Text/Zhou Xiongfei
Edit/Midnight
The power battery industry can be described as a constant war.
This month, the market value of the Ningde era is still maintained at a trillion scale, and at the same time, it has also launched the "EVOGO" power exchange brand and series of power exchange services in a high-profile manner, officially entering the field of new energy vehicle power exchange. After seeing this, LG Chem, which has been competing with it for many years, is a bit unable to sit still.
Today, LG New Energy, a subsidiary of LG Chem, officially landed on the Korea Stock Exchange, and the opening stock price after listing was reported at 597,000 won/share, compared with the previous issue price of 300,000 won/share, an increase of 99%. After the listing, the market value also reached 116.8 trillion won (about 616.9 billion yuan).
Not only that, LG New Energy's total fundraising reached $11 billion, and its listing became the largest IPO in the history of the Korean capital market.
Due to the excessive amount of funds raised, coupled with the expansion capacity plan revealed in the prospectus, such a series of actions in the industry's view, the listing of LG New Energy is LG Chem's "pre-war preparation" to challenge the Ningde era, after all, LG Chem has achieved a transcendence of the Ningde era.
If you look at the "entry" time, LG Chem was established more than ten years earlier than the Ningde era, but the former really began to develop the lithium battery business around 1999, while the latter was established in 2011, with the support of national policies and the protection of the "white list", to achieve the transcendence of LG Chem.
By 2019, the Ningde era has become the "double material overlord" in the global power battery industry and the Power Battery track in the Chinese market, LG Chem can only be in the global market after the Ningde era; and in the domestic market, LG Chem is in a state of little known.
Until the first half of 2020, LG Chem surpassed the Ningde era in terms of global installed capacity, and once became the focus of attention in the industry.
The reason why LG Chem was able to achieve that anti-overtake at that time was due to the supply of batteries for Tesla. At the end of 2019, Tesla's Shanghai factory was completed, and products such as the Model 3 began to be delivered to the world, and the installed capacity of LG Chemical, the main supplier of batteries, also increased.
But for LG Chem, such a transcendence is short-lived, and in the second half of 2020, the Ningde era once again topped the global power battery installed capacity. More importantly, with the beginning of last year, the "battery shortage" in the new energy automobile industry began to spread, Tesla, Weilai, GAC Aean and other car companies have begun to develop their own batteries in order to ensure that they will not be "stuck neck".
In the context of the power battery industry rolling up and car companies have developed their own batteries, LG Chem may be difficult to find the "next Tesla".
But in order to continue to catch up, and even surpass the Ningde era again, LG Chem had to spin off subsidiaries to go public in exchange for "ammunition." "So, what are the odds of LG Chem surpassing the Ningde era again?
1
A listing plan that must be completed
It is undeniable that LG New Energy has become another giant in the Korean capital market.
After the listing of LG New Energy, the market value of LG New Energy has reached 116.8 trillion won (about 97.2 billion US dollars), compared with Samsung Electronics, which is also listed on the South Korean exchange, with a market value of 497.31 trillion won, which also means that LG New Energy has become the second largest stock in South Korea after Samsung Electronics.
For the listing of LG New Energy, the market gave an optimistic evaluation. Cho Byung-Hyun, an analyst at Wondae Securities Korea, told the media that the new market giant may also continue to attract money away from other South Korean stocks, "which is a stock that must be bought." ”
According to Bloomberg, after the independent listing of LG New Energy, parent company LG Chemical will retain 81.8% of the shares of the battery subsidiary. "With the listing of LG New Energy, LG Chem's previous resources and capabilities in power batteries can be further integrated, which will be of great help to LG Chem and its own subsequent development." Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology, told Wired Travel.
Because of this, LG Chem has been preparing for the listing of LG new energy for a long time.
As early as December 2020, LG New Energy has been spun off from within LG Chem and established a new company with a separate battery business, and Jin Zhong, president of LG Chem's primary battery business unit, is now the CEO of the company. For this action, in the eyes of the industry at the time, it was very likely to prepare for the independent listing in the future.
Image source LG new energy official website
The voice just dropped. Just six months after LG New Energy set up the new company, it submitted a listing application to the Korea Stock Exchange, which was scheduled to be completed by the end of last year, but this listing plan was quickly broken by a large-scale recall.
