(Report Producer/Author: CITIC Securities, Yuan Jiancong, Wu Weichen, Teng Guanxing, Wang Hao)
Review: Analysis of the development path of power battery enterprises
Looking back at history, the development of power battery companies can be divided into three stages:
Product development stage: The development process is complex, testing the company's technical research and development strength. Power battery products have high technical barriers, the development process is complex, including product program design, production process control, quality inspection, after-sales service system construction and other links, which requires long-term know-how accumulation of enterprises. In some key links, such as battery materials, battery cells, modules, battery packs, battery management systems have high technical requirements, testing the technology and R & D capabilities of battery enterprises.
Production line (customer) verification stage: the verification cycle is long, and the customer stickiness is strong after the verification is passed. As the core component of new energy vehicles, power batteries need to be developed, produced and sold around the specific needs of customers with specific models, and only products that have passed customer verification can be assembled into vehicles of corresponding models. The safety, stability, consistency, and fast response capabilities of battery enterprise products require customer verification, and the verification cycle is long. However, after passing the verification, the oem generally does not easily replace the power battery supplier during the life cycle of the model, and the customer stickiness is strong.
Scale replication, resource layout stage: to meet customer needs, to ensure the supply of raw materials. After successfully passing customer verification with high-quality products, battery companies need to expand their production capacity accordingly to meet customer needs, and at the same time, based on the scale of production capacity, they continue to develop new customers and achieve positive feedback effects. At the same time of scale expansion, in order to resist the risk of fluctuations in raw material prices, ensure the supply of raw materials, and improve the level of profitability, battery companies usually layout upstream resources.
Taking the Ningde era as an example, the deep ploughing industry has finally become a leader for ten years. CATL times was born in 2011 from the consumer battery leader ATL power battery division, inheriting its advanced battery technology; after passing the CERTIFICATION of BMW and Yutong, it became its supplier and laid the foundation for rapid development; in 2017, it established a joint venture with SAIC Group, Times SAIC, and then successively established joint venture factories with Dongfeng, GAC, FAW and Geely to become the core supplier of the leading domestic OEMs; in 2018, the company was listed on the IPO and accelerated its layout on the production capacity side and the resource side; 2020 Became a Tesla power battery supplier. According to SNE statistics, from 2017 to 2020, CATL ranked first in the global power battery installed capacity for four consecutive years, and the global power battery installed capacity of THE CATL era reached 67.5GWh in January 2021, with a market share of 31%, an increase of 6pcts compared with 2020.
Looking back at the development process of the Ningde era, it has also roughly experienced three stages of product development, production line (customer) verification, scale replication and supply chain layout, and the Current Ningde era has entered the stage of large-scale release of power batteries and rapid increase in market share.
Power battery: accumulated over the years, is expected to usher in the harvest period
Analogous to the Ningde era, looking back at the development history of Ewell's lithium power battery business, we find that since the company entered the power battery field, it has gone through product development, production line (customer) verification and other stages, and the current point in time is in the stage of large-scale expansion of production capacity and the integration of upstream resources.
Product development: Multi-technology routes are parallel to meet the needs of rich application scenarios
Different routes have their own advantages and disadvantages, and diversified layouts are conducive to avoiding technical risks. Power batteries can be divided into ternary, lithium iron phosphate, lithium cobalt oxide batteries, etc. according to different cathode material systems, and can be divided into square, soft packs and cylindrical batteries according to different package shapes. Different technical routes of power batteries have their own advantages and disadvantages, corresponding to different application scenarios, battery companies on the battery route diversified technical layout, is expected to avoid the risk of technological change brought by a single technical route, enhance the competitiveness of enterprise products.
Multi-technology routes develop together, and power battery products are abundant. The company started with lithium primary batteries, and then gradually broadened the product categories, and gradually extended to consumer lithium batteries, power and energy storage batteries. 2015-2019 is the company's product development stage, the company does not gamble a single route, but lithium iron phosphate battery and ternary battery multi-system parallel, the development of products include square ternary, square lithium iron phosphate, soft package ternary and large cylindrical battery, can provide electric vehicles and energy storage and other new energy industries from the battery to the module, module to the system of complete product solutions, to achieve the vehicle power battery BEV, PHEV, HEV and MHEV full range of coverage.
