China lithium battery cathode material industry market research and "14th Five-Year" development trend research report

Lithium battery cathode material industry technical level characteristics and prospect trend barriers

Lithium battery belongs to a kind of secondary battery, compared with other secondary batteries (nickel cadmium, nickel-metal hydride, lead battery, etc.), lithium battery has the advantages of high working voltage, large energy density, long cycle life and no heavy metal pollution, widely used in consumer electronics, power batteries and energy storage batteries and other fields.

Lithium batteries are mainly composed of cathode materials, negative electrode materials, separators, electrolytes and battery housings. The cathode material directly determines the performance of lithium battery energy density, safety, service life, charging time and temperature adaptability, which is the decisive factor for the electrochemical performance of the battery. In addition, the cost of cathode materials also has a key impact on the overall cost of lithium batteries. Therefore, cathode materials have a guiding role in the development of the lithium battery industry.

China lithium battery cathode material industry market research and "14th Five-Year" development trend research report

Source: Compiled by Puhua Youce

1. The technical level and characteristics of lithium battery cathode material industry

(1) Lithium cobalt oxide technology level and characteristics

Lithium cobalt oxide is mainly used in the field of consumer electronics, with the promotion and application of 5G technology and the continuous emergence of new electronic products, due to the demand for long battery life of lithium batteries and the limitation of battery volume, consumer electronic products such as smart phones and tablets have further improved the requirements for battery energy density. The cathode material is the provider of lithium sources for lithium batteries, which fundamentally determines the specific capacity and energy density of the battery. In the future, the technical route of lithium cobalt oxide products will develop in the direction of high voltage and high compaction, and high voltage lithium cobalt oxide above 4.45V will gradually become the mainstream products developed by lithium battery cathode material enterprises.

(2) The technical level and characteristics of ternary cathode materials

Ternary materials are mainly used in the new energy vehicle battery market, with the tightening of the subsidy policy quota for new energy vehicles since 2017, the technical standard requirements have gradually increased, and the demands of power battery manufacturers to improve the energy density of lithium batteries have risen. In the ternary material, the functional positioning of the three elements is different, nickel plays a role in improving the energy density of the material in the ternary material, and increasing the relative content of nickel in the ternary material is the key to improving the energy density of the battery. From the cost point of view, increasing the nickel content and reducing the cobalt content of ternary materials is also a necessary way to reduce the overall cost of ternary materials.

High nickelization is the mainstream technical route for the future development of ternary materials. High nickel ternary materials mainly include nickel cobalt manganese and nickel cobalt aluminum two series, the future development trend of ternary materials is to continuously improve the content of nickel (nickel molar content ≥ 80%) to improve its specific capacity, while through doping, coating and surface treatment and other technical means, improve its cycle performance.

3. The main opportunities facing the industry

(1) The downstream application field is further expanded to generate market demand

In addition to power batteries and consumer batteries, because China's energy storage battery industry is still in the early stage of development, energy storage battery demand accounts for less than 10% of China's total lithium battery demand, and the energy storage battery industry has not yet formed a scale effect. Due to cost considerations, energy storage battery companies tend to choose low-cost lithium iron phosphate as the cathode material. However, with the development of China's energy storage market, the application scenarios of energy storage batteries will further increase, coupled with the continuous decline in the cost of ternary cathode materials, ternary cathode materials are expected to expand the penetration rate in the field of energy storage batteries with their comprehensive performance advantages.

(2) Energy-saving and environmental protection policies are increased to promote the layout of new energy vehicles worldwide

Problems such as global energy supply and demand imbalance and environmental pollution are prominent, and as a key part of creating an energy-saving and environmentally friendly society, the development of new energy vehicles has become a top priority. Since 2015, as the most representative type of new energy vehicles, pure electric vehicles have been strongly recognized and supported by governments and car companies, and have obtained broad development space and huge development dividends, for example, the Japanese government plans to increase the proportion of new energy vehicle sales to 70% of total new car sales by 2023; Norway plans to ban the sale of fuel vehicles by 2025; and the United Kingdom, Denmark, Germany, Iceland, Slovenia, Sweden and the Netherlands plan to ban the sale of fuel vehicles by 2030. For example, Volkswagen Group implements the "goTOzero" strategy, planning to reduce the carbon emissions of the whole life cycle of the group's products by 2025 compared with 2015, and achieve carbon neutrality in the global market by 2050; Mercedes-Benz Automobile Group issued the "2039 Vision", planning to account for more than half of the new sales of passenger cars by 2030. By 2039, we will aim to achieve carbon neutrality in our lineup of new passenger cars.

