2021 is a "counterattack" year for the continental power battery market.
This year, the installed capacity of lithium iron phosphate batteries officially exceeded that of ternary batteries.
Source: Tramway, Lithium Cat Laboratory Mapping
But this is not the first time lithium iron phosphate has "stood on the top of the mountain".
Before the rise of ternary batteries and high-end electric vehicles, lithium iron phosphate batteries occupied most of the installed capacity of domestic passenger cars, but later they were continuously marginalized under the wave of technology.
At that time, almost only BYD still adhered to the route of lithium iron phosphate. Even if it has been surpassed by the latecomer Ningde era and stepped off the throne of domestic battery first, BYD has never given up lithium iron phosphate.
On March 29, 2020, BYD released the blade battery, announcing the return of BYD and lithium iron phosphate with ultra-high safety through acupuncture test, energy density that does not lose ternary batteries, and ultra-long life beyond ternary batteries.
At a forum event a year later, Wang Chuanfu, chairman and president of BYD, said with emotion:
"The blade battery single-handedly pulled the lithium iron phosphate battery back."
Although there are still many factors behind the return of lithium iron phosphate, for BYD, which has been "dead" for many years in the embattled ternary battery, this still means that it finally broke through.
01
Lithium iron phosphate floats and sinks
The first rise of lithium iron phosphate batteries is due to the promotion of electric commercial vehicles.
In 2009, the Ministry of Science and Technology, the National Development and Reform Commission and other departments launched the "Ten Cities and Thousand Vehicles" project for new energy vehicles, and planned to launch 1,000 new energy vehicles in ten cities every year to carry out demonstration operations, involving urban buses, taxis, public affairs, municipal administration, postal services and other fields for a period of three years.
In the list of recommended models released later, commercial vehicles occupy most of the page, which is also the earliest new energy vehicle market in mainland China.
Lithium iron phosphate batteries named after cathode materials have lower cost, long cycle life and good safety than the nickel-cobalt-manganese compound cathode of ternary batteries, but the voltage platform and compaction density are lower, resulting in a lower overall energy density.
Source: International Energy Network, Lithium Cat Laboratory Mapping
But in the era of commercial vehicles, cost and safety are the first considerations, followed by battery life, and this aspect can also be compensated by increasing the battery pack, such as buses and other commercial vehicles do not lack the space for large batteries, which also directly determines the lithium iron phosphate became the main type of battery used in that period.
Source: Gaogong lithium battery, lithium cat laboratory drawing
In 2016, the installed proportion of lithium iron phosphate batteries exceeded 70%, and the unit price of lithium iron cathode once exceeded 110,000 yuan / ton.
The turning point also happened precisely in this year.
In November 2016, the four ministries and commissions introduced the battery energy density threshold in the Notice on Adjusting the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles, and gradually increased the mileage requirements. According to the subsidy policy, new energy vehicles with energy density higher than 120Wh/kg will receive 1.1 times subsidies.
At that time, the energy density of lithium iron phosphate batteries was mainly concentrated in 70-80Wh/Kg, which could not meet the standard of "the mass energy density of pure electric passenger car power battery system is not less than 90Wh/kg", which led to the market gradually shifting to ternary lithium batteries with higher energy density, and the relatively higher cost was also supplemented by subsidies.
In 2018, the cumulative output of domestic power batteries reached 70.6GWh, of which ternary batteries accounted for 55.5%, and lithium iron phosphate batteries have dropped to 39.7%. For the first time, the market share of lithium iron phosphate batteries was surpassed by ternary batteries.
By 2019, the share of lithium iron phosphate power batteries has dropped to 32.5%, gradually marginalized.
But in this year, another thing happened, which changed the pattern that was originally dominated by ternary batteries.
In 2019, the Ministry of Finance and other departments issued a notice to adjust the financial subsidy policy for the promotion and application of new energy vehicles, and the subsidy standard will be reduced by an average of 50% on the basis of 2018, and the slope will be in place by the end of 2020.
Under the new subsidy policy, the original local subsidies are all cancelled, the maximum upper limit of the energy density subsidy coefficient is adjusted to 100%, and only new energy passenger vehicles with energy density of more than 160Wh/kg can receive 100% subsidies.
Source: Pacific Auto Network, Lithium Cat Laboratory Mapping
In ternary batteries, the cost of cathode materials accounts for about 65%, the cost of raw materials accounts for up to 90%, of which nickel and cobalt are relatively scarce metals, most of the cobalt and nickel used in mainland production come from imports, and the external dependence is as high as 80%, and there is greater volatility.