Tesla leads, and the 4680 large cylindrical battery is expected to accelerate the introduction. Tesla first released the 4680 large cylindrical battery on Battery Day in September 2020, that is, a cylindrical battery with a single cell diameter of 46mm and a height of 80mm. According to the Tesla Battery Day announcement, through the use of non-polar ear and other technologies, compared with the previous 2170 battery, the performance of the 4680 large cylindrical battery has been significantly improved, which is reflected in the energy of the single cell can be increased by 5 times, the endurance can be increased by 16%, and the output power can be increased by 6 times. From the current progress, Tesla's 4680 battery production capacity is expected to begin to be released in 2022, benefiting from the Tesla demonstration effect, and the large cylindrical battery is expected to accelerate the introduction into the market.
The company's large cylindrical battery production capacity planning is clear, and the products have both safety and economic advantages. On November 5, 2020, Ewell Lithium Energy announced that its subsidiary Ewell Power signed a "Contract Letter" with the Jingmen High-tech Zone Management Committee to invest in the construction of a 20GWh large cylindrical battery project for passenger cars, and according to liu Jincheng, chairman of the company, the Jingmen large cylindrical battery project contains two sizes of 4680 and 4695, which may be the first mass production in the world and support international first-class customers. According to Dr. Gui Ke, head of the strategic work department of EWELL Power, at the CBIS2021 summit, the large cylindrical battery produced by the company has made the large cylindrical battery both safety and economy advantages through the optimization of the pole design, shell design, core design and cover design. In 2021, the company has successfully mass-produced iron-lithium version of the large cylindrical battery, and it is expected that the 46 series of ternary large cylindrical batteries will be mass-produced in 2022.
Continue to increase investment in research and development to ensure the smooth development of new products. In order to ensure the smooth development of multi-technology route battery products, the company has continuously increased R&D investment in recent years, from 2015 to 2020, the company's R & D investment increased from 0.7 billion yuan to 720 million yuan, and the CAGR reached 59% in the past 5 years, a significant increase. The proportion of the company's R&D investment in operating income has also shown an upward trend in recent years, with 9.1%/7.4%/8.9%/8.8% in 2018-2021H1 respectively, maintaining a leading level in the industry. It is expected that the company will continue to maintain a high level of R & D investment in the future and accelerate the process of new product development.
Attach importance to talent reserves and build a research and development team of 1,000 people. Since its inception, adhere to scientific and technological innovation as the core competitiveness of the enterprise, in addition to continuously increasing investment in the research and development of lithium battery business, the company also strives to build a thousand people R & D team, in recent years the number of company R & D personnel continues to grow, according to the company's annual report, 2018-2020 the number of R & D personnel are 1,178/1,443/1,751 people. According to the company's official website, the company cooperates with Wuhan University, Israel Store Dot and other universities and research institutions, and has a professional and technical consultant team composed of academicians of the two academies and experts at home and abroad, and the number of R & D personnel has exceeded 2,000+, which is in a leading position in the industry.
Establish a high-level research institute to accelerate the development of new products and new materials. The company strives to build a high-level research institute, by the company's founder and chairman Dr. Liu Jincheng personally as the dean, has built a number of laboratories and pilot lines, strengthen the transformation of achievements, and quickly respond to downstream needs. Relying on the Ewell Lithium Energy Research Institute, the company has made a series of valuable technological achievements in the development of new battery materials, breakthroughs in key process technology bottlenecks, and research on new batteries with high safety and high energy density, including: solid-state battery technology, dry electrode green manufacturing technology, etc.; technological breakthroughs have been made in lithium fluorocarbon batteries, further opening up new application fields of lithium batteries; and the development capacity of hydrogen energy and fuel cell core technologies has been constructed. (Source: Future Think Tank)
Customer verification: From commercial vehicles to passenger cars, from domestic to overseas, we continue to develop new customers
The products are gradually verified by key customers and continue to obtain customer fixed points. The company's early customers of power batteries are mainly commercial vehicles, and in 2017, it signed a cooperation agreement with Nanjing Jinlong to supply power batteries and module products; from 2018 to 2019, the company achieved breakthroughs in the field of passenger cars, gradually verifying international high-end customers such as Daimler and Hyundai Kia; since 2020, the company's customers have accelerated their breakthroughs and continued to harvest the fixed points of power battery suppliers of well-known domestic and foreign car companies such as BMW Brilliance, BMW, Jaguar Land Rover, Dongfeng Liuqi and other well-known domestic and foreign car companies. From commercial vehicles to passenger cars, from domestic to overseas, the company continues to expand its customer base.