At the end of July 2021, GM announced that it would recall nearly 69,000 Bolt electric vehicles produced in 2017-2019 nationwide due to production defects in the battery packs they were carrying that would cause the vehicle to catch fire, and the hidden battery packs would be replaced.
According to a report presented by the National Highway Traffic Safety Administration (NHTSA), the manufacturer of these battery packs is LG's new energy business unit.
As everyone knows, a month later, GM once again announced that due to the possibility of vehicle fires caused by high-voltage battery packs, the scale of the recall a month ago was expanded, in addition to the Bolt produced in 2017-2019, the brand models produced in 2019-2022 are all within the scope of the recall, a total of more than 73,000 vehicles.
According to GM's official statement, such a round of recalls will cause its own losses to reach $1 billion, and the Bolt model will be stopped indefinitely. In addition, because the large-scale recall of vehicle batteries was provided by LG Chem, GM also sought compensation from LG New Energy at that time.
Due to the recall, LG New Energy's listing plan was suspended. "We are reviewing the application but cannot provide information about the reason for the delay." The South Korean exchange has publicly stated that LG New Energy has been suspended.
Just when there was speculation about whether LG New Energy would be so shelved, LG Chem announced in October that it had reached an agreement with General Motors to compensate it for $1.9 billion, which became the highest amount of compensation since the establishment of LG Chem.
LG Chem reached a compensation agreement with GM, screenshot from GM's official website
Although LG New Energy lost $320 million in the third quarter of last year due to this loss, it may be worth it. Because of the compensation agreement with General Motors, LG New Energy's listing review was resumed.
At the end of last year, LG New Energy again announced its intention to raise about 12.8 trillion won (about 68.092 billion yuan) through an initial public offering (IPO) on the Korea Stock Exchange.
It should be noted that LG New Energy's listing today is only one year since it was split from LG Chem. Because of this, in the industry's view, the independent listing of LG New Energy may be something that LG Chem must complete.
It is not surprising that there is such a feeling.
On the power battery track, LG Group is a "forerunner". In the early 1990s, with the development of 3C products such as mobile phones, LG saw the development opportunities of lithium battery products on these tracks, and began to lay out lithium batteries in 1995, but it was not until the beginning of 2000 that its lithium battery products really landed, and LG Chem was also split off to operate separately.
Around 2007, with the development of new energy vehicles around the world, LG Chemical also expanded its lithium battery business from mobile phone 3C electronic products to the power battery field, and began to supply local car companies such as Hyundai Motor, and formed a certain influence on a global scale.
But in 2011, with the establishment of a battery manufacturer called "Ningde Era" and receiving battery orders from established car manufacturers such as BMW and Mercedes-Benz the following year, NINGDE Era quickly ran to the front of LG Chem and became a "brother" in the global power battery track.
According to the data of the Prospective Industry Research Institute, in the 2019 power battery manufacturers installed capacity market share ranking, the Ningde era ranked first with 28.2%, and LG Chem lagged behind the Ningde era with 10.3%.
But by 2020, LG Chem had surpassed the Ningde era. According to SNE Research statistics, in the total installed capacity ranking of global power battery manufacturers from January to July 2020, LG Chem ranked first with a market share of 25.1%, and CATL ranked second with 23.8%.
From January to July 2020, the total installed capacity share of global power battery manufacturers accounted for,
The data comes from SNE Research, a mapping of connected travel
Due to the supremacy of the Ningde era on the global power battery track, LG Chem's surpassing of the Ningde era at that time became the focus of attention in the industry, and LG Chem was also marked with a highlight.
But what LG didn't expect was that such highlights didn't last long.
In August 2020, according to SNE Research data, ningde era returned to the world's first position with a 25.9% share of power battery installed capacity in that month, and LG Chem fell back to second place again. For this result, LG Chem is naturally not satisfied, so much so that this month put forward the slogan of "the global market share surpassed the Ningde era and became the world's first".
But compared with the transcendence two years ago, LG Chem wants to surpass the Ningde era again, and there is not much help left.
2
LG Chem, which has lost its "helper", has been lost
It is undeniable that the official commissioning of Tesla's Shanghai factory at the end of 2019 has become a landmark event.
