Most of the decommissioned power batteries flow to the "small workshop" in the recycling process.
Author: Smell the wind
Producer: Genki Capital
Core content
1, the power battery recycling of the wind blows up.
2, the industry is in the ascendant, the market has been "excessive competition".
3. Grimme has opened up a complete cycle from power battery recycling, cascade utilization to remanufacturing.
Under the background of the general trend of carbon peaking and carbon neutrality, green transportation and clean energy represented by new energy vehicles have shown great industrial prospects, and at the same time, under the continuous increase of capital, new energy has become a "global outlet", and the development of new energy vehicles is also booming.
Recently, due to the sharp rise in the price of raw materials such as nickel, cobalt, lithium and so on, the price of power battery recycling has also soared, "waste" is even more expensive than new goods, the outlet of power battery recycling has come, but there are still many problems and challenges, the industry concentration is low, and it is still in the "barbaric growth" period.
The wind of power battery recycling blows up
With the rapid growth of the penetration rate of new energy vehicles, power batteries will also step from GWh to TWh era, which also shows a thousand times growth space. According to the data, the annual sales volume of new energy vehicles in 2021 reached 3.308 million units, an increase of 114.1% year-on-year, and the market penetration rate reached 17%.
However, with the rapid growth of new energy vehicle ownership, the number of power batteries is also gradually rising. According to a research report released by global market research institute TrendForce Jibang Consulting at the end of 2021, the scrap of power batteries in China will exceed 18GWh in 2021, and the number will reach 91GWh by 2025. At the same time, TrendForce Jibang Consulting estimates that the market size of China's waste power battery recycling market will reach 26 billion yuan in 2025.
East Asia Qianhai Securities Research Report pointed out that it is estimated that if the market penetration rate of new energy vehicles in mainland China can reach 35% in 2025, the total amount of power battery retirement in 2030 after 5 years will reach 2.37 million tons, and the market space for power battery dismantling and recycling is expected to reach 100 billion yuan.
The power battery itself is a consumable, the overall performance of the battery will decay with the increase in the number of charges, when the actual capacity of the battery is attenuated to less than 80% of the rated capacity, its endurance will be greatly reduced, and it is basically no longer suitable for vehicles. According to national regulations, the power battery capacity attenuates to less than 80% of the rated capacity, and it faces decommissioning and compulsory recycling.
China began to promote the development of new energy vehicles around 2010, but the outbreak of new energy vehicle production and sales began in 2015, the National Bureau of Statistics data show that in 2015, the mainland new energy vehicle production of 401,300 units, an increase of 291% over 2014, sales of 331,100 vehicles, an increase of 342.9% year-on-year, the year-on-year growth rate of production and sales has been significantly higher than the previous level.
The scrap life of the vehicle power battery is usually between 5-8 years, then in 2022, the first batch of power batteries put on the market will also usher in a wave of retirement. With a large number of new energy vehicle power batteries entering the scrapping link, how to deal with decommissioned batteries has become an urgent problem.
As we all know, waste batteries are a kind of highly polluting garbage. For example, a 20-gram cell phone battery can contaminate 1 square kilometer of land for about 50 years. The larger power battery, which contains a large number of heavy metals, electrolytes, solvents and various types of organic matter excipients, integrates a variety of highly toxic pollutants in one, improper disposal will seriously pollute soil and water sources, and will also produce toxic gas emissions, if there is no scientific recovery, it will cause greater ecological and environmental problems. Based on this, the state has issued a series of policies including the implementation of the "Interim Measures for the Management of the Recycling and Utilization of New Energy Vehicle Power Batteries" and the "Administrative Measures for the Echelon Utilization of New Energy Vehicle Power Batteries".
The industry is in the ascendant, the market has been "over-competitive"
Based on the protection of the environment, the power battery recycling industry has been spawned, and the rise in the price of power battery raw materials driven by demand is also expanding the market.