On March 8, 2022, the London Mercantile Exchange staged a "short war", and Lun Nickel once soared by more than 110% during the day, breaking through $100,000 / ton, a record high. The raw material side has risen sharply, and the downstream battery and host manufacturers' cost end is likely to be further under pressure.
In contrast, the price of lithium iron phosphate raw materials is relatively stable. From 2016 to 2019, the price of lithium iron cathode materials fell by more than 60%, and the price of lithium iron phosphate power battery packs fell by nearly 70%.
The rapid development of ternary batteries is closely related to the subsidy policy. This also means that when the subsidy disappears, the disadvantage of the cost of ternary batteries has become a problem that battery manufacturers and car companies have to consider.
According to huaan securities calculations, the use cost of lithium iron phosphate cathode is about 0.08 yuan / Wh, which can save 0.15-0.21 yuan / Wh compared with ternary cathode materials, corresponding to a reduction of 65%-72%. Under the new subsidy policy, if the ternary battery with 55kWh and 405 kilometers of battery is replaced by a lithium iron phosphate battery, the cost can be reduced by 0.46 million yuan to 0.56 million yuan.
With the gradual expansion of the scope of promotion of new energy vehicles in the future, the day when subsidies completely disappear will eventually come. In the past two years, the frequent occurrence of accidents in new energy vehicle fires has also made consumers worried about ternary batteries with high energy density.
At such a point in time, the birth of the blade battery seems appropriate.
At the press conference, BYD said that the energy density of blade batteries can reach 180Wh/kg, which is comparable to ternary batteries.
At this point, the completion of the short board of endurance has made the lithium iron phosphate battery comprehensively surpass the ternary battery from the aspects of cost, safety and cost performance, and ushered in the second rise.
And this time, to a large extent, it is inseparable from BYD's persistence for many years.
02
Eve of dawn
In the line of adhering to lithium iron phosphate, BYD once walked a long night.
BYD has been using lithium iron phosphate batteries since 2005, and Wang Chuanfu explained that the reasons are:
"Ternary batteries use a lot of cobalt and nickel, China has no cobalt, nickel is also very little, China can not change from the card neck of oil to the card neck of cobalt and nickel, and the battery that is really used on a large scale cannot rely on rare metals."
But at that time, new energy vehicles had not yet been widely promoted, and the supply of upstream raw materials had not yet become a "card neck" problem, which meant that even if bydie's adherence to the lithium iron phosphate route was correct, this forward-looking could only be reflected when the market developed to a certain extent and the supply and demand structure began to show imbalance.
As one of the earliest enterprises in China to develop power batteries, BYD's first lithium iron phosphate battery was launched in 2005. With the start of the domestic new energy vehicle market, BYD's batteries have begun to be applied on a large scale in BYD's self-produced passenger cars and commercial vehicles.
In the early days of the development of new energy vehicles, that is, the period when the lithium iron phosphate route first occupied the mainstream, with battery technology and policy subsidies in hand, BYD sat firmly in the position of industry giant.
Source: EV Obsession, China Automotive 100 Association, GGII, Evergrande Research Institute, Lithium Cat Laboratory Mapping
However, this changed in 2017, following the introduction of subsidies. BYD, once the industry's first, was "cut off from the horse" by the rising star Ningde era.
For the reason why BYD was overtaken by the Ningde era, a statement in the industry believes that on the one hand, BYD's bet on the lithium iron phosphate route has made a mistake, and it did not foresee the rise of ternary material batteries, which was seized by the Ningde era that took two routes at the same time.
On the other hand, it is BYD's insistence on a "vertical integration" model that limits its share expansion.
This is also related to BYD's "excessive" foresight.
BYD's first new energy vehicle was born in 2008, a year before the mainland implemented the new energy vehicle promotion project.
This means that in the domestic market at that time, new energy vehicles were almost blank, not only small in scale, uncertain prospects, but more importantly, the upstream supporting facilities were very scarce. There are very few partners who dare to "break through" new energy with BYD, and suppliers either do not cooperate or offer sky-high prices.
In finding partners, the cost of trial and error is enough to drag down the industry. In desperation, BYD chose to "do it yourself and eat enough food and clothing" to open the road of vertical integration.
Vertical integration means that BYD develops and produces its own parts, assembles its own vehicles, and even develops its own automotive software systems. Under this strategy, BYD eventually developed into the only new energy vehicle company in China with battery, motor, and electronic control "three electricity" technology, and also has the ability to independently develop IGBT chips, and the layout runs through the upstream and downstream.