From the perspective of the domestic new energy automobile industry, with the commissioning of Tesla's Shanghai factory, it means that Tesla's "catfish" officially entered the domestic market; at the same time, "Wei Xiaoli" and other new car-making forces, Geely, BYD and other independent car companies will also compete with Tesla's domestic models. As a result, the domestic new energy automobile industry at that time became noisy.
At the same time that everyone is looking at the domestic new energy automobile industry, the pattern of the power battery track is also changing as Tesla enters the domestic market.
As mentioned above, LG Chem, the "perennial second oldest" in the total installed capacity ranking of global power battery manufacturers from January to July 2020, achieved a counterattack and once surpassed the Ningde era to the top position, which has a lot to do with Tesla's help.
According to Wired Travel, as early as 2019, LG Chem reached an agreement with Tesla to supply batteries, according to the agreement when Tesla's Shanghai factory was put into production, the former supplied battery products for it; Tesla also announced in August of that year that the domestic Model 3 would purchase LG's batteries.
Tesla Model 3, image source Tesla official micro
This news temporarily stirred up thousands of waves in the domestic new energy market, after all, this means that Panasonic is no longer Tesla's only battery supplier, but also represents LG Chem officially entered the Tesla supplier list.
In order to ensure the normal supply of Tesla models, LG Chem invested 1.2 trillion won (about $1.025 billion) in 2019 to expand production capacity at the cylindrical battery factory in Nanjing Xingang, and said that the batteries at this factory will be supplied to Tesla's Shanghai factory.
By 2020, LG Chem not only became a battery supplier to Tesla's Chinese factory, but also became the exclusive battery supplier of Tesla China in February of that year, so that in the month LG Chem supplied domestic Model 3 battery installed capacity reached 201.92 MWh, and in the previous month, the installed capacity was only 54.39 MWh, an increase of 271.2% month-on-month.
As we all know, with the listing and mass production of Tesla's domestic Model 3, it once became a popular model in the domestic new energy vehicle market. According to the data of the Association of Automobile Associations, in February 2020, Tesla's domestic Model 3 sales were 3900 vehicles, which has ranked first in the domestic new energy model sales.
By the following month, the sales of this model reached 10,160 units, an increase of 160.51% over February, and after that, except for April 2020, the sales of domestic Model 3 were more than 10,000 units. With the rapid growth of domestic Model 3 sales, Tesla's LG Chem has naturally been greatly assisted in the installed capacity of batteries.
In addition to Tesla, there are other "helpers" to help LG Chem surpass the Ningde era.
In the first half of 2020, in addition to the Chinese market, the European new energy vehicle market became the largest market for global new energy vehicle sales at that time, with sales reaching 401,000 units, compared with less than 400,000 domestic sales in the same period.
In the European new energy market in the first half of 2020, the best-selling models were the Renault Zoe, Volkswagen e-Golf and Audi e-tron models, with sales of 36,506 units, 17,639 units and 13,538 units, respectively. It should be noted that these models have one thing in common - they are equipped with LG Chem's battery packs.
This means that the popularity of these models in the European new energy vehicle market has also promoted the growth of LG chemical battery installed capacity to a certain extent, so as to increase its share in the global power battery market.
Because of this, for LG Chem to surpass the NINGD era in terms of installed capacity in the first half of 2020, SNE Research has said that it is mainly due to the good performance of domestic Tesla Model 3, Renault Zoe EV and Audi e-tron models.
But these "helpers" will not always be clustered around LG Chem.
Just after LG Chem surpassed the Ningde era, the latter quickly "held hands" with Tesla. At the end of June 2020, CATL issued a statement saying that it had signed an agreement with Tesla to start supplying lithium iron phosphate batteries for Tesla's China factory in July of that year, and the agreement was valid until June 30, 2022.
CATL reached a supply agreement statement with Tesla, screenshot from the announcement
After this news was reported by the media, it also caused a sensation in the domestic new energy automobile industry, because it meant that the battery manufacturers supplying Tesla China were not only LG Chem, but also its biggest rival, Ningde Era, and also ate the cake. As a result, after the Ningde era began to supply domestic Model 3, it quickly surpassed LG Chem and returned to the top of the global power battery installed capacity.
The roof leaks are even rainy, and since last year, many car companies have abandoned LG Chem.