Taking lithium carbonate as an example, as one of the main cathode materials for lithium batteries, since the beginning of 2021, affected by the weather in the northern region and the power curtailment in the southern region, the output of lithium carbonate is low, while the downstream demand for new energy vehicles and electric bicycles has driven the orders of power battery companies to be hot, resulting in short supply, rising from more than 50,000 yuan per ton to about 430,000 yuan in a year, an increase of more than 7 times. The rise in raw material prices has further highlighted the regenerative value of nickel, cobalt and manganese in power batteries, and further promoted the growth of demand for power battery recycling.
Source: Prospective Industry Research Institute
Compared with the uncertainty of the initial development of new energy vehicles, power battery recycling seems to have a more certain "dividend". This has also accelerated the layout of power battery recycling business for various types of enterprises to a certain extent. According to the Tianyancha APP, there are 36,000 existing power battery recycling related enterprises in the mainland. Among them, a total of 24,000 new enterprises were registered in 2021, an increase of 644.3% year-on-year. The lithium battery recycling industry is still in the growth period, but the cake has not yet been made, and the hunters have already sharpened their knives.
At present, the domestic layout of the power battery recycling industry enterprises can be roughly divided into four categories: the first category is based on Grammy (002340. SZ) is a professional recycling agency for third-party power batteries; the second category is based on BYD (002594. SZ) as the representative of the vehicle enterprises; the third category is the Ningde era (300750. SZ), Guoxuan Hi-Tech (002074. SZ) and other power battery manufacturers represented; the fourth category is the gift of materials (002709. SZ), Xiamen Tungsten New Energy (688788. SH) as the representative of the battery material manufacturers. However, the number of listed companies focusing on this business is small, and most of them participate in project construction.
There are two main means of recycling decommissioned power batteries: cascade utilization, dismantling and recycling of raw materials.
Among them, the ladder uses the retired batteries with higher remaining capacity for secondary use in the field of low-demand battery demand. Battery capacity in the range of 20% -80% is mainly used in low-speed electric vehicles, communication base stations, solar street lights, UPS power supplies and other small energy storage areas.
Theoretically, because the battery used in the cascade will eventually be dismantled and recycled when the capacity is less than 20%, but because of its existence of 20%-80% can be used as the usable capacity in other fields, it is obvious that it can produce greater economic benefits compared to the direct disassembly after recycling, which is also the mainstream direction of battery recycling in the future.
However, the battery ladder utilization process is long, which involves multiple links such as monitoring, packaging and reorganization. Due to the different requirements for cascade utilization batteries in different application scenarios, the performance of each single battery must first be monitored in the cascade utilization process of waste batteries. However, due to the fact that waste batteries mostly flow to the market in the form of battery packs, the batteries must be disassembled first for each test of the single battery. Therefore, at present, the echelon utilization of decommissioned batteries is still in its infancy, and the steps and technologies involved in its process are still relatively complex, which also leads to its economic benefits are not obvious.
In addition, on the application side, users have a negative psychology about the use of the ladder and worry about the power and safety of the recycled battery. At the same time, consumers naturally have the inherent psychology of not loving to use "second-hand" goods, and manufacturers dare not use the ladder to use batteries because they are afraid of losing users. Therefore, at present, the cascade application mainly stays at the B-end, and the C-end with richer application scenarios also needs the process of market education.
Source: East Asia Qianhai Securities
Scrap dismantling is relatively not cumbersome, but also the main technical means of battery recycling. The recovery of battery raw materials is to completely disassemble the battery, separate out the rare metals in it, and then put it into the battery production line for reuse. This battery utilization method can reduce the import of raw materials, which in turn reduces the exploitation of minerals. From the perspective of industrial processes, it mainly includes pre-discharge, disassembly, screening, stripping, purification, production and other processes, and its process eliminates many processes such as detection, repair, reorganization, and certification than the echelon utilization of batteries.