Source: Head Leopard Institute
However, controlling the entire industry chain did not bring BYD the expected cost reduction, but once caused large-scale quality problems.
From 2008 to 2020, BYD's gross profit margin has been maintained at about 15-20%, slightly higher than the level of 10+% of traditional fuel vehicle companies, but after subtracting operating expenses, net profit fell below negative in 2012-2014, and also showed negative growth in 2017-2019, with very large fluctuations.
Source: BYD Annual Report, Lithium Cat Lab Mapping
In 2011, BYD was exposed to problems with airbags, wipers and other components. In 2016, BYD ushered in a large-scale complaint about the gearbox. Some BYD employees once told the media that in BYD's "closed-loop car" chain, no matter whether the quality of parts is high or not, the price is expensive, AND's own vehicles can only install their own parts.
BYD, immersed in "vertical integration", is like a flower growing in a greenhouse it has built, far from market competition and losing competitiveness. At this time, CATL has obtained a number of mainstream car companies at home and abroad, such as Citroen, BMW, BAIC, Geely and so on.
With the introduction of new subsidy regulations in 2017, the rise of ternary batteries, by 2019, BYD's battery installed capacity is only one-third of the Ningde era.
Seeing that the share he once held was being squeezed out by his opponents little by little, Wang Chuanfu finally began to reform BYD, introducing external suppliers while letting the internal parts department go out:
Earning BYD's money is not called a skill, you have to earn money from other car companies, that is called a skill.
At the same time, BYD also began to learn from the Ningde era to "walk on two legs", develop ternary battery production capacity, and supply batteries to external customers.
In May 2019, BYD announced the establishment of five "Fordy" companies, including Fordy Battery, Fordy Power, and Fordy Technology, to split the original parts supporting system and sell them to the outside world. The blade battery that "splits" a path for BYD this time is from the Verdy battery.
However, THERE is still a long way to go to achieve byBYD to achieve overtaking.
It is not easy to shake the hegemony of the Ningde era, on the one hand, the latter has established the appeal of the C-end, consumers even if they do not understand the battery technology, they will want to choose the first brand; on the other hand, the Ningde era has also established a deep binding relationship with major car companies at home and abroad, and its financing ability, industrial chain layout, word of mouth, and brand have produced potential energy, and this "corner" is not so easy to dig.
Everything was difficult at the beginning, but fortunately, the first step has now been taken.
In February 2021, the Ministry of Industry and Information Technology declared that Hongqi's E-QM5 will be equipped with lithium iron phosphate batteries produced by Chongqing Fordi, which is the only production base for blade batteries.
With the arrival of the first blade battery for customers, BYD's long night finally ushered in the morning light.
On the other hand, the car side also ushered in good news: January sales data showed that BYD vehicle sales topped the global list with 93,300 units, squeezing out Tesla, which had previously dominated the list.
03
Tail voice: New World
BYD, which successfully "broke through", came to a new world with many opponents.
After several years of competition, the technical competition of battery manufacturers has shifted from materials to form battles.
In 2019, CATL released CTP technology, which is known as "moduleless" technology, which also improves safety and energy density by simplifying the battery structure. After this, CATL also received an order for CTP lithium iron phosphate batteries from Tesla.
In 2021, GAC Aean released the magazine battery, achieving a breakthrough that the whole package of ternary lithium batteries could not be ignited; in the same year, Great Wall Motors also launched the Dayu battery, claiming that in any position in the battery pack, single or multiple cells triggered thermal runaway, it can achieve no fire and no explosion.
In early 2022, Tesla announced that the 4680 battery achieved mass production, and this larger cylindrical battery is expected to further increase the energy density of the battery.
The opponents are endless, and new technologies are emerging.
On the other hand, ternary and lithium iron phosphate are not the end of technology, and solid-state batteries have been full of mountains and rain.
A piece of information circulating on the Internet said that BYD has passed relevant experiments internally, solid-state batteries can be mass-produced and loaded at any time, and all battery routes, BYD has research and corresponding patent reserves.
A statistic shows that in terms of the number of domestic solid-state battery patents, BYD ranks first with 76 patents.
Facing this new world, BYD is ready.
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What is BYD's "answer" from "vertical integration" to "open innovation"? Ghost Bucket Truck
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"BYD Wild" Chinese entrepreneur
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Author: Zhou Xiaowen, Editor: Chen Chen
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