Global inflation is fierce, and the penetration rate of new energy vehicles continues to rise

Recently, new energy companies represented by Tesla have begun a new round of price increases. Tesla China took the lead in announcing price increases on March 15, raising prices for models such as the Model 3 and Y by 14,000 yuan to 20,000 yuan. Subsequently, BYD also announced that it would raise the price of new energy vehicles by 3,000 yuan to 6,000 yuan from March 16. Since 2022, more than 20 new energy vehicle companies have announced price increases, close to 40 models.

At the 24th Credit Suisse Asia-Pacific Investment Forum for Asia (AIC), Wang Bin, co-head of automotive industry research at Credit Suisse, said that it is expected that short-term battery price increases will continue, or further increase prices by 20% in the second quarter, and vehicle prices may also increase slightly. However, in the medium and long term, technological progress will still drive cost reduction, for example, Weilai Automobile announced the official launch of the ternary iron lithium standard battery pack, using ternary lithium formula and lithium iron phosphate formula mixed to reduce battery costs. In addition, CTP (Cell-To-Pack) technology and CTC battery system (CelltoChassis) also help reduce costs.

The penetration rate of new energy vehicles has increased in the long term

The global penetration of new energy vehicles is accelerating. According to the statistical analysis of Autohome, in 2021, the global new energy vehicles achieved a total of 6.5014 million registered sales, an increase of 108% over 2020, and the penetration rate reached 10.2%.

According to the latest data released by the Association of Passenger Vehicles in March, the wholesale sales of new energy passenger vehicles reached 317,000 units in February, an increase of 189.1% year-on-year, down 24.1% month-on-month, and the month-on-month decline was smaller than in previous years. New energy passenger car orders were weak in late January, but there was a clear pick-up in February, with retail sales reaching 272,000 units, up 180.5% year-on-year. The domestic retail penetration rate of new energy vehicles in February was 21.8%, an increase of 13 percentage points from the penetration rate of 8.1% in February 2021.

The upstream price increase tide is menacing, but the credit Suisse research team recently predicts that the global new energy vehicle penetration rate will reach 73% in 2030, a sharp increase from the previous forecast of 62%. At the same time, the agency expects that global demand for electric vehicle batteries will also reach 280 million kilowatt hours (TWh) in 2030, a significant increase from the previous forecast of 1.8TWh, which means that global battery demand will climb at a compound annualized growth rate of 28% from 2021 to 2030, which is amazing.

According to the reporter's recent interviews and surveys, due to the sharp rise in the price of raw materials such as lithium carbonate, the cost of power batteries, which account for the largest part of the cost of the vehicle, has increased sharply, and battery giants such as Ningde Times and Guoxuan Hi-Tech have raised prices to transmit pressure to new energy car companies, and car companies will then transmit pressure to consumers. At present, it is a critical period for downstream car companies to seize market share, so even if the competitive middle and downstream enterprises raise prices, many times they are also "loss-making and profitable".

In addition to the surge in lithium prices, nickel prices have also received attention recently. However, Wang Bin told reporters that nickel supply is in a state of surplus all year round, even if Russia's export volume is removed, it will still be in a more balanced state. "Nickel sulfide is used for battery anode production, accounting for 6% to 7% of the battery cost, so the nickel price needs to soar a lot to cause a little increase in battery prices, and it is not a big problem at present."

Wang Bin also believes that the technological progress of the past few years will also promote the rapid decline in battery costs, making new energy vehicles more popular, and this trend will continue in the future, and short-term price increases are still a small episode.

In terms of technological innovation, he said, for example, on September 23 last year, Weilai Automobile announced the official launch of the ternary iron lithium standard battery pack, which uses a ternary lithium formula and lithium iron phosphate formula mixed, compared with the old 70 kWh (kWh) battery pack not only increased the capacity of 5kWh, and the cycle life has been improved, and the mixed installation method also reduces costs.

At present, lithium iron phosphate (LFP) and lithium ternary (NCM) batteries occupy an absolute advantage. Due to the inherent physicochemical properties of the two, whether it is LFP or NCM, there are obvious long boards and shortcomings. Among them, the advantages of LFP are relatively high safety and low cost, but the winter performance is poor; on the contrary, although NCM has the advantages of high energy density and better low temperature in winter than LFP, its higher activity also brings higher safety risks. As lithium prices soar, LFP's market share is likely to climb in the short term, becoming the first choice for more models. Ruixin currently expects LFP market share to reach 67% in 2025 (only 38% in 2020), and LFP's global market share will also reach 15% by 2025 and only zero in 2020.

In addition, technological innovations include changes in battery pack design. Wang Bin said that CTP (moduleless) technology can achieve a 30% cost reduction, while the CTC battery system has reduced costs by 5% to 10%, and may come out in the second quarter of 2022. At the same time, in order to increase the market share, OEMs do not rule out that they will control the price increase or discount, so in the medium and long term, the judgment of the penetration rate of new energy vehicles will not change.

The institution is optimistic about upstream lithium resources and midstream materials

For investment institutions, most institutions are still optimistic about the opportunities in the new energy industry chain in 2022, especially optimistic about upstream lithium resources and midstream materials.

Gu Jiayuan, director of equity research and fund manager of Fullerton China, told the first financial reporter that looking forward to the growth stock investment in 2022, there is no shortage of investors who are worried that the penetration rate of new energy vehicles will slow down after the rapid increase to 20%, but after a wave of correction, the new energy vehicle sector that was previously overvalued seems to have shown allocation value.

"Last year's valuation was a bit exaggerated, because according to estimates, the compound growth rate of this track in the next 5 years is 30%, but it has fallen to this position and has begun to become more optimistic. Although after the penetration rate of new energy vehicles increased rapidly to 20%, some people began to worry about the slowdown in growth, but taking mobile phones as an example, when the penetration rate of smart phones was 20% to 50%, it was the fastest growth rate of stock prices and performance. The penetration rate of new energy vehicles is expected to increase to a higher level, and it is not excluded that it can reach 100%. ”

At the same time, unlike the 2B-side photovoltaic industry, which focuses on the rate of return, the biggest difference in the 2C-end new energy vehicle industry chain is to look at the product, "electric vehicles give people a better user experience, and better products will create demand." Jobs said at the time, 'We don't need to do market research because people don't know what they want until they see the good stuff.'" Gu Jiayuan said.

Guo Chen, fund manager of Shanghai Investment Morgan, told reporters that new energy automobile companies can launch more and more consumer goods that consumers are willing to pay, which is one of the core factors that promote the continuous improvement of the penetration rate of the entire industry. The high price of crude oil may be a turning point to further promote the development of new energy sources.

Gu Jiayuan said that one of the most optimistic themes this year is the upstream lithium resources and midstream materials of new energy. "There are concerns that lithium prices are too expensive, but if you look at the world's largest lithium product supplier - The United States Yabao, its average price of lithium resources is not expensive, some of the two hundred thousand or even half a million are more than a single event or loose order, in fact, not so exaggerated." In addition, midstream materials will also have no small opportunities this year, such as high-nickel ternary cathodes, which are important materials for electric vehicles to increase battery energy density. ”