The mainstream business model of power battery recycling formed by this is that the battery factory and the car factory will deliver the waste battery and battery waste to the third-party power battery recycling agency, which will carry out green treatment of the recyclables, extract nickel, cobalt, manganese and other metals in green, and produce battery-grade nickel, cobalt, manganese sulfate, ternary precursor or cathode materials, as raw materials for power battery production to supply the second, third and fourth types of enterprises.
Based on the above logic, Yuanqi Capital selected a third-party power battery recycling manufacturer Grammy that has realized the industrial cycle of waste battery remanufacturing battery materials for analysis.
Grimme: The second curve of power battery recycling
Founded in 2002, Grimme originally started with electronic waste recycling for the production and sale of ultra-fine cobalt, nickel powder materials and other products, and is also the first listed company in China to mine "urban mine" resources, renewable resources and electronic waste recycling industry.
In 2012, Grimme began to enter the field of battery materials through the acquisition of Jiangsu Kailik, which is mainly engaged in the research and development, production and sales of metal cobalt and new energy lithium battery cathode material precursors, and metal cobalt and lithium battery cathode material precursors (cobalt tetroxide) as its core products. In 2015, as a company that started by relying on waste recycling, Grimme detected the "water temperature" change in the field of new energy batteries earlier, began to lay out the power battery recycling business, and also opened up the industrial cycle of waste battery recycling to battery material reengineering. In 2020, Grimme will separate the e-waste recycling and waste plastic modification and recycling business to be listed separately (it has now been accepted by the Shenzhen Stock Exchange). So far, Grimme has fully focused on the new energy business with ternary precursors, cobalt tetroxide and power battery recycling as the main body.
In terms of business, thanks to the high prosperity of new energy vehicles, the increase in new energy business has allowed Grimme to enjoy the dividends brought by the hot downstream market demand. Grimme's revenue climbed from $3.486 billion in 2013 to $12.47 billion in 2020. The share of revenue from battery materials also increased from 28% to 70% in the first half of 2021. According to the financial report information, in terms of business layout, Grimme has opened up a complete cycle from power battery recycling, cascade utilization to remanufacturing.
According to the 2020 financial report, at present, Grammy recycles 10% of the country's e-waste, more than 10% of waste batteries (except lead-acid batteries) and more than 4% of scrap cars every year. Grimme's recycled tungsten resources account for more than 5% of domestic raw tungsten mining, nickel resources account for more than 8% of domestic raw nickel mining, and cobalt resources exceed domestic raw cobalt mining. It processes these resources into products such as ultra-fine powders, power batteries and ordinary battery materials, and has become a leading manufacturer in the global supply chains of cemented carbide and new energy vehicles.
In terms of input terminal , that is, power battery recycling , Grammy adopts a strategy of "foreign contracting + independent recycling". That is, through cooperation with downstream battery material enterprises, power battery manufacturers, new energy vehicle manufacturers, etc., to a certain extent, the source of power battery recycling is locked, and at the same time, self-built recycling channels are built to expand the battery recycling network. At present, Grimme has reached strategic cooperation with more than 280 OEMs and battery factories around the world, including Volkswagen, Daimler Benz, Toyota, Changan, Nio, WM, Xiaopeng, etc., and signed power battery recycling agreements.
Source: Company earnings
Output end - that is, product sales, Grimme has been bound to the head customer in the downstream industry, recycled products and cascade utilization battery packs have also been recognized by customers (cascade utilization battery packs have opened up cascade application scenarios such as UPS, forklifts, low-speed vehicles, high-altitude vehicles, parking air conditioners), and in 2019, the first time to achieve profitability in the power battery recycling business.
In 2020, Grimme achieved ternary precursor shipments of 41,450 tons, and annual shipments of cobalt tetroxide of 15,429 tons, ranking among the top three in the world. Its main customers include SAMSUNG SDI, ECOPRO, CATL Times, LGC, ATL, Ronbay Technology, Xiamen Tungsten, etc. many well-known battery and material manufacturers.
Judging from Grammy's reply on the investor interactive platform, the current Grammy's battery recycling (including but not limited to power battery recycling) can meet its own raw material demand of about 20%, in addition, it currently has the annual production capacity of processing 250,000 sets of waste power battery packs, and at the same time, it is planning to have a total disassembly processing capacity of 450,000 sets / year.
From the capacity planning to the business layout, it can be seen that Grimme has firmly adopted the power battery recycling business as the second growth curve. From the perspective of business growth, the revenue of its power battery recycling business in 2020 increased by 175.11% year-on-year, which is the fastest growing business segment of the company.
Judging from the growth rate and gross profit level of its power battery recycling business in the past two years, power battery recycling is indeed a good business. According to the company's 2020 financial report, the gross profit of Grimme's power battery recycling business reached 20.04%, which is between the company's ternary precursor 24.03% and the gross profit of cobalt tetroxide products 18.90%.
Industry dilemma: Bad money drives out good money
However, although the layout of power battery recycling has long been regarded as an important strategy by Grammy, from the perspective of revenue, this business is far from supporting the company's performance growth. In 2020, the revenue of Grimme's power battery recycling business was about 93 million yuan, accounting for only about 0.75% of revenue. The corresponding total recovery volume is about 10,000 tons, in contrast to the company's power battery recovery capacity is facing the problem of "not enough to eat". This is also the embarrassment of most "regular troops" in the industry.
Although power battery recycling has been the outlet of the new energy industry, the overall market operation situation is not ideal. At present, the Ministry of Industry and Information Technology has issued three batches of power battery recycling "white list", a total of 47 enterprises. The first two batches of 27 "white list" enterprises alone have a total production capacity of more than 1 million tons in 2020. Idle capacity is a common problem among current industry participants.
As we mentioned earlier, the existing power battery recycling related enterprises have exceeded 36,000, and there are only 47 "regular troops" recognized by the state, but the current policy does not restrict non-"white list" companies from engaging in this business. The industry still lacks some norms and standards, and all kinds of companies want to come in and get a piece of the pie. As the number of registered enterprises in this field continues to increase, the situation of more monks and fewer porridges may further deteriorate.
The failure of the giant effect has caused the vast majority of decommissioned power batteries to flow to the "small workshop" in the recycling link, and also makes the power battery recycling industry in the risk of bad money driving out good money. He Ye, secretary general of the Resource Compulsory Recycling Industry Technology Innovation Strategic Alliance, said that as of 2020, the mainland has accumulated more than 200,000 tons of decommissioned power batteries, but the total number of batteries that can be received from the current standardized channels is only about 30,000 tons, but at least more than 100,000 tons flow to non-standard channels.
Some small workshop recycling enterprises with small investment scale and not meeting the technical requirements of environmentally friendly production have a comprehensive dismantling cost that is much lower than that of regular enterprises, which allows them to recover most of the decommissioned batteries at a relatively high price.
In addition, most of the batteries that have really entered the scrapping stage are the earliest batch of new energy vehicle batteries, the number is relatively small, and most of them are lithium iron phosphate batteries, and compared with ternary batteries, the benefits of lithium iron phosphate batteries directly recycled and disassembled are not prominent. The ternary battery with greater recycling value has not yet reached the peak of decommissioning. Therefore, the problem of insufficient food for power battery recycling enterprises may not be effectively solved in the short term.
Source: Minmetals Economic Research Institute
However, with the gradual strengthening of industry norms and the further arrival of the wave of power battery decommissioning, companies like Grimme have strong enough channel power to complete the production capacity layout earlier and have a perfect industrial chain of power battery recycling enterprises, which may be able to stand out in this protracted war.
Resources:
1, East Asia Qianhai Securities - power battery recycling: standing on the eve of the outbreak of the 100 billion market. December 2021
2. Prospective Industry Research Institute - Analysis of the development status of China's power industry in 2022. February 2022
3. Minmetals Economic Research Institute - Research on the development status and trend of power battery recycling. January 2019