Lithium iron phosphate leading layout in Spain "behind"

From the volume capacity, to the volume product, to the volume price, the lithium battery industry has only taken less than 3 years.

Since 2024, the degree of involution in the industry has continued to intensify, and it can be seen that the speed of launching new products and technologies between enterprises is faster than before, and the corresponding price of battery cell products has further declined, and the unit price of battery cells has entered the era of 0.3 yuan.

On the other hand, the industry is also accelerating the emergence of cross-border and crazy expansion of "sequelae", the most obvious is that some fund-raising and investment projects have been stopped one after another, including many leading enterprises. For example, the electrolyte leader Capchem postponed the Jingmen project, the Nord Hubei Huangshi copper foil project was postponed again, and the black sesame suspended the construction of Jiangxi energy storage lithium battery project.

It can be determined that the era of insufficient products and production capacity has passed, and the lithium battery industry has officially entered the era of "breaking volumes".

On the one hand, we should insist on technological innovation and win with product performance. As Liu Jincheng, chairman of EVE, said, second-tier battery companies should return to the most essential and basic capabilities of the industry, which is to improve technology and quality. In addition, Jiang Li, secretary of the board of directors of CATL, also said that in the face of industry involution, the company's coping strategy is to rely on the performance and quality of the product itself to participate in the competition, rather than a low-price strategy.

The other side of the book is to go to sea. At present, the overseas energy storage and new energy vehicle market is growing rapidly, but the imperfection of its lithium battery industry chain provides opportunities for domestic enterprises. Moreover, judging from the performance in 2023, the overseas revenue growth of some lithium battery companies is greater than that of the domestic market, which strengthens the determination of lithium battery people to go overseas to "seize the market".

According to the statistics of the starting point of lithium battery, in the team of going to sea, battery companies such as CATL, BYD, Guoxuan Hi-Tech, and EVE Lithium Energy, as well as material companies such as Rongbai, Dangsheng Technology, Beiteri, Shanshan, Tianci, Capchem, Enjie, and Xingyuan Materials, have taken the lead in Europe, Africa, Southeast Asia and other markets.

Among them, the European market has the advantages of rapid economic development and large energy demand, which is attracting domestic lithium battery leaders to enter the market successively. As a lithium iron phosphate shipment of TPO1 enterprises, Hunan Yuneng, after landing in the capital market, has also accelerated its overseas layout, and recently plans to "enter" the Spanish market.

—1—Hunan Yuneng plans to settle in Spain to accelerate the development of overseas markets

On April 19, Hunan Yuneng issued an announcement on foreign investment, planning to set up an investment company in Singapore, and the investment company will set up a project company in Spain to invest in the construction of a lithium battery cathode material project with an annual output of 50,000 tons.

According to the announcement, the project company is tentatively named Yuneng International (Spain) New Energy Battery Materials Co., Ltd., with a total planned investment of about 982 million yuan (about 129 million euros), located in Extremadura, Spain, and a construction period of 15 months.

However, Hunan Yuneng said that at present, investment matters still need to be recorded/approved by relevant departments in China, Singapore and Spain, and there are certain uncertainties, in addition to risks such as markets and overseas operations.

Hunan Yuneng also pointed out that the reason for this layout is, on the one hand, to implement the global development strategy, expand the market and improve international competitiveness, and on the other hand, because some customers and potential customers have established production bases or related plans in Europe, the company can further support nearby.

As we all know, Hunan Yuneng's two main customers are CATL and BYD, and before Hunan Yuneng went public, it received investment from these two companies. At present, CATL and BYD hold 7.9% and 3.95% of the shares of Hunan Yuneng, respectively.

CATL and BYD have already laid out the news of Spain, that is to say, if the Hunan Yuneng Spain project is successfully put into operation, it will once again match the capacity needs of these two companies, and the proportion of overseas revenue will increase.

In fact, Hunan Yuneng's current performance sources are mainly in the domestic market, which is also one of the important reasons to stimulate Hunan Yuneng to accelerate the development of overseas markets.

According to the 2023 annual report, the company achieved revenue of 41.358 billion yuan last year, a year-on-year decrease of 3.35%, and the net profit attributable to the parent company was 1.581 billion yuan, a year-on-year decrease of 47.44%.

From the perspective of products, lithium iron phosphate is the main source of revenue, accounting for 99.39%, and the shipment volume will reach 506,800 tons, and from the regional point of view, Hunan Yuneng's sales market in 2023 will be mainly concentrated in China, accounting for more than 96% of revenue.

In terms of customers, Hunan Yuneng has the risk of a high concentration of customers, accounting for more than 96.11% of sales to the top 5 customers. In particular, the first and second largest customers together accounted for more than 78% of sales.

Hunan Yuneng said that the company is actively expanding domestic energy storage and power battery customers. In 2023, in addition to the two major customers of CATL and BYD, the proportion of sales of other customers has increased to 23.29%, and it can be known from the annual report information that EVE is one of them.

—2—Three major battery companies "selected" Spain

Among the batteries cooperating with Hunan Yuneng, CATL and BYD currently have plans to deploy in Spain.

CATL signed a memorandum of understanding with Stellantis Group in November 2023. CATL will supply lithium iron phosphate battery cells and modules to Stellantis Group in Europe to support Stellantis' electric vehicle production in the European market. At the same time, the two parties also explored the possibility of establishing a joint venture on a peer-to-peer basis.

In January this year, foreign media reported that Stellantis Group is selecting a site for its fourth battery factory in Europe and plans to cooperate with CATL, which is expected to settle in Spain.

As for BYD, it seems to be earlier than the CATL era. In April 2023, the Spanish newspaper "Expansion" reported that BYD was considering building a new battery gigafactory in Spain.

In fact, in addition to building a battery plant, BYD has already developed electric passenger cars and energy storage business in Spain. On the electric vehicle side, BYD simultaneously launched three pure electric models in the Spanish market in April last year, including Han, Tang and BYD ATTO 3, and two pioneer stores in the center of Madrid, the capital of Spain, and Barcelona were also officially opened. On the energy storage side, at the beginning of this year, BYD received an order for a 1.1GWh energy storage system from Grenergy, a Spanish energy storage company.

In this way, BYD has more reason to deploy battery production capacity in Spain to boost business expansion in the European market.

In addition to these two battery companies, Envision Power has laid out the Spanish market earlier. In June 2022, Envision Power announced that it would build a gigafactory with a planned capacity of 30GWh in the Navarmola de la Mata region of Spain, which will be completed and put into operation in 2025. This is Envision Power's third zero-carbon battery plant in Europe.

In addition to the relatively stable international environment, battery companies choose the Spanish market, and the most important thing is to take a fancy to its electric vehicle industry.

—3—Europe's second largest automobile producer

As the second largest automobile producer in Europe, Spain has a huge automotive industry cluster, and its automobile production capacity is second only to Germany. Relevant survey data shows that from 2019 to 2022, due to multiple factors such as the epidemic, chip shortages and the market, the development of the Spanish automobile industry will be slow. However, since 2023, its automobile manufacturing industry has picked up, with nearly 2.5 million cars produced in Spain in 2023 and predicted to reach about 2.3 million vehicles annually in 2024.

In addition, under the influence of policies such as the "Electric Vehicle Industry Incentive Program" and the "New Energy Vehicle Promotion Strategy", Spain has become one of the world's leading countries in the field of new energy, driving further growth in automobile production and sales.

According to data from January this year, Spain's automobile production increased by 18.7% year-on-year, and automobile sales increased by 8.1% year-on-year, of which the output of new energy vehicles increased by 11.9% year-on-year.

Not only Volkswagen, Mercedes-Benz, Audi, PSA, Nissan, Ford and other international first-line car companies have industrial manufacturing bases in Spain, but more and more domestic car companies have deployed in Spain, using Spain as a springboard to enter Europe.

For example, Chery Automobile, on April 19, signed an agreement with the Spanish car company Ebro-EV Motors to establish a joint venture in Barcelona, Spain to produce new electric vehicles, Chery Automobile will take the lead in the production of Omenda and other models in the third and fourth quarters of this year, and is expected to reach 50,000 units per year by 2027 and increase to 150,000 units in 2029.

There is also Xpeng, which has reached an agreement with the Spanish distributor Salvador Caetano Group to expect to sell electric vehicles in Spain and Portugal this year.

For battery companies, the energy storage market may also be an attractive point.

In February 2021, the Spanish government approved a strategic roadmap for energy storage, calling for the deployment of 20GW of energy storage projects by 2030 and 30GW by 2050 in order for the country to achieve carbon neutrality by mid-century. In the past two years, a number of energy storage projects have landed in Spain, which is also a rare opportunity for Chinese companies.

It is foreseeable that under the leadership of terminal car companies, battery leaders and other enterprises, there will be more supporting enterprises going overseas, and the overseas revenue of material companies such as Hunan Yuneng will grow.