Among them is the first modern car. In February last year, Yonhap News Agency reported that CATL had received orders from Hyundai Toyo to supply power batteries to two models built on its E-GMP platform, while the original supplier, LG Chem, was abandoned.
The reason behind this may be due to the spontaneous combustion of modern cars in the industry. Since 2018, Hyundai Motor has launched the pure electric model KONA to the global market as its main weapon in the layout of the new energy market. But since the launch of this model, there have been at least 15 spontaneous combustion incidents as of 2021, and this model is equipped with LG Chem's battery pack.
As everyone knows, two months later, according to a person familiar with the matter quoted by Autohome, "when LG Chem executives went to Volkswagen headquarters in Germany to discuss the next step of technology for battery cooperation, they were rejected by Volkswagen." ”
The reason for the refusal to cooperate may be because in 2019, LG Chem threatened volkswagen to interrupt the supply of batteries, and the contradiction between the two has emerged. Similar to Hyundai, just after Volkswagen rejected LG Chem, catheter replaced LG Chem as Volkswagen's battery supplier.
In addition to being excluded from the list of their respective battery suppliers by car companies, LG Chem is currently facing the challenge of self-developed batteries by car companies.
Tesla took the lead, releasing its new battery plan on the "Battery Day" in September 2020, and said that it would mass-produce around 2023; subsequently, Weilai, GAC Aeon and other car companies also released their own new battery plans last year. Wired travel has been in "Tesla, Weilai, GAC's 1000 km battery, is it a real technology or a new gimmick?" This is described in detail in the article.
Tesla wuji ear new battery, picture source Tesla official micro
Even volkswagen, a veteran car company, released its self-developed battery plan on "Power Day" last March, and said that it would launch a standard battery next year to supply batteries for its models.
From the abandonment of car companies to the self-developed batteries of car companies, these car companies that were once "helpers" have gradually moved away from LG Chem. In such a situation, LG Chem wants to surpass the Ningde era again, it is difficult to get the help of these "helpers", so that LG Chem can only put its hopes into the market.
3
Subsidiaries independent listing, LG Chem can threaten the Ningde era?
Since the Ningde era successfully regained the position of "one brother" in the second half of 2020, a certain gap has been opened with LG Chem.
According to the latest data released by SNE Research, from January to November 2021, catheter era ranked first in the global power battery track with an installed capacity of 79.8GWh, while LG Chem followed the CATL era with an installed capacity of 51.5GWh.
In terms of global power battery market share, CATL also ranked first in the world with 31.8%, while LG Chem ranked second with 20.5%.
The gap between the installed capacity of the Ningde era and LG Chem is more obvious in the domestic power battery market.
Recently, the Power Battery Innovation Alliance announced the installed capacity of domestic power batteries last year, of which the Ningde era won half of the entire industry with an installed capacity share of 52%, ranking behind it are BYD, AVIC lithium battery and Guoxuan Hi-Tech and other domestic power battery manufacturers.
For LG Chem, it ranked 5th in the industry with only 4% of the domestic power battery installed capacity last year, and the market share gap with the Ningde era in the first place even reached 12 times. This means that the strength of the NINGDE era is superior to LG Chem, both domestically and globally.
In 2021, the share of domestic power battery installed capacity will account for the proportion,
The data comes from the Power Battery Innovation Alliance, which connects the travel mapping
But that doesn't mean LG Chem lost the opportunity to challenge the CATL era.
If you look at the production capacity of the two, as of June 2021, the production capacity of power batteries and energy storage systems in the Ningde era is 65.45GWh, and the production capacity under construction is 92.5 GWh, a total of 157.95 GWh. According to the prospectus submitted by LG New Energy, as of the end of September 2021, it has a battery production capacity of 70GWh in Europe, 62GWh in China, 18GWh in South Korea and 5GWh in the United States, totaling 155GWh.
From the perspective of capacity distribution, the production capacity production layout of the Ningde era is basically located in China and other places, such as Fujian, Jiangsu, Qinghai and Sichuan provinces; in contrast, LG Chemical's production capacity is distributed in the global scope, such as in South Korea, China, the United States and Poland and other countries have layouts.
This means that although the Ningde era far surpasses LG Chem in terms of installed capacity, the gap between LG Chem and the Ningde era is not large in terms of global production capacity, and even in terms of capacity distribution, the former has more advantages than the latter.