Scale replication and resource layout: accelerated capacity expansion, supply chain integration
New energy vehicles have entered a stage of rapid development, and car companies with explosive models have a large demand for single products and sufficient production capacity of battery companies are important conditions for participating in competition. The company has successfully developed a variety of battery products with different technical routes, and has successively passed the verification of first-class large customers at home and abroad, which requires large-scale production capacity to meet customer needs and enhance market competitiveness.
Capital expenditures have increased rapidly, and fixed assets + projects under construction have risen sharply. Since 2015, the company's capital expenditure has increased significantly, and in the first three quarters of 2021, the company's capital expenditure has reached 3.69 billion yuan, which is expected to be mainly for the construction of power battery production capacity. In addition, since 2015, the company's fixed assets and projects under construction have grown rapidly, from 600 million yuan in 2015 to 9.2 billion yuan at the end of the third quarter of 2021, considering that the company's capital expenditure in recent years has mainly invested in power batteries, and it is expected that fixed assets and projects under construction are mainly power battery production capacity.
The current production capacity is about 43GWh, and the total planned production capacity is expected to be about 245GWh. As of December 2021, the company already has about 20GWh iron lithium battery production capacity, 20GWh soft pack ternary battery production capacity, 2.5GWh square ternary battery production capacity, a total of about 43GWh power battery production capacity. In the past year, the company's production capacity has accelerated expansion, and new large-scale power battery production projects have been announced, including Jingmen 152GWh power energy storage battery project, Chengdu 50GWh power energy storage battery project, etc. We expect the company's power battery production capacity to reach 140GWh by 2023, according to the expansion announcement, it is expected that the company's long-term total planned production capacity will be about 245GWh.
Upstream raw material prices have risen, and the gross profit margin of battery companies has been under pressure. Since the second half of 2020, the price of raw materials upstream of power batteries has risen significantly, and the four main materials are positive electrode, negative electrode, diaphragm and electrolyte from the beginning of 2021 (as of 2022-1-20) The price increases are: three yuan 811 type (53%), three yuan 622 type (87%), lithium iron phosphate (162%), mid-range human graphite (37%), high-end artificial graphite (6%), 9μm wet base film (13%), 7μm wet base film (0%), three Meta-cylindrical electrolyte (220%), lithium iron phosphate electrolyte (176%), 6F (402%). The rise in raw material prices has put pressure on the gross profit margin of power battery companies, and the gross profit margins of major power battery companies have declined to varying degrees since 2021.
Increase the layout of resources and accelerate the creation of integrated advantages. Since 2021, the company has continued to expand the integrated layout of battery material links, through the acquisition of the equity of Jinkunlun and Dahua Chemical, and the joint venture with Jinkunlun to lay out upstream lithium resources; the joint venture with German Nano and Bertrui to lay out the positive electrode material link; the joint venture company with Enjie Co., Ltd. to lay out the diaphragm link, the joint venture with Zhongke Electric, the layout of the negative electrode material link, etc.; and the cooperation with Huayou Cobalt industry to lay out the upstream nickel and cobalt resources. The company has completed the layout of nickel,cobalt lithium salt, positive electrode, negative electrode, electrolyte, precursor, diaphragm, etc., to further improve the layout of the battery material link, but also to make up for its own shortcomings in the field of material development relative to the absolute leader of the industry, it is expected that the follow-up company may continue to expand the strategic layout of other battery material links, and further consolidate the integration advantages.
