China's power battery overspeed: from being crushed to dominating the world

In the summer of 1987, when the then deputy director of the State Economic Commission inspected Shanghai Volkswagen, in front of the Chinese and German personnel, he issued a warning: "If the proportion of parts produced in China cannot be smoothly increased to 40%, we will shut down Shanghai Volkswagen!" ”

However, after more than twenty years of tossing and turning, the localization rate of domestic passenger cars is still stagnant. According to the 2013 Industrial Blue Book, more than 95% of the corporate profits of Chinese brand passenger cars in 2011 were earned by the joint venture. On the one hand, when overseas car companies authorize joint venture car companies to produce, they have to charge high technology transfer fees, and on the other hand, they have earned high profits in the procurement of parts.

The premise of an automobile power is a strong parts power. Practice has proved that under the influence of factors such as joint venture policies and technology for markets, there are still shortcomings of "low, scattered and weak" in the mainland's traditional parts and components industry. What is the future of China's auto industry?

The answer is new energy vehicles. Since the launch of the "Ten Cities and 1000 Vehicles" project in January 2009, in just over a decade, the reshuffle of the new energy automobile industry chain has bought a chance for China to sit on the table.

Different from traditional cars, the core technology of new energy lies in the "three electricities", that is, batteries, motors and electronic controls. Thanks to the abundant rare earth resources, China has become a big producer of drive motors, with Dayang Motor, Jingjin Electric, Shanghai Dajun, CRRC Zhuzhou Institute, United Electronics, etc. as the representative of China's motor suppliers, the production of drive motor technology has reached the international advanced level. At present, only a few passenger cars use the electric drive system of foreign companies.

Motors and electronic controls have been paid relatively little attention by the industry, and batteries are the "heart" of new energy vehicles, accounting for more than 40% of the cost of the vehicle. At the moment of the explosive growth of new energy in the world, the industry directly calls "the battery winner wins the world".

The demand trend of batteries in the development of the global new energy industry

In a speech at the Ford, Michigan plant in May 2021, U.S. President Joe Biden said, "Electric vehicles are the 'future of the automotive industry, and China is 'leading' in this race." ”。 Biden's "leading" also targets power batteries, "China supplies 80% of the world's electric vehicle batteries!" They are made not only in China, but also in Germany and Mexico, and then exported to the whole world. ”

From no sense of existence to becoming a global hegemon, what has happened behind China's power battery industry?

#01

"Battery double male" walks the rivers and lakes

In the early stage of the development of new energy vehicles, batteries did not become a climate due to high cost and low mileage. At that time, the Chinese government began to support the development of new energy vehicles, and since 2010, a large number of subsidy policies have gushed out, and the industrial chain of power batteries has gradually started.

However, the embarrassing thing is that at that time, there was not a single battery manufacturer in China that could play. Most of the subsidies were eventually earned by South Korean battery factories.

Around 2010, the company that did the best in China's power battery had a yield rate of only 60%, while Japan and South Korea had already achieved more than 90%. At that time, LG Chem won orders from SAIC, FAW and Changan in one go, and these three major state-owned enterprises accounted for 60% of domestic sales that year.

Not only is there a huge disparity in production efficiency, compared with the mainstream lithium iron phosphate in China, the ternary lithium battery route promoted by Japan and South Korea has obvious energy density advantages, while China's technological accumulation in this regard is almost zero. In this way, Japanese and Korean battery manufacturers such as Panasonic, LG Chemical, and Samsung SDI have crushed Chinese companies in all aspects.

Battery is the new energy vehicle technology density, the highest cost of components, if you can not get the battery, the fuel vehicle industry technology to change the market, it seems that it will be repeated on the new track.

However, Chinese never lost heart, but waited for an opportunity. The turning point came in 2015, when a "whitelist" was put

Foreign-funded enterprises such as LG and Samsung, which account for 60% of the domestic market, are directly blocked outside the door of the Chinese market. The tilt of the policy coupled with the time difference in capacity expansion has created an excellent window period for the development of China's battery companies.

The rise of the Ningde era is the most typical case. In 2011, Zeng Yuqun, who had founded ATL, saw the opportunity to start a business again, spun off ATL's automotive power department separately, returned to his hometown of Ningde, Fujian Province, and established the Ningde era.

Chairman of CATL Zeng Yuqun

In the same year, BMW's power battery cooperation project with a domestic company failed, and it turned to finding new suppliers. The NINGDE era, which inherited the experience of ATL service Apple, attracted the attention of BMW headquarters, but the premise of cooperation was that the NINGDE era needed to nibble down the 800 pages of German technical documents given by BMW.

With the documents marked with various needs and parameters, CATL spent time with BMW's process experts. Two years later, the NINGDE era successfully entered the BMW supply chain and became famous in one battle.

Another Chinese battery manufacturer debuted earlier than the Ningde era. As early as 1994, 28-year-old Wang Chuanfu led workers to squeeze into a house in Shenzhen and began to produce nickel-chrome batteries that the Japanese eliminated. Because he could not afford to buy an automated production line, Wang Chuanfu used the idea of "fixture + manual = robot" to create a semi-automated production line. Soon, BYD became China's first and the world's fourth largest battery manufacturer with the tactic of sea of people.