The promotion of energy conservation and environmental protection policies around the world The increasing demand for new energy vehicle power batteries will promote the market demand for ternary cathode materials.

(3) The adverse impact of the subsidy policy on the new energy automobile industry has gradually weakened, and the development momentum of new energy vehicle production and sales is good

The automotive industry has a major driving role in the development of the national economy, after years of rapid development, in recent years, the overall growth rate of the domestic automotive industry has slowed down, according to the data of the China Association of Automobile Manufacturers, in 2020, China's automobile production and sales of 25.225 million vehicles and 25.311 million vehicles, down 2.0% and 1.9% year-on-year. With the advancement of new energy and intelligent technology, a large number of emerging car manufacturers have entered the automotive industry, and the emergence of new products, new technologies, new services and new models has accelerated the transformation of the automotive industry.

According to the China Association of Automobile Manufacturers, from 2015 to 2018, the sales of new energy vehicles in mainland China increased significantly from 331,000 units to 1.256 million units, with an average annual compound growth rate of 56.0%. Since 2019, due to changes in policies related to the new energy vehicle industry, especially the decline of the subsidy policy for new energy vehicles, it has had a greater impact on the new energy vehicle market. In 2019, new energy vehicles sold 1.206 million units, down 4.0% year-on-year. However, with the stabilization of the epidemic, the sales of new energy vehicles have picked up significantly in the second half of the year, with Sales of New Energy Vehicles in China reaching 1.367 million units in 2020, an increase of 13.3% year-on-year, and the new energy industry has gradually recovered. In 2021, the sales volume of new energy vehicles in the mainland reached 3.521 million units, which has exceeded the number of domestic calendar years.

(4) The national industrial policy has promoted the mainland new energy automobile industry to enter a new stage of accelerated development, bringing large-scale market space for ternary materials

Since 2012, the state has successively issued industrial policies such as the "Energy-saving and New Energy Vehicle Industry Development Plan", "Guiding Opinions on Accelerating the Promotion and Application of New Energy Vehicles", "The 13th Five-Year Plan" National Strategic Emerging Industry Development Plan" and "Medium- and Long-term Development Plan for the Automobile Industry", which clearly point out that new energy vehicles are the main strategic directions for the transformation of the mainland automobile industry. In November 2020, the mainland issued the "New Energy Vehicle Industry Development Plan (2021-2035)", which is expected to reach about 20% of the total sales volume of new energy vehicles in 2025. According to the statistics of the China Association of Automobile Manufacturers, the sales volume of new energy vehicles in mainland China will account for only 5.40% of all automobile sales in 2020, and new energy vehicles are still in the initial stage of development, and it is expected that there will be a lot of market improvement space in the future.

In July 2021, the China Association of Automobile Manufacturers issued the "14th Five-Year Plan" Automotive Industry Development Proposal, summarizing the current development status of the mainland's new energy automobile industry as "laying a solid foundation for new energy vehicles and entering a new stage of accelerated development." By the end of 2021, the number of new energy vehicles in the country will reach 7.84 million, accounting for 2.60% of the total number of vehicles, of which 6.4 million pure electric vehicles, accounting for 81.63%, production and sales, sales and ownership have ranked first in the world for six consecutive years. The world's most advanced technologies have gathered in China, and the fields of R&D system construction, industrial supply chain cultivation, and derivative business expansion have been comprehensively expanded. ”

The future development goal is proposed: "The development of the new energy automobile industry is marketized." The new industrial ecology centered on the new energy automobile industry has been gradually completed, the common bottleneck technology has been broken, the brand quality has strong international competitiveness, the infrastructure system has been continuously improved, the product economy and convenience of use have been continuously improved, the market environment has been greatly improved, and the product penetration rate has been significantly improved. By 2025, new energy vehicle sales will account for more than 20%, and the average electricity consumption of new pure electric passenger cars will drop to 12.0 kWh/100 km. ”

4. The main trend of the industry

(1) The future development trend of lithium cobalt oxide industry

In the field of high-end 3C electronic products, lithium cobalt oxide has the advantages of high energy density, high discharge voltage, good filling, good cycle performance, etc., to meet the market requirements of high-end 3C electronic products such as smart phones, notebook computers, tabletS, etc. in terms of battery volume and energy density; at the same time, consumers of high-end 3C electronic products have low cost sensitivity to battery cathode materials, so in the field of high-end 3C electronic products, lithium cobalt oxide will continue to maintain its dominant position and is difficult to be replaced by other cathode materials. With the demand for smartphone replacement brought about by the application of 5G communication technology, and the emergence of new consumer electronic products such as consumer drones, electronic cigarettes and portable electronic devices, the market demand for lithium cobalt oxide will continue to grow steadily.

In the field of low-end 3C electronic products, due to the price advantage of ternary cathode materials and the improvement in cycle stability, thermal stability and safety performance, while the requirements of low-end 3C electronic products for battery volume and energy density are relatively low, ternary cathode materials gradually replace lithium cobaltate, occupying a certain share in the low-end 3C electronic products market such as charging treasures, electric toys, and electric home products.

(2) The future development trend of the ternary material industry

1) Ternary materials have become one of the mainstream cathode materials in the field of pure electric passenger cars

In the choice of cathode materials, low cost and high safety have always been important factors for power battery companies to consider, therefore, in the early stage of the development of China's new energy pure electric vehicle industry, lithium iron phosphate with cost and maturity advantages is the main cathode material for power batteries.

Under the background of the acceleration of the commercialization of new energy pure electric vehicles, pure electric passenger cars have gradually occupied a dominant position in China's pure electric vehicle market, leading the development of the new energy pure electric vehicle industry. Compared with other types of pure electric vehicles such as buses and logistics vehicles, pure electric passenger cars have higher requirements for endurance and charging efficiency, and the necessity of using high specific capacity and high magnification power batteries and corresponding cathode materials is highlighted. Compared with lithium iron phosphate, ternary materials have the advantages of high specific capacity, high energy density and high magnification, which can meet the requirements of pure electric passenger car power batteries. In addition, with the gradual maturity of ternary material technology, the market price of ternary materials is gradually reduced, and the cost advantage of lithium iron phosphate relative to ternary materials is weakened. For the comprehensive consideration of cost and performance, power battery companies have strengthened their willingness to choose ternary materials as battery cathode materials, and ternary materials have become one of the mainstream cathode materials in the field of pure electric passenger cars.

In the future, in the field of power batteries, due to the different performance characteristics of lithium iron phosphate and ternary materials, the two major technical routes will be supported at the same time and applied to different scenarios. Lithium iron phosphate batteries have the advantages of high safety and long cycle life, which can meet the needs of pure electric commercial vehicles with higher requirements for safety and operation frequency; in the field of pure electric passenger cars with higher space and weight requirements, high energy density ternary batteries can achieve longer cruising range and are more suitable for individual consumer needs.

2) The decline in subsidies for new energy vehicles and the decline in cost demand have promoted the development of ternary materials to the high-nickel route

Since the state began to promote new energy vehicles in 2009, the mainland has been implementing the new energy vehicle subsidy policy, and with the development of the new energy vehicle market, the state has also adjusted the subsidy policy. Overall, the subsidy policy shows a trend of tightening the amount and gradually increasing the requirements of technical standards, and the subsidy policy has been linked to energy density since 2017. In 2017, the mainland government successively issued the Action Plan for Promoting the Development of the Automotive Power Battery Industry and the Medium- and Long-term Development Plan for the Automotive Industry, and formulated the development goals of high-energy density power batteries. In 2018, the subsidy policy encouraged models with high mileage, high energy density and low energy consumption, and the subsidies for models with high mileage and energy density did not fall but rose, and the subsidy policy began to change to support the strong and the excellent, which is conducive to eliminating backward production capacity in the industry and improving the concentration of the industry. In 2019, the subsidy policy was introduced, and pure electric vehicles with a range of 250 kilometers and an energy density of less than 125Wh/kg no longer enjoy subsidies. In the 2020 subsidy policy, technical indicators such as energy density of power battery systems are not adjusted, and the threshold for the energy consumption of new energy vehicles and the pure electric mileage of pure electric passenger cars is moderately increased. In 2021, the subsidy policy will maintain the current purchase subsidy technical indicator system framework and threshold requirements unchanged, and the subsidy standard for new energy vehicles will decline by 20% on the basis of 2020, but the subsidy standard for electric vehicles that meet the requirements in public transportation and other fields will be reduced by 10%.

Due to the continuous improvement of the requirements of pure electric vehicles for mileage, the demands of power battery manufacturers to improve the energy density of lithium batteries have risen. In ternary materials, the functional positioning of the three elements is different, and nickel plays a role in improving the energy density of the material in the ternary material. Power battery energy density is the main factor affecting the endurance of pure electric passenger cars, and increasing the relative content of nickel in ternary materials is the key to improving the energy density of batteries, so improving the relative content of nickel in ternary materials, thereby improving the mileage of pure electric vehicles, is a necessary choice for the development of pure electric passenger vehicles to high cruising range.

In addition, from a cost point of view, increasing the nickel content of ternary materials is also a necessary way to reduce the overall cost of ternary materials. In the overall cost of ternary materials, raw material costs account for more than 80%. Compared with nickel resources, China's cobalt resources are more scarce, as a raw material for ternary materials, the price difference between cobalt metal salt compounds and nickel metal salt compounds is obvious, and the high price of cobalt raw materials is one of the key factors restricting the decline in the cost of ternary materials. In ternary materials, the use of nickel increases, and the amount of cobalt can be greatly reduced, so that the unit cost of ternary materials can be significantly reduced. Although in the short term, the process and technology of the high nickel series ternary materials are complex, the production requirements are high, and the pre-equipment and R&D investment are large, resulting in a higher overall cost than that of ordinary ternary materials. However, with the improvement of the technical maturity of the high nickel series ternary materials, the large-scale application of the high nickel series ternary materials will gradually make its overall cost lower than that of ordinary ternary materials.

In order to promote the popularity of pure electric passenger cars, reducing the cost of pure electric passenger cars and improving the mileage of passenger cars are the basic prerequisites, and high-nickel ternary materials will be increasingly favored with their cost and performance advantages, and market demand will continue to increase. With the scale of China's new energy pure electric passenger cars, from the perspective of reducing the cost of pure electric passenger cars and improving the endurance of passenger cars, the direction of the development of ternary cathode materials for power batteries is clear, high nickel ternary materials will gradually scale up, and market demand will continue to increase.

3) Ternary materials enter the market for 3C electronics with lower requirements for volume-specific capacity density

From the perspective of the application of various types of ternary materials, due to the advantages of high specific capacity, high energy density, high magnification, etc., high-nickel ternary materials such as Ni8 series are suitable for high-end pure electric vehicle power batteries, while ordinary ternary materials are suitable for low-end power batteries, and gradually expand to the field of 3C digital batteries.

With the advantages of large compaction density, stable charge and discharge, and high working voltage, lithium cobalt oxide has become the cathode material used in lithium batteries of traditional 3C electronic products, and has remained stable in the high-end market. However, lithium cobalt oxide has a higher cost, short battery life and other disadvantages, compared with lithium cobalt oxide, ternary cathode material has a price advantage, and in the cycle stability, thermal stability and safety performance has improved, so ternary cathode materials gradually enter the charging treasure, electric toys, electric home products and other low-end 3C electronic products market.

