Where does the power cell go?

Leap through the relevant lithium-listed companies in the first quarter of 2016 earnings forecast, more than a large increase in performance and net profit of the welcome situation. Among them, the data is the most dazzling of the upstream raw materials company Tianqi lithium industry, which is expected to increase its net profit by nearly 900 % year-on-year, which is expected to exceed the total net profit in 2015, thus leading the entire industry.

Tianqi lithium industry mentioned in the performance forecast that benefiting from the steady growth of demand in the downstream lithium battery market, driving the rapid growth in demand for related lithium chemical products. This increase in market demand also led to a year-on-year increase in sales prices and sales of battery grade lithium carbonate products in Tianqi Lithium. Operating income increased significantly from the same period last year, and the gross profit margin for product sales increased significantly.

Is the price of lithium carbonate the general trend? Where does the power battery go?

However, for upstream raw materials companies, this is not yet the most "sweet" moment. Prices of raw materials, including lithium carbonate and lithium hexafluorophosphate, will continue to rise this year and remain high until the end of the year, as capacity lags behind market demand. The price increase brought by raw materials, including electrolytes, positive material prices, battery enterprise cost pressure is huge.

I asked companies about the price of battery materials. The price of electrolytes has generally increased by 2-3 times since the same period last year, while the price of positive materials has also increased by more than 30 %, which directly led to an increase of 20 % in the overall cost of the core. Therefore, for the related power battery companies, the price increase of their products seems to be a matter of course.

Is price increases the general trend?

The author found that the price of upstream raw materials skyrocketed, bringing great pressure to the cost control of battery enterprises. The continued growth of the downstream new energy car market and the sharp increase in market demand for power batteries have also led some battery companies to continuously transfer material costs to the downstream market, thus choosing price increases.

"At present, the speed of material expansion is clearly lagging behind the core. This shortage of supply has led to a sharp increase in material prices on the one hand, and on the other hand it has limited the pace of expansion of power battery companies. Therefore, the conventional cost-cutting approach of scale is not feasible for the time being in the field of power batteries, and price increases are an inevitable trend. "The person in charge of a domestic electric core company mentioned this.

He also said that the current company's core price through multiple rounds of price increases, has now risen by about 20 %. However, even so, its products are still in short supply. Among the more than ten battery companies surveyed by the author, more than 50 % of the company's product prices have increased to varying degrees, and most of the increases have also been concentrated in about 15 % -20 %.

From the performance reports of relevant listed companies, it can also be seen that sales and net profits of battery companies including BYD, Xinwangda, Nandu Power, and Yiwei Lithium have achieved significant growth. And for 2016 revenue, are also optimistic. Correlation person analysis, besides downstream new energy vehicle market demand pull, behind this kind of rapid growth, also have inseparably relation with battery price rise.

Compared with lead-acid batteries, the disadvantages of lithium batteries lie in the long development and commercialization time, insufficient safety, and lack of cost advantages. Today, the gap between the two costs is constantly expanding. "Our goal is to keep the price of lithium batteries infinitely close to that of lead-acid batteries, but the surge in upstream raw materials has disrupted our plans. "Xing Heng power deputy general Wangzhengwei said.

At the end of March, when I attended a lithium-ion peak forum in Guangzhou, some experts mentioned that lead-acid batteries will still be the mainstream of the market until 2025.

For downstream new energy car companies, the reduction of subsidies and the increase in battery prices are tantamount to a double blow in terms of cost control. Previously, new energy vehicles had been criticized by consumers for pricing too high, and now the increase in the price of power batteries has given the target of 5 million new energy vehicles sold by 2020, adding some uncertainty.

Build Core Competitiveness Opportunities?

However, even at a time when raw materials are "rising", some companies insist on not raising prices, but hope that they can do their best to strictly control the cost of products, or to maximize these increased costs to internalize. Do not increase the cost pressure of downstream new energy car customers.

鈥淚t seems to me that many of the companies that choose to follow suit are smaller ones. So far, Wotema has not implemented a strategy to increase prices. "Wotema, deputy general manager of Gengdexian, said that the price of battery-grade lithium carbonate is not as exaggerated as previously disclosed by the media. The so-called 180,000 tons are only individual behaviors and can not represent the entire industry.

He also mentioned that Wotema has a great deal of bargaining power in the price of raw materials through the optimization of raw material procurement channels and large-scale procurement. At the same time, by optimizing equipment, upgrading production lines, and upgrading manufacturing processes, production costs are strictly controlled, so Wotema's power battery product costs have not increased much.

According to relevant data, the total number of vehicle-powered battery shipments in 2015 was 15.9 GHH, an increase of 220 % year-on-year, and sales revenue was 37.06 billion yuan. Wotema's shipments reached 1.37 GWh, and the market accounted for 8.6 %. Ranked in the top three in the entire vehicle-powered battery field, second only to BYD and CATL.

Based on current market performance, the price of raw materials will remain high this year, and the price of power cells will continue to rise in the first half of this year. "At present, we will negotiate with our raw material suppliers to share the pressure of rising raw materials. There will be no price increase for the product. If costs continue to rise, the possibility of downstream transmission of cost pressures is not ruled out in the future. "One business leader mentioned this.

The industry believes that although the increase in raw materials has a great impact on the core company, the transmission pressure from the battery factory to the downstream new energy car company is inevitable but not the only means. If the relevant battery enterprises can effectively control the cost without implementing the price increase strategy on the premise of guaranteeing the performance, quality and safety of the products, their market competitiveness will be greatly enhanced.

At present, there are hundreds of domestic power battery companies, and the degree of competition in the market can be expected. In 2017, with the continuous release of the expanded production capacity of raw materials manufacturers, higher requirements will be put forward for the degree of enterprise supply chain optimization and cost control capabilities. Product price increases may increase profits, but stick to the bottom line, the accumulation of market reputation may be the key to success.

The page contains the contents of the machine translation.