In 2003, BYD grew to become the world's second largest producer of rechargeable batteries, and in the same year, BYD Auto was established. In the early days, the policy was biased towards commercial vehicles, and lithium iron phosphate, which had better advantages such as safety and cycle life, occupied the "throne" of power batteries for a long time, and its share was even as high as more than 70%. BYD, which took lithium iron phosphate batteries as its core products, became the leader of the domestic power battery industry at that time.

Chairman and President of BYD Co., Ltd. Wang Chuanfu

With the gradual rise of the private car market, the technical route of the battery has changed, the disadvantage of low battery life of lithium iron phosphate battery has begun to be revealed, and ternary lithium has begun to soar. Compared with BYD's firm bet on lithium iron phosphate, both sides of the Ningde era have bet, but they are more inclined to ternary lithium.

At this point, China's battery double male has stepped out of the road of scale, beating a large number of foreign enterprises to "lose their armor and armor". By 2017, CATL naturally replaced foreign manufacturers such as Panasonic, LG Chemical, and Samsung SDI, becoming the global power battery sales champion with a sales volume of 11.84 GWh, and winning the first "world champion" for China in the field of auto parts.

And a situation around the Ningde era of "one superpower and many strong, the group of heroes" situation is being established step by step. In 2018, the global power battery installed capacity was 92.5GWh, and the top ten battery companies were CATL, Panasonic, BYD, LG Chemical, AESC, Samsung SDI, Guoxuan Hi-Tech, Lishen, Fu Neng and BAK. In the global power battery Top10, counting the Vision AESC, China occupies 7 seats.

In just ten years, we finally squeezed into the new energy era train with a platform ticket for the fuel car era, and also sat in business class.

#02

Mission accomplished, enter the open fight

When the mission of domestic batteries changes from bigger to stronger, the historical mission of the white list is also completed.

In June 2019, the "white list" of new energy vehicle power batteries that have existed in the industry for nearly 4 years was officially cancelled. From protection to openness, Panasonic, LG, and Samsung will have no obstacles in the domestic market.

In July 2018, Nanjing Jiangning Binjiang Development Zone signed a contract with LG Chem to invest $2 billion in the Binjiang Development Zone to build a power battery project; in October 2019, LG Chem invested $2 billion in Nanjing to achieve mass production, and in 2020, it will add AN ADDITIONAL $500 million to build cylindrical automotive power batteries, and the products are expected to supply BMW in addition to Tesla.

This has forced domestic power battery manufacturers to accelerate the research of battery technology and compete fairly with the global power battery giants with higher level products.

In 2020, things have changed subtly. The data shows that LG Chemical installed capacity in the first quarter of 2020 surpassed the Ningde era, taking away the global hegemony, and this anti-overtaking momentum was maintained until July. Among them, part of this is due to the order of Tesla Model 3 (LG Chem provides 21700 cylindrical batteries), and part of it is that the European new energy vehicle market is strong in 2020, and the sales volume exceeds the Chinese market, becoming the key to the rise of Korean manufacturers.

Tesla 21700 cylindrical battery

Among the global battery manufacturers, LG Chem is a rather radical company. In order to surpass the Ningde era, in the past two years, LG Chem has braved huge losses, invested in large-scale factories around the world, and plans to expand production capacity to 110GWh in 2020 (for comparison, Panasonic plans to have a production capacity of 52GWh in 2020). In order to allow LG New Energy to have better financing capabilities and accelerate the development of enterprises, at the end of 2020, LG Chem announced that LG New Energy will be independent.

However, the blind pursuit of scale LG new energy has "ignored" product safety. At the beginning of 2021, LG New Energy was busy, dealing with lawsuits with competitors, investigating the causes of repeated spontaneous combustion of batteries, and bearing sky-high claims due to recalls.

LG recalls continue, affecting not only the Chevrolet Bolt, but also the hyundai Kona, not only power batteries, but also energy storage business. According to incomplete statistics, in less than a year, because of the LG battery problem, the recall has exceeded 300,000 vehicles.

The "lost period" of Korean battery manufacturers has also freed up opportunities for Chinese battery suppliers to enter the supply chain of Korean cars. Hyundai, for example, will negotiate the use of BYD blade batteries in electric vehicles sold in China and offer to supply batteries to Hyundai from 2022. This is also the second Chinese battery supplier to negotiate cooperation after the Ningde era.

According to the latest data from SNE Research, a South Korean market research organization, from January to March 2022, LG New Energy's global power battery installed capacity was about 15.1GWh, with a market share of 15.9%, ranking second in the world. In the same period last year, LG New Energy's global market share was 22.1%, and its market share fell by 6.2% year-on-year.

If you want to surpass LG New Energy in the Ningde era, you can only watch the gap widen. Ten years after its establishment, the market value of the Ningde era broke through the trillion mark for the first time, becoming the first company to reach a trillion market value on the ChiNext board, which was affectionately called "Ning Wang" by shareholders.

In fact, the anti-superiority of China's battery companies is by no means a simple and crude summary of "subsidies" and "white lists". In terms of technological innovation, each company has its own competitiveness.

