The impact of lithium battery equipment under the new regulations of power battery

On May 17, the National Development and Reform Commission issued the "Regulations on Investment Management of the Automobile Industry (Draft for Comment)". The part of the investment in "power battery" includes following contents: the requirements for the new power battery project and expansion project should be met: 1.The province where the project is located last two annual capacity utilization rates is higher than the industry average. 2. The proposed project needs to have a higher level of intelligence. 3. The specific energy of the battery cell is no less than 300wh/kg, and the specific energy of the system is no less than 220wh/kg. 4. The fast charge rate of the power type vehicle power battery unit is not lower than 8C, and the remaining capacity after 2000 cycles is not lower than 95% of the initial capacity; the fast charge rate of the power type power battery system is not lower than 5C, after 1500 cycles The remaining capacity is not less than 95% of the initial capacity.

The policy first mentions the “capacity utilization concept”, and the source of capital control blindly invests in new energy battery projects: According to the data of the starting point research institute, the Chinese lithium battery factory is expected to have a capacity of more than 200GWh in 2018, but the actual effective capacity is about 80GWh. Many of them are planning capacity without actually purchasing equipment. The expansion of high-end battery plants (CATL, BYD, Panasonic, LG and Samsung) will accelerate, and the expansion of second- and third-line battery plants will slow down or be eliminated. Therefore, we judge that the future of China's power battery industry has the following characteristics: 1) Structural overcapacity: In 2017, the shipment of power batteries was much lower than that of production capacity, but the capacity utilization rate of high-end manufacturers was close to 70%. The leading high-end batteries purchased by traditional leading car companies (Volkswagen BMW Audi, etc.) have large gaps in supply and demand, and there is a serious excess of low-end battery capacity. 2) The concentration of industry in the future will continue to increase: SMEs that do not have core technologies and do not have access to capacity utilization are facing elimination. 3) The battery faucet is always strong: In 2017, CATL's operating income totaled 20 billion Yuan (+34%), of which lithium battery business income was 16.6 billion Yuan, gross profit margin was 35%; net profit of returning home was 3.9 billion Yuan (year-on-year + 36%).

Judging from the idea of structural adjustment of state subsidies, policies are leaning toward advanced technologies and advantageous enterprises, which is more conducive to the sound development of the industry.

Battery companies with high energy density and high technology levels will be supported by policy: for power batteries, they should be measured in terms of energy density, longevity and economy. The policy supports high energy density of 300Wh/kg and the actual situation is far away: as of the current new energy vehicle promotion catalog, the power battery product system has a maximum energy density of only 152Wh/kg, and has a 45% improvement from the target minimum threshold. . Take the Panasonic battery used by the industry leader Tesla as an example. Tesla's current 18650battery has an energy density of about 250Wh/kg. On the Model3's 21700battery, Tesla will use a silicon-carbon anode. The cell energy density is increased to 300Wh/kg. According to official CATL data, the energy density of their batteries can now reach 240Wh/kg. In addition, BYD's official data shows that the energy density of its NCM battery can now reach 200Wh / kg. In the short term, there is still much room for improvement in the energy density of domestic batteries, and the energy density is not eager to improve until the safety problem is solved.

The increase in electrification rate is an inevitable trend. The battery factory entering the supply chain of leading car companies will lead to high growth rate: we believe that the future battery manufacturers will usher in changes:

1) Domestic battery manufacturers continue to expand production capacity. We believe that the lithium battery industry will face a situation of oversupply in the future, but the power lithium battery market in the high-end sector is in short supply. The advantages of large manufacturers in the field of high-end batteries are becoming more and more obvious with good product quality, technical level and customer advantages. However, small vendors and vendors taking the low-end technology route will face the risk of elimination and the possibility of being acquired by large manufacturers. 2) International car companies and battery companies will accelerate their investment in China, and China will become a world-class factory in the lithium battery industry. In addition to Tesla, Volkswagen Group announced that it will expand its battery procurement contract. In 2025, the purchase amount will reach US$48 billion. Orders are most likely to be obtained by LG Chem, Samsung SDI, Panasonic or CATL. International automakers are accelerating their investment in China, which is expected to significantly increase the demand for domestic power batteries. We judge that China will become a world-class factory in the lithium battery industry in the future. The latest actions of Tesla and Volkswagen show that the global electrification rate will accelerate, and global new energy vehicles will usher in a high boom cycle.

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