enhance the bargaining power of enterprises. In addition to the ability to negotiate with suppliers and buyers in the Porter Force Model, due to the growing prosperity of the financial industry, the ability to negotiate with banks and other institutions about the use of interest rates for funds also directly affects corporate costs. The increase in the size of the company will increase the company's voice and bargaining power. For example, oligopolistic industries such as Sinopec of Petro-China have only passive acceptance of prices for upstream suppliers and downstream customers. Once the company reaches a certain size, the cash flow and profitability levels are stable, the credit rating is improved, and the cost of using funds can be reduced when negotiating with banks and other institutions.

3.3 Significant cost reductions can be achieved by choosing a low-cost technology route

Lithium iron phosphate and ternary materials cost the same, and ternary materials become the first choice for dynamic lithium electricity. According to our previously reported calculations, the cost per K Wh of lithium iron phosphate batteries and NCM523 batteries is approximately $900. Lithium iron phosphate has a longer history and more mature than ternary materials. Its cost has been relatively stable, and ternary materials have started late. With the Advancement of technology, there is still room for further decline in costs. In 2017, the adjustment of a series of new policies, the content of which all point to the development direction of the high energy density of power batteries, the trend of three-way batteries to become the mainstream choice of power lithium has been very clear.

At present, cylindrical batteries have the lowest cost, but square batteries have great potential. As the earliest and most stable lithium-ion battery, the cylindrical battery has a single size and can be automated in batch production, thus reducing costs. However, based on the BatPaC cost model developed by the Argonne laboratory in the United States, under the current state of the art, the space for further cost reduction of the cylinder is small, and the prismatic battery has great potential to reduce the cost of the lithium ion battery. The soft pack battery is the most expensive battery, but the design is flexible, the heat dissipation performance is good, the air will be blown up after inflation, and the safety performance is also good. There is no thick shell of the cylindrical battery and the square battery, and the theoretical energy density is also higher.

3.4 Supply chains in health sciences reduce costs

Specialization helps to reduce costs. One of the ten principles of economics, trade can make everyone better, because trade allows everyone to engage in activities in which they have a comparative advantage. This principle applies not only to individuals, but also to enterprises and countries. Assuming that a battery company produces all the upstream materials needed for positive materials, negative materials, diaphragm, etc., the company will not be able to focus on its best areas, and the production of upstream materials will be difficult to achieve economies of scale. benefit. Specialization can make full use of the resource endowment and advantages of enterprises to improve their own efficiency and reduce costs. In May 2017, BYD, which has long been characterized by vertical integration, announced an open supply chain to adapt to the division of labor in modern industry.

Establishing efficient supply chains can reduce costs. Streamlining product types and using as many standardized components as possible could significantly reduce the stock of spare parts and semi-finished products. Take Panasonic as an example. The battery models are mainly 18650 and 21700, which greatly reduces the types of structural parts. In addition, reducing the number of suppliers and forming a closer value chain centered on product production cooperation can reduce the company's costs in materials development and supply. In the case of Woterma, the supplier of each material is maintained at about five as far as possible, reducing the supply cost and ensuring consistency between battery batches.

3.5 Rising stars have a greater cost advantage

The new production line has higher production capacity and the cost of new batteries is lower. Lithium power line iteration is fast, now the domestic can achieve the whole line model, overthrowing the previous customers need to purchase seven or more enterprise equipment traditional delivery model, greatly shorten the production capacity construction cycle, improve the equipment production efficiency. At the same time, it is also conducive to subsequent equipment upgrades, which has played a significant role in reducing the cost of dynamic lithium power enterprises. According to the China Chemical and Physical Power Industry Association, the new 21700 battery can reduce the manufacturing cost of watt-hour units by more than 20 % compared to the traditional "18650 battery" in the industry.

Equipment ROE jumped a step, the advantage of the rear is obvious. The technology of the lithium electric equipment industry has evolved greatly from 2016 to 2017. Before that, each technology level was relatively backward. With the rise of dynamic lithium power since 2015, various companies have stolen equipment technology from Japan and South Korea. At present, China's lithium electric equipment is already comparable in speed to South Korean equipment, and the price still has significant advantages. Therefore, the equipment ROE is upgraded, and the cost of the newly launched production line is lower than that of the old production line, so the latecomer advantage is obvious.

4. Find the rising star of the power cell

From the above four factors that determine the cost, we investigate the enterprises in the field of dynamic lithium power in recent years and look for the rising and rising of dynamic lithium power.

4.1 Penghui Energy: The mid-year performance will double, and the power lithium power capacity will reach 6.8 GWh

Penghui Energy's performance forecast for the 2017 half-year was attributed to net profit of 87.35 million yuan to 100.453 million yuan of shareholders of listed companies, an increase of 100 % to 130 % over the same period last year. Since 2017, the company has entered the promotion catalogue of more than 10 models. With the passenger car Zhongtaiyun 100S volume, the performance of the power lithium power is high, and the power lithium power capacity is expected to reach 6.8 GWh by the end of this year. Penghui Energy entered the power battery field in 2015. Its products cover columns, soft packs, and squares, with the most complete coverage and core competitiveness.

4.2 million lithium weft can: benefit from sharing bicycles, the first 21,700 production line in China was completed and put into operation

Billions of lithium can provide power system solutions for sharing bicycle smart car locks in 2016, laying a solid foundation for rapidly expanding power cells to seize market share. On June 28, 2017, the company began manufacturing 21700-size batteries. Compared with the 18650 battery, the 21700 battery has a higher energy density, lighter battery package, lower battery system costs, and easier automation.

4.3 Zhuhai Yinlong: With lithium titanate as the core, "Miss Dong" plus fast clearance

At the beginning of its establishment in 2009, Zhuhai Yinlong has focused on new energy batteries. In 2010, through the acquisition of American Titanium, it was able to truly knock out the technology of lithium titanate battery. Despite the late start, the development speed of Zhuhai Yinlong is extremely rapid. At the end of 2015, Zhuhai Yinlong ranked among the top 10 in the sales of pure electric buses. In 2016, Yinlong pure electric bus sales orders exceeded 6,200. At the end of 2016, Dong Mingzhu teamed up to jointly increase the capital of Zhuhai Yinlong by 3 billion yuan. On May 17, 2017, Zhuhai Yinlong handled the registration of the counseling and filing in the Guangdong Securities Regulatory Bureau, and accepted the publicity. Zhuhai Yinlong officially opened the IPO tour of the A shares.

4.4 Lixin Energy: A well-funded team with rich experience and high starting point and high goals

Lixin Energy was established in June 2016 with a total planned investment of 3 billion yuan. Hou Xiaohe, former vice president of Tianjin Lishen, served as general manager of Lixin Energy. It is expected that the first and second phases of the project will achieve an annual output of 4 billion watts. Lithium-ion power batteries and new energy storage battery systems. At present, the product covers the lithium iron sulfate battery and the ternary NCM battery system. The product types include soft-pack batteries and square aluminum shell batteries.

5. Risk Tips

Sales of new energy vehicles fell short of expectations. As a strategic emerging industry, new energy vehicles are not yet mature and rely on subsidies. If policies fluctuate, or if new energy car companies fail to produce better quality products in the short term, it will lead to lower sales of new energy vehicles than expected, which will affect the entire industrial chain. Shipment situation.

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