Driven by the rapid growth of cobalt demand for global consumer batteries and power batteries, the gap between cobalt supply and demand in the future may be further enlarged. In this case, the cost advantage of ternary cathode materials over lithium cobalt oxide is becoming increasingly obvious, which is expected to increase the penetration rate of the low-end 3C electronics market.

5. Main challenges

(1) Industry competition has intensified

Lithium battery cathode material is located in the middle of the industrial chain. In recent years, with the support of national policies for the new energy automobile industry and the growth of downstream demand, a large amount of capital has poured into the lithium battery cathode material industry, and there have been upstream resource enterprises and downstream battery enterprises extending to the cathode material link, making the industry competition intensified. Lithium battery cathode material manufacturers must keep up with market trends, strengthen their own professional advantages and scale advantages, and establish a sound supply chain guarantee system to cope with the pressure brought about by the intensification of industry competition.

(2) Upstream raw material price fluctuations have a greater impact on business operations and profitability

Lithium battery cathode material industry sales pricing generally adopts the "main raw material cost + processing price" pricing model, "main raw material cost" is affected by the market price of cobalt, lithium, nickel, manganese and other related metal salt raw materials, "processing price" is composed of cathode material production enterprises according to the processing cost of specific products, target profits, of which "processing cost" remains basically stable. The fluctuation of upstream raw material market prices has a greater impact on the operation and profitability of lithium battery cathode material production enterprises, lithium battery cathode material production enterprises must strengthen cooperation with upstream and downstream suppliers and customers, increase long-term orders, and strengthen the analysis and judgment of raw material market conditions, and strive to accurately grasp the trend of raw material prices, etc., to reduce raw material procurement costs and grasp the market initiative.

6. Two major barriers in the industry

(1) Barriers to talent reserves

The lithium battery cathode material industry is a talent-intensive industry, and the company's R&D and management talent reserve is a key factor in determining whether it can gain a firm foothold in the industry. Lithium battery cathode material industrialization time is relatively short, and according to the customer's customized requirements for production mode is more common, so the experience accumulation of R & D and production team is particularly important; the first to enter the industry enterprises have experienced, strong R & D and production teams, in terms of manpower reserves far ahead of the new entrants. In addition, lithium battery cathode material enterprises also need to understand the market procurement and sales team, with keen market insight, good supplier customer coordination ability of the procurement and sales team is crucial to lithium battery cathode material enterprises.

Enterprises that first enter the field of lithium battery cathode materials often have higher and more popular and more perfect talent training systems, and the attraction to talents is stronger, so that most of the cutting-edge talents in the industry are concentrated in the first-movers, and it is difficult for new enterprises to enter the industry to have the same talent attraction. Therefore, the talent gap between the first-mover enterprises and the new entrants in the industry will continue to expand, forming a talent barrier in the industry.

(2) Capacity and capital barriers

Lithium battery cathode material industry has a strong scale effect, on the one hand, large production capacity of enterprises in the procurement bargaining, production cost dilution and other aspects have advantages, on the other hand, the industry's head lithium battery production enterprises for the supply of cathode material suppliers and other aspects of higher requirements, large cathode materials enterprises compared to small enterprises are easier to carry out the head lithium battery production enterprise supplier directory. Therefore, the expansion of production capacity is the development trend of lithium battery cathode material enterprises, and the expansion of production lines puts forward higher requirements for the financial strength of enterprises.

In addition, the preparation of lithium battery cathode materials requires heavy metal raw materials such as cobalt, nickel, and manganese, and its procurement requires a lot of financial support, and the daily operation of enterprises also needs working capital support. Compared with the industry's leading enterprises that have accumulated a certain amount of financial strength, new entrants face higher financial barriers.

For more industry information, please refer to PwC Consulting's "China Lithium Battery Cathode Materials Industry Market Research and "14th Five-Year" Development Trend Research Report", and Puhua Youce Consulting also provides industry research reports, industrial chain consulting, project feasibility reports, 14th Five-Year Plan, BP business plans, industrial maps, industrial planning, blue white papers, IPO fundraising feasibility studies, IPO working paper consulting and other services.

China lithium battery cathode material industry market research and "14th Five-Year" development trend research report

Read on