“The wolf in the power battery industry is coming.” Recently, a regular catalog released by the Ministry of Industry and Information Technology made the industry sigh with emotion.
According to the “Catalogue of Recommended Models for the Promotion and Application of New Energy Vehicles (11th Batch in 2019)”, new energy vehicles equipped with foreign-invested batteries will receive subsidies in China for the first time. This means that following the abolition of the battery “white list” in June this year, the China Dynamics (600482, Stock Bar) battery market has officially opened to foreign investment.
There are a total of 26 passenger cars in the recommended models announced this time, including 22 pure electric vehicles, including the Tesla pure electric sedan that will be produced in China. At present, it is not clear who will be Tesla’s battery supplier after it is produced in China. However, after entering the subsidy catalog, relevant models will most likely receive subsidies. In addition to Tesla, foreign brands Mercedes-Benz and Toyota have also entered the recommended list.
In the past few years, China’s subsidies for new energy vehicles have been strongly related to the selected power battery manufacturers. Carrying batteries produced by battery “whitelist” companies and entering the above recommended catalog is the first step to obtain subsidies. Therefore, in recent years, imported new energy vehicles, mainly Tesla, have not been subsidized. Domestic new energy vehicle companies and power battery companies have also enjoyed a “window period” of rapid development for several years.
However, the true maturity of the industry cannot be separated from market testing. As the sales and ownership of new energy vehicles gradually increase, relevant departments are also guiding the development of the industry from policy-driven to market-driven. On the one hand, subsidies for new energy vehicles have been reduced year by year and will be completely withdrawn from the market by the end of 2020. On the other hand, the “white list” of power batteries was also announced to be abolished in late June this year.
Obviously, before subsidies are completely withdrawn, China’s new energy vehicle industry will first face competition from foreign counterparts, and the power battery industry will bear the brunt.
Complete liberalization of foreign-invested batteries
Judging from the latest published catalog, new energy models of foreign brands such as Tesla, Mercedes-Benz, and Toyota have all entered the subsidy sequence. Among them, Tesla has declared two versions of the models entered into the catalog, corresponding to different battery system energy densities and cruising ranges.
Why is there such a difference in the same Tesla model? This may be partly related to the fact that Tesla has chosen more than one supplier. Since the beginning of this year, Tesla has been exposed to have reached “non-exclusive” agreements with a number of power battery companies. The “scandal” targets include CATL (300750, Stock Bar), LG Chem, etc.
Tesla’s battery suppliers have always been confusing. A report from the Research Department of the Power Battery Application Branch of Battery China.com pointed out that the Tesla models selected into the recommended catalog are equipped with “ternary batteries produced by Tesla (Shanghai).”
Tesla has indeed been producing its own battery modules, but who will provide the cells? A long-term observer of Tesla analyzed a reporter from the 21st Century Business Herald that the reason why the model has two energy densities is because it is equipped with battery cells (i.e., cells) from Panasonic and LG Chem.
“This is the first time that a model equipped with foreign battery cells has entered the subsidy catalog.” The person pointed out that in addition to Tesla, two cars from Beijing Benz and GAC Toyota have also entered the subsidy catalog, and neither of them are equipped with Domestic batteries.
Tesla did not respond to the specific company’s battery cells it uses, but since the abolition of the power battery “white list”, it is only a matter of time that batteries produced by foreign-funded companies and cars equipped with these batteries will enter the subsidy catalog.
In March 2015, the Ministry of Industry and Information Technology issued the “Automotive Power Battery Industry Specifications”, which will use batteries produced by approved companies as a basic condition for obtaining new energy vehicle subsidies. Since then, the Ministry of Industry and Information Technology has successively released four batches of power battery production enterprise catalogs (i.e., “White Power Batteries”). List”), building a “wall” for China’s power battery industry.
Information shows that the 57 battery manufacturers selected are all local companies, and Japanese and Korean battery manufacturers such as Panasonic, Samsung, and LG Chem that were previously used by SAIC, Changan, Chery, and other car companies are not included. Because they are linked to subsidies, these foreign-funded battery companies can only temporarily withdraw from the Chinese market.
However, the “white list” has long been out of touch with the development of the industry. A reporter from the 21st Century Business Herald previously learned that in actual operation, the implementation of the “white list” is not so strict, and some models that do not use “required” batteries have also entered the product catalog of the Ministry of Industry and Information Technology. At the same time, with the market concentration, However, some companies on the “white list” have reduced their business or even gone bankrupt.
Industry analysts believe that canceling the battery “white list” and opening up the power battery market to foreign investment is a key step for China’s new energy vehicles to move from policy-driven to market-driven. Only when more powerful companies enter the market can production capacity be increased faster. And to reduce costs and achieve the real development of new energy vehicles.
Marketization is the general trend. In addition to the liberalization of the “white list”, the gradual decline of subsidies is a direct measure to promote the marketization of the industry. The recently announced “New Energy Vehicle Industry Development Plan (2021-2035)” (draft for comments) also clearly states that it is necessary to promote the optimization and reorganization of power battery companies and increase industry concentration.
Reducing costs is key
With the support and encouragement of industry policies, a number of domestic power battery companies have grown rapidly in recent years, including CATL, BYD (002594, Stock Bar), Guoxuan Hi-Tech (002074, Stock Bar), etc., including Fuli, which recently landed on the Science and Technology Innovation Board. Energy technology. Among them, CATL has become the “overlord” in the industry. The latest data shows that in the first three quarters of this year, CATL’s domestic market share has increased to 51%.
Under the trend of gradual liberalization of the market, foreign-funded power battery companies have also made arrangements in China. In 2018, LG Chem launched a power battery investment project in Nanjing, and Panasonic also plans to specifically manufacture batteries for electric vehicles in its Dalian factory.
It is worth mentioning that Tesla’s domestic battery suppliers, Panasonic and LG Chem, are both the targets of popular rumors. Among them, Panasonic is Tesla’s “familiar” partner, and American-made Teslas are supplied by Panasonic.
Tesla’s “indecision” and “preparation” reflect the fierce competition in the power battery industry to a certain extent. As for local brands that have been developing rapidly in the Chinese market for several years, can they face the competition from foreign brands this time?
A person close to the power battery industry told a reporter from the 21st Century Business Herald that the competitive advantages of foreign-invested power batteries are mainly technology and cost control, which have formed certain “barriers” in the market. Taking Panasonic as an example, some industry analysts pointed out that although it also produces ternary lithium batteries, Panasonic uses a different proportion of raw materials, which can increase energy density while reducing costs.
However, in recent years of development, with the increase in scale, the cost of domestic power batteries has also been decreasing year by year. Taking CATL as an example, the price of its power battery system was 2.27 yuan/Wh in 2015, and dropped to 1.16 yuan/Wh in 2018, with an average annual compound decline of about 20%.
Domestic power battery companies have also made many attempts to reduce costs. For example, both BYD and CATL are developing CTP (CelltoPack, module-free power battery pack) technology, trying to improve battery performance with a more streamlined battery pack internal design. Companies such as Yiwei Lithium Energy (300014, Stock Bar) are also reporting in annual reports Zhong said that the automation level of the production line should be improved to increase the yield rate and reduce costs.
CTP technology still has many difficulties to overcome, but recent news shows that CATL’s CTP battery packs have entered the stage of commercial production in batches. At the signing ceremony on December 6 to deepen strategic cooperation between CATL and BAIC New Energy, Zeng Yuqun, chairman of CATL, said: “CTP technology will cover all existing and upcoming mainstream models of BAIC New Energy.”
Improving technical levels and reducing costs are the key methods. Chinese power battery companies represented by CATL are about to usher in a real “review” of the market.
Post time: Nov-18-2023