Increased pressure from power cell companies or affected by subsidy policies

The new energy subsidy policy has been continuously adjusted, and the power battery pressure in the upper reaches of the new energy automotive industry chain has soared. At present, power battery manufacturers such as BYD and Wotema face major challenges.

BYD recently announced that it expects net profits attributable to shareholders of listed companies to fall by 75.24 % to 91.75 % from January to March 2018 due to factors such as the receding of new energy car subsidies. The net profit range of shareholders belonging to listed companies is between 50 million yuan and 150 million yuan.

In 2017, BYD's net profit belonging to shareholders of listed companies was 4.066 billion yuan, a year-on-year decline of 19.51 %. As subsidies recede year by year, BYD's net profit has fallen, and pressure in the new energy car market has increased to some extent affecting the power battery sector. Last year, while retaining the global sales champion of new energy vehicles, the loss of domestic power battery sales ranked second.

Wotema, who ranked third in the domestic power cell market last year, is even more unoptimistic. On the evening of April 1, Wotema's listed company Jianrui issued an announcement that the company had already had overdue debts, amounting to 1.998 billion yuan, mainly for bills payable and bank loans. Wotema vice president Mengguang said in an interview with the First Financial Reporter on April 3 that the power battery company is currently under pressure. The company's impact on the new energy industry policy is estimated to be biased. The reason why the debt is overdue is that the expansion is too aggressive. There is a problem with cash flow. Wotema will take measures such as cleaning up inventory, invigorating assets, accelerating accounts collection and other measures to actively save himself, solve the problem of funds, and strive to get out of the predicament.

Driven by new energy subsidies and other policies, China's new energy vehicles have entered the fast track since 2013, with annual sales climbing from 17,600 to 777,000 in 2017. As the "heart" of new energy vehicles, the production and sales of power batteries have also been rising. According to statistics from the Higher Industrial Industry Research Institute(GGII), China's power battery shipments in 2017 were 44.5 GWh, a year-on-year growth rate of 44 %. Wotema, BYD, and Li Yujun ranked among the top three domestic power battery sales, which were 11.84 GWh, 7.2 GWh, and 5.5 GWh, respectively. Among them, the Ningde era not only surpassed BYD last year, but also surpassed Panasonic Electric to become the global power battery system sales champion.

But behind the growth, many power cell makers are becoming less comfortable. In an interview with the First Financial Reporter on April 3, Luohuanta, Dean of the Institute of High-tech Industry, said that although electric vehicles and power batteries still maintained rapid growth in 2017, due to the impact of subsidy receding, the price of power batteries dropped significantly. The average price at the end of the year was 20 % to 25 % lower than at the beginning of the year. The cost pressure on the industrial chain is enormous.

In 2017, the new state subsidy standard for passenger vehicles was reduced by 20 % according to the 2016 subsidy standard, and the subsidy standard for passenger cars was generally reduced by 40 % above the 2016 standard. The threshold for subsidies has also been significantly raised. Subsidies are directly linked to power cell energy density, mileage, fuel saving rate, and 30,000 kilometers of mileage. In addition, the subsidies have also been adjusted from the pre-allocation system to the liquidation system.

Faced with the adjustment of the subsidy policy, new energy vehicle factories have transferred the pressure of operating costs to power batteries. As a result, power batteries have been squeezed at both ends. On one side, raw materials such as upstream lithium have been raised, and on the other hand, the lower reaches of the new energy vehicle factory have reduced prices. In response, Wotema was too optimistic and did not put down the pace of expansion and tried to exchange profits for scale expansion to make up for the loss of subsidies. However, the 30,000 km policy has extended Wotema's speed of return on sales to the entire vehicle company. Zhong Mengguang said that the market required for the new energy bus to travel 30,000 kilometers is relatively fast, but the logistics car will take at least one and a half years. After that, the vehicle company can apply for subsidies and the amount of money will return to Wotema. The time has been greatly extended, causing the company's cash flow problems.

Compared with Wotema, who is mainly for customers of new energy commercial vehicles, BYD and Ningde era, which have power batteries for new energy passenger vehicles and new energy commercial vehicles, have been relatively less affected, but they are still unavoidable. Environmental impact. BYD pointed out that the first quarter of 2018 was affected by the slope of subsidies for new energy vehicles, especially the partial profitability of electric buses, which brought greater pressure on the overall profit of the group. BYD has stepped up research and development and accelerated the launch of new models to absorb the impact of subsidies on the slope. This year, BYD will launch a number of new energy vehicles including the new generation of Tang. BYD's new energy vehicle sales target is 200,000 this year, and the growth of new energy vehicles will boost the growth of lithium batteries. In addition, BYD is accelerating the start of the open power battery supply.

The Ningde era, which has become a power battery supplier for many vehicle factories such as Huachenbaoma, Geely, Beiqi, and Yutong, is accelerating the expansion of the market and has recently entered the supply chain of Volkswagen. A few days ago, Volkswagen group in Europe and China have reached the amount of 20 billion euro battery purchase orders, China's first battery partner is ningde era. On April 4, the Ningde era will be on the conference. In the future, the capital market will further accelerate the competition for the power battery market.

Wuhui, an analyst in the power cell industry, said in an interview with First Financial that this year's power cell market should be more stable than last year. This year's prices are also relatively stable, but prices still show a downward trend.

In terms of production capacity, Luohuanta pointed out that by the end of 2017, the total domestic power battery capacity was 135GWh, the effective production capacity was 110GWh, and the National capacity utilization rate was only about 40 %. It is expected that the national power battery capacity utilization rate will be lower in 2018. Some low-end production capacity is facing elimination and integration.

Subsidies will shrink further in 2018. From February 12, 2018 to June 11, 2018, it is a transitional period. The new energy passenger vehicles and new energy passenger cars on the transitional period are subsidized 0.7 times the corresponding standard in accordance with the financial development[2016] 958(ie, the 2017 subsidy policy). New energy trucks and special vehicles are subsidized 0.4 times. According to relevant policies, the subsidy plan for the promotion and application of new energy vehicles will only reach 2020.

As soon as possible from the policy leading to the market leading channel, this is a new energy car industry urgently need to break a difficult problem. Luohuanta predicted that in the next 3 to 5 years, new energy vehicles will still be the main driving force driving the growth of lithium battery production, but there are still many problems, such as subsidies are declining year by year, and the slope rate is greater than before, plus power The upstream material price fluctuations of batteries, Car companies and power batteries how to deal with the price reduction, and in 2017 the state subsidy has not been issued, the industrial chain triangular debt is serious, how the company relieves the capital pressure, as well as the industry standards, subsidy thresholds, etc., how to survive the three-four line enterprises. He believes that the lithium battery industry has a bright future, but the future is relatively tortuous, and related companies need to continuously upgrade their core technologies.

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