Future outlook: The power business is expected to usher in a harvest period
The power business has grown rapidly and the proportion of revenue has continued to increase. From the perspective of revenue, the company's power battery business grew rapidly, and in the first half of 2021, the company's power battery business achieved revenue of 3.89 billion yuan, +186% year-on-year, mainly due to the continuous release of new production capacity of soft pack ternary batteries, and the rapid growth of shipment scale. From the perspective of revenue structure, the proportion of power batteries continues to increase, 2019/2020/2021H1 The company's power battery business revenue accounted for 33%/50%/59% respectively. With the further release of production capacity, it is expected that the company's power battery business will continue to maintain a high growth rate in the future, and the proportion of revenue is expected to further increase.
Shipments grew rapidly and the market share was further enhanced. From the perspective of the domestic market, in recent years, the company's power battery installed capacity as a whole to maintain a growth momentum, according to GGII data, the company's domestic power battery installed capacity in January-November 2021 was 1.95GWh, an increase of 91% year-on-year. From the perspective of the global market, according to SNE data, the company's global power battery installed capacity reached 3.6GWh from January to November 2021, ranking ninth in the world, with a market share of 1.4%. In terms of battery types, according to GGII data, in recent years, the company has been ranking at the forefront of domestic LFP power battery installed capacity, and it is expected to further increase its market share with the large-scale release of LFP production and supporting passenger car customers in the future.
After completing the layout of technology, customers, production capacity and resources, the power battery is expected to usher in the harvest period. Combing the company's power battery business development history can be found that the company has established advantages in technology, customers, production capacity and other advantages through years of accumulation, accelerated global support, and actively laid out the upstream industrial chain, covering nickel and cobalt lithium resources, positive electrode, negative electrode, precursor, diaphragm, electrolyte and other links, and continue to obtain domestic passenger car customers ternary and lithium iron phosphate battery fixed point. The company's power battery business growth certainty is relatively high, is expected to enter the volume growth stage, ushering in the harvest period.
Energy storage batteries: demand outbreak, open up long-term growth space
The energy storage market is developing rapidly and is about to usher in an explosive period
"Photovoltaic" + "energy storage" is the main application scenario of household energy storage. The electrical energy is transmitted to the control system by the photovoltaic cell arranged on the roof, and the control system will supply the electrical energy to the household appliances through the inverter or directly transmit the electrical energy to the energy storage battery storage; during the peak period of electricity consumption, the energy storage battery will supply energy to the household appliances through the control system and the inverter. When the energy storage battery storage energy is greater than the demand, the user can choose to sell part of the power to the grid system. Some control platforms support virtual grids, which can skip the grid to achieve power sharing between users. The main investments in household energy storage include photovoltaic cells, energy storage batteries, inverters and control platforms.
On the base station side, the macro base station contains energy storage batteries, which act as an emergency power source for the base station and undertake the role of peak shaving and valley filling. Due to the weak penetration of 5G base stations, macro base stations are generally used in combination with micro base stations. Micro base stations can be further subdivided into micro base stations, leather base stations and flying base stations to achieve a small range of signal coverage in different scenarios, and micro base stations generally only use direct power supply methods and are not equipped with energy storage batteries. Macro base station single wave power up to 12.6W or more, can achieve signal coverage within 200m range, the interior is equipped with energy storage batteries can (1) store electrical energy, in the urban grid blackout as emergency energy, support about 3-4 hours of base station work; (2) can also be used to shave peaks and valleys, that is, when the grid load is low, supplement the base station power supply at high load, maintain the normal power of the base station, and reduce the adverse impact of power grid fluctuations.
Grid-side energy storage is mainly used for peak shaving and valley filling in the power grid. At the trough of electricity consumption, the power grid transmits the electricity to the user side and transmits the excess power to the energy storage battery system through the power conditioning system, while the photovoltaic energy storage system transmits the electrical energy to the energy storage battery system storage; at the peak of electricity consumption, the energy storage battery system and the photovoltaic energy storage system transmit the stored electricity to the user side through the power regulation system.
It is estimated that the compound annual growth rate of global energy storage installed capacity will be about 61% in 2020-2027. Benefiting from the rapid growth of demand for rich superimposed terminals in application scenarios, the global installed capacity of energy storage batteries in 2020 will be about 28GWh, and we expect that by 2027, the global installed capacity of energy storage batteries will be about 780GWh, corresponding to a compound growth rate of 61% in 2020-2027, and the industry installed capacity will grow rapidly.