Perhaps because of this, LG Chem has the confidence to say the slogan of "having the opportunity to surpass the Ningde era". In order to achieve this goal, LG Chem will aim the main direction of attack at the "short board" of the Ningde era - production capacity.
According to LG New Energy's listing prospectus, in addition to a part of the funds raised through the listing, in addition to spending part of the funds for research and development of new products and improving product quality and technology, the remaining funds will be used to expand their own production capacity, and these expanded production capacities are distributed in Poland, China and the United States.
Among them, for the Polish battery factory, LG Chem has invested 23.448 billion yuan, and will invest 5.971 billion yuan in the future; for the Michigan battery factory and the Ultium Cells battery factory in the United States, LG New Energy has invested 3.109 billion yuan and 4.802 billion yuan respectively, and will invest 8.639 billion yuan and 24.310 billion yuan respectively in the future.
In addition to overseas markets, LG Chem's investment in the Chinese market is also underway. According to the prospectus, LG New Energy has invested 16.123 billion yuan and 8.501 billion yuan in China's Nanjing Battery Factory and China's Binjiang (Nanjing) Battery Factory, and will invest 7.383 billion yuan and 2.531 billion yuan respectively.
According to LG Chem's plan, it is expected that by 2025, the production capacity of the three major regions of North America, Europe and China will reach at least 160GWh, 100GWh and 60GWh, respectively, and the total capacity will reach 342GWh.
In addition to actively expanding production capacity, LG Chem is also laying out on the upstream raw materials of power batteries.
In 2020, LG Chem and Weihua Co., Ltd. reached a cooperation agreement to purchase finely ground lithium hydroxide raw materials; in the same year, LG Chem also reached a long-term cooperation agreement with Chile's SQM, which will supply lithium carbonate raw materials to the former from 2021 to 2029.
At the same time, in order to ensure the supply of nickel, LG Chem also plans to invest $9.8 billion in Indonesia to build a factory to cover the upstream and downstream industrial chains such as nickel mining, refining and battery production.
The above series of actions are regarded by the industry as LG Chem's attack on the Ningde era, but in the industry's view, LG Chem and LG New Energy want to surpass the Ningde era in the future.
"First of all, from the perspective of the market value of the two, the Ningde era has exceeded more than 200 billion US dollars and is in stability, and for LG New Energy, although the market value after listing is close to 100 billion US dollars, due to the limited liquidity of the Korean exchange, its stock price and market value may have greater fluctuations after that." Liu Chang, an investor who has been paying attention to the field of new energy for many years, told Wired Travel.
Liu Chang also said that although the layout of LG New Energy in terms of production capacity, especially the global layout is more abundant than that of the Ningde era, the Ningde era has also stepped up the layout of overseas markets in the past two years, and is further enriching its own production capacity line, and is also laying out new product lines such as sodium batteries.
In September last year, CATL carried out a new round of fixed increase plans, according to the plan will raise 58.2 billion yuan, this money will be used for 7 projects a total of 137GWh power lithium batteries and 30GWh energy storage cabinet construction and expansion. CATL expects to add 240GWh of planned production capacity from 2022 to 2023, and the total production capacity will be close to about 600GWh by 2025, far exceeding LG Chem's planned production capacity in the same period.
The official public account of the Ningde era
In addition, CATL is also actively carrying out overseas layout. In November last year, CATL and YPF, a well-known lithium mining company in Argentina, began negotiations on a strategic partnership for lithium resources, and YPF President Pablo González said that he hoped to establish a good cooperative relationship with CATL." ”
The following month, CATL plans to invest 2 billion euros to build its first overseas factory in Poland, according to Asia Daily, which has visited towns such as Jawor in western Poland. In this news, CATL said it would not comment, but the industry believes that the credibility of this news is very large.
Now, LG Chemical LG Chem wants to surpass the goal of the Ningde era in the short term, which is difficult to achieve. But what is certain is that as power battery companies have expanded production and more car companies have developed batteries, the competition encountered by LG Chem in the future power battery battlefield will also be more intense.
Therefore, for LG Chem, perhaps only by listing LG new energy can we win more advantages in the future.
(At the request of the interviewee, Liu Chang is a pseudonym in the article.) ）