From 2023 to the first quarter of 2024, although the terminal new energy vehicle companies are mired in price wars, they still maintain positive growth in operating income.
In contrast, most of the middle and upstream lithium battery manufacturers are facing the dilemma of a significant reduction in capacity utilization, a decline in revenue, a decrease in product prices and a decline in industry status. In the future, lithium battery manufacturers may experience a difficult period in the middle and upper reaches.
1. The upstream and downstream manufacturers in the lithium battery industry are collectively cold
Benefiting from policies and sales, midstream and upstream manufacturers in the lithium battery industry chain will significantly expand their production capacity from 2021 to 2022.
The huge new production capacity will be released in 23-24 years, so that the middle and upstream manufacturers of the lithium battery industry chain will have an oversupply.
(1) The capacity utilization rate of midstream and upstream manufacturers has declined seriously
In 2023, domestic sales of new energy vehicles will reach 9.495 million units, a year-on-year increase of 37.9%. However, power battery and lithium battery material manufacturers have expanded production by more than 50%. As a result, the capacity utilization rate of domestic lithium battery manufacturers fell by 20 percentage points to less than 50%.
The situation of lithium battery material manufacturers is even more serious. According to the latest data from JPMorgan Chase, the capacity utilization rate of separator manufacturers has dropped by nearly 30 percentage points to 50%. The capacity utilization rate of electrolyte manufacturers also fell by more than 20 percentage points to less than 30%.
(2) The rate of battery expansion has begun to slow down, and the leader is expected to take the lead in getting out of the predicament
Fortunately, most power battery manufacturers have begun to consciously slow down the pace of expansion and reduce capital expenditure. Taking the leading company CATL as an example, in the first quarter of this year, CATL's capital expenditure showed signs of slowing down, CATL's fixed assets were 114.5 billion yuan, the first month-on-month decline, and the construction in progress was 26.22 billion yuan, down 18.9% year-on-year.
In the future, as a leading lithium battery manufacturer, CATL will work closely with many terminal new energy vehicle companies with high-quality battery products, with stable demand and slowed down production expansion, and the subsequent capacity utilization rate will be improved. However, second- and third-tier power battery manufacturers, such as EVE and Guoxuan Hi-Tech, may continue to face the dilemma of declining capacity utilization.
Correspondingly, upstream lithium battery material manufacturers still have a large number of fixed assets under construction, and the increase in fixed assets under construction is higher than that of fixed assets. Taking Putailai, a leading negative electrode company, as an example, the fixed assets in the first quarter of this year were 6.745 billion yuan, a year-on-year increase of 14.44%, and basically the same as the previous quarter; The construction under construction was 6.136 billion yuan, an increase of 108.14% year-on-year and 20.8% month-on-month.
Therefore, in the short term, it may be difficult to improve the capacity utilization rate of upstream lithium battery material manufacturers.
(3) It is unlikely that battery and material prices will improve in the future
In addition, due to the oversupply of the overall lithium battery market, the industry status and voice of the middle and upper reaches have also begun to shift to the terminal, and the decline in the price of power batteries and materials is inevitable. In addition, it is unlikely that the price of the product will improve in the short to medium term.
In 2023, the intensity of the price war in the power battery market is increasing. The average price of lithium iron phosphate batteries (power type) and ternary lithium batteries (power type) has dropped by about 55%; Among the four major materials, the price reductions of cathode materials (ternary 523), anode materials (artificial graphite), electrolytes (ternary conventional power type) and separators (wet base film 5 microns) were as high as 63%, 64%, 55% and 17%, respectively.
Moreover, in 2024, under the smoke of the price war of terminal new energy vehicles, the price decline trend of power batteries and lithium battery materials will obviously continue.
2. The hard days of upstream lithium battery material manufacturers will continue
In 2023, despite the decline in product prices, the increase in sales volume partially offset the impact, and terminal new energy vehicle companies and power battery manufacturers still achieved positive growth in operating income and profit. However, lithium battery material manufacturers have all been wiped out, none of them will achieve profit growth in 2023, and their revenue will all decline year-on-year.
Wall Street Insight and Wisdom Research believes that the main reason is that in order to save costs, midstream and downstream manufacturers continue to transmit pricing pressure to upstream manufacturers, resulting in a decline in material prices greater than the growth in shipments. In the context of the price war in the new energy vehicle market, the industry status and bargaining power of upstream lithium battery materials enterprises have been weakened, and they are facing the problems of extending the cash conversion cycle, increasing inventory turnover rate and accounts receivable days.
Taking Tianci Materials, a leading electrolyte manufacturer, as an example, in 2023, its accounts receivable days increased by 61.3% to 104.3 days, inventory turnover days increased by 18.6% to 55.93 days, and net cash flow from operating activities decreased by 45.4% year-on-year to 2.274 billion yuan.
Looking ahead, the plight of lithium battery material manufacturers may continue. Compared with new energy vehicle companies and power battery manufacturers, lithium battery material manufacturers are more dependent on government subsidies. In 2023, the amount of government subsidies received by companies in the lithium battery industry chain as a percentage of net profit will increase, but the growth rate of lithium battery material manufacturers will be significantly higher than that of midstream and downstream companies.
Taking the leading company CATL as an example, the proportion of government subsidies in 2023 will increase from 8.8% to 13%; The proportion of government subsidies for lithium battery material manufacturers such as Putailai, Shanshan Co., Ltd. and Rongbai Technology has increased by more than 10%.
With the further decline of subsidies related to the domestic new energy vehicle industry in the future, lithium battery material manufacturers whose main business profitability has been declining may face the dilemma of continuing to shrink their net profits. To sum up, under the double blow of fierce competition and price war in the new energy vehicle market, lithium battery manufacturers are standing at the crossroads of the industry, especially for those small and medium-sized manufacturers, how to break through the encirclement and find new growth points will be a problem they have to face.
With the gradual retreat of policy dividends, the reshuffle of the lithium battery industry has also begun to enter the acceleration stage, and then the real winners can stand out.
This article is from Wall Street News, welcome to download the APP to see more