CATL has gained a leading global competitive advantage by virtue of its perfect technical layout in structural innovation and material system. Wu Kai, chief scientist of the Ningde era, revealed a Kirin battery in the Electric Vehicle 100 People's Meeting, which is the battery of the third generation of CTP technology in the Ningde era. Under the same chemical system and the same battery pack size, the power of the Kirin battery pack can be increased by 13% compared with Tesla's 4680 system.

In addition, BYD's blade battery, Guoxuan Hi-Tech's JTM, Hive Energy's cobalt-free battery and other leading technologies have been recognized by international car companies, and the products are supported by its mainstream models.

Under the leadership of China, lithium iron phosphate batteries have recovered globally. Tesla began to carry lithium iron phosphate batteries on a large scale. In addition to Hyundai, companies such as Volkswagen, Renault and Ford are considering adopting this technology.

In addition to the technical field, the production capacity layout of China's power batteries is also leading the world, far exceeding that of Japan, South Korea, Europe and the United States, and the scale advantage is becoming more and more obvious.

In order to strengthen the right to speak in the industrial chain, the battery manufacturers represented by the Ningde era will also extend their tentacles to the upstream industrial chain, and many Chinese companies also participate in the development of overseas mines through equity participation, underwriting, self-owned and other ways, Ganfeng Lithium and Tianqi Lithium are enterprises that develop more overseas lithium mines.

It can be said that in the global power battery TOP10, 6 Chinese companies, 3 Korean companies, and 1 Japanese company have become the norm. According to the latest SNE Research data, the global power battery loading volume of 6 Chinese companies in the first quarter of 2022 increased by more than 100% year-on-year, and the global market share also increased.

#03

To the world, Chinese enterprises have turned over

Different from the past "market for technology", Chinese battery companies have achieved "external output", that is, to achieve technology transfer to overseas enterprises.

In October 2021, CATL signed a cross-technology licensing agreement with ATL and a CTP technology licensing and cooperation intention agreement with Hyundai Mobis to achieve technology output and corresponding economic value through commercial cooperation and licensing.

Multinational car companies have more or less realized the "marriage" with Chinese power battery companies, and the relationship between automakers and power battery suppliers is moving from a simple buying and selling relationship to a deep binding relationship of capital investment.

For example, after cooperating with CATL, Volkswagen spent about 1.1 billion euros to acquire 26.74% of the equity of Guoxuan Hi-Tech, becoming its largest shareholder; Daimler, the parent company of Mercedes-Benz, invested 905 million yuan in Fu Neng Technology in addition to cooperation with CATL and Ewell Lithium Energy.

After years of domestic market training, Chinese battery manufacturers are actively participating in international competition. "In 2021, China will account for 32% of the global automotive industry, and in terms of electric vehicles, China will account for 50% of the world's sales. However, with the development of global electric vehicles, the proportion of electric vehicle sales in China may fall to around 30% in the future, so we must see global market opportunities. Zhao Weijun, president of Envision Power China, said at a recent meeting of 100 people, "As a head battery company, overseas business sales should be greater than 50%, and there must be a certain proportion in different regions." ”

Globalization is the only way to go. Almost without exception, the top ten manufacturers in terms of domestic installed capacity have begun to accelerate their expansion of their international territory.

The first battery factory in Thuringia, Germany, has obtained an 8GWh battery production license (equivalent to the battery required for 120,000 electric vehicles), and production is imminent. In North America, CATL may spend $5 billion to build a factory to supply customers, including Tesla.

Previously, the United Kingdom and France have already laid out the long-term power, the near-term plan to build a battery factory in Kentucky, the United States, planning a production capacity of 30GWh. Prior to this, Envision Power has supplied Nissan and Renault, and this year it has received orders from Mercedes-Benz, planning to lay out the European and American markets together.

The battery manufacturers such as Hive Energy and Guoxuan Hi-Tech have officially announced or built battery factories in the form of sole proprietorship or joint ventures, supporting European car companies nearby.

However, "there are still many difficulties for domestic battery suppliers to go to sea." An auto industry analyst, who did not want to be named, said of the car market story. The reason is that differences in the legal system, as well as international political background and other factors, domestic overseas enterprises need to be more "cautious" on the road to compliance, otherwise lawsuits such as electric vehicle recalls will be in the ascendant.

However, the above-mentioned people also stressed that there is no barrier between domestic battery suppliers and overseas battery manufacturers at the technical level, otherwise there will not be a number of domestic suppliers shortlisted for the list of international car companies. In his view, domestic battery manufacturers must first keep the basic disk of the local market, and overseas expansion can be slow.

In just a few decades, the mainland automobile industry has gone through the development process of the Western automobile industry for hundreds of years. Without an energy revolution, mainland companies will want to overtake the same path, and the odds are almost zero.

In the era of new energy, when the engine and gearbox are abandoned, the technical barriers built by foreign giants are no longer an insurmountable level, opening up a new track for all market participants.

This is a good opportunity for the mainland to turn the tide of the world automobile industry. It is expected that more Chinese enterprises can show more "highlight moments" on the new track.