The high cycle and low cost characteristics of lithium iron phosphate batteries have obvious advantages in the field of energy storage. Energy storage field on the battery cycle performance and cost requirements are more stringent, lithium iron phosphate battery cycle life of more than 2000 times, according to the company's official website information, the company's energy storage iron lithium products can do more than 3500 cycles. In addition, the current average price of lithium iron phosphate battery industry is about 0.64 yuan / Wh (excluding tax), which is significantly lower than the price of ternary batteries of 0.79 yuan / Wh (excluding tax). We expect that with the growth of overseas sales of domestic lithium iron phosphate batteries, energy storage batteries may be completely replaced by lithium iron phosphate batteries.
The company actively lays out the energy storage business, and accelerates the development of products, customers and production capacity
The company laid out the energy storage business earlier, and its products cover various application scenarios such as power, communications, and household use. Since 2014, the company has been forward-looking layout energy storage business, is committed to providing the community with high safety, cost-effective energy storage lithium-ion battery system, the company's energy storage battery products have covered the power generation side, transmission side and user side, data room, communication base station and electric ships and other application scenarios. With integrated products such as 1500V liquid-cooled energy storage integrated system for power, 48V battery system for communication series, 48V low-voltage and 200V high-voltage battery system for home energy storage, the company has become the world's core energy storage system solution provider.
The company's lithium iron phosphate battery has excellent performance, and its products have passed a number of professional certifications at home and abroad. According to the company's official website data, the company's lithium iron phosphate battery cycle times can be more than 3500 times, the performance is superior. In March 2014, the company's communication energy storage product "EVE-4850" obtained the product certification certificate issued by the Thiel Certification Center, with the qualification of relevant departments to bid; at the end of 2016, the company obtained the China Tower Company headquarters collection qualification certification, becoming a supplier of lithium iron phosphate battery in China Tower; in May 2021, Ewell Power LF280K cell obtained the UL9540A certificate awarded by UL Company, UL is a world-renowned testing and certification body, The UL9540A report issued by the United States has been widely accepted and recognized by regulatory authorities across the United States, and the acquisition of this certificate by Ewell Power can effectively reduce the risk of customers in the approval of licenses by AHJ regulatory authorities across the United States, and better explore the international energy storage market.
Continuous energy storage orders have been won, and the customer relationship is stable. Since the layout of the energy storage battery business in 2014, the company has successively won large customer orders: 1) communication energy storage: the company has successively won customer orders from Tianjin Unicom, Guangdong Tower, China Mobile, etc.; 2) User energy storage: The company participated in the household energy storage company Wotai Energy (currently holding 10.68%) in 2016, Wotai Energy has a deep layout in the European and Australian household energy storage market, and the company is expected to expand the market in the field of home energy storage through its channel advantages; 3) Power energy storage: the company 2018 Won the bid for the Henan power grid 100 MWh energy storage station project, and the winning bid amount was 9.99 million yuan. At present, the company has established long-term and stable cooperative relations with first-class automobile manufacturing enterprises at home and abroad, foreign communication operators and leading domestic communication equipment enterprises, and the huge market demand is expected to promote the rapid development of the company's energy storage business.
Together with Linyang Energy, the construction of iron-lithium energy storage battery production capacity is accelerated. On June 10, 2021, the company announced that it intends to establish a joint venture with Linyang Energy to invest 3 billion yuan to build an energy storage battery project with an annual output of 10GWh, of which Ewell Power (a wholly-owned subsidiary of EWELL Lithium Energy) holds 65% of the shares and Linyang Energy holds 35% of the shares. We expect that the joint venture company is mainly oriented to power-side energy storage, which can give full play to the company's energy storage battery manufacturing advantages and Linyang energy power station channel advantages to jointly promote the rapid development of energy storage business. By the end of 2021, the company's existing iron lithium energy storage battery production capacity of about 10GWh, the company is currently accelerating the construction of production capacity based on the order in hand, it is expected that the company's 2023 iron lithium energy storage battery production capacity will reach 20GWh, shipments are expected to achieve substantial growth. (Source: Future Think Tank)
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank].