Analyze the 'Matthew Effect' in the power lithium battery industry

According to public data, the number of power lithium battery companies in my country reached 155 in 2016, and by 2017 it has dropped to about 130. Some institutions predict that by the end of June 2018, there may be only 105 power lithium battery companies in my country. In the process of rapid technology iteration and continuous price drops, once the technology or capital cannot keep up with the development of the market, power lithium battery companies are in danger of being eliminated. In April of this year, many new energy vehicle power lithium battery companies have successively released their 2017 performance reports. Many of them have experienced a slowdown in performance growth, and their net profits have declined significantly. For example, Mengshi Technology lost 129 million yuan in 2017, a sharp drop of 236.98% year-on-year; BYD's net profit in 2017 also failed to achieve positive growth, down 19.5% year-on-year. Attracted by the policy dividend, a large number of small and medium-sized battery companies in China have swarmed in the past two to three years, rapidly expanding and increasing production, and the power lithium battery industry has become a red sea. Power lithium batteries have overcapacity, and my country's lithium batteries have a structural surplus. At the same time, as new power lithium battery project requirements, high energy density subsidy coefficients and other policies, and Japanese and Korean battery companies return to the Chinese market one after another, the power lithium battery industry has begun to enter a state of elimination. According to relevant information, China's power lithium battery supporting enterprises have dropped from 150 in 2015 to about 100 in 2017, and one-third of the enterprises have been eliminated. According to SMM's understanding, the domestic battery company market in the first half of 2018 was average. Compared with the same period last year, the order volume of battery companies from January to June was only a quarter of last year. The price of raw materials for power lithium batteries has risen. The subsidy policy has declined to produce raw materials such as cobalt and lithium, which are essential for the production of power lithium batteries. Prices have risen rapidly in the past for a long time. The rise in the price of upstream raw materials has led to bottlenecks in the development of technology, and the pressure on the production cost of the entire industry chain has risen sharply. At the same time, subsidy decline is also a key word for the new energy automobile industry in 2017. According to the 'Notice on the Financial Support Policy for the Promotion and Application of Xinnengyan Automobiles from 2016 to 2020Decrease by 40% on the basis. Affected by the decline of new energy vehicle subsidies, many new energy vehicle companies have transferred pressure to power lithium battery companies in order to reduce production costs, continuously forcing battery manufacturers to lower their prices, resulting in financial problems for power lithium battery companies and The phenomenon of operating difficulties. In 2018, the new energy vehicle subsidy standard also has new requirements. The subsidy level has been increased from 3 to 5, and the subsidy threshold has been increased from 100 kilometers to 150 kilometers. Due to the rapid adjustment of subsidy standards, many companies that produce low-energy-density lithium batteries will not have time to transform in the future, and the performance of many battery companies has basically experienced a sharp decline. Faced with the dual effects of rising raw material prices and subsidy decline, power lithium battery companies have to maintain their competitiveness in the growing trend of raw materials, and many have chosen to sign cooperation or buy shares with upstream supply chain companies. Improve market competitiveness by ensuring adequate supply of resources. In addition, many battery companies have established stable and long-term cooperative relations with car companies. Battery factories and automakers have established joint ventures to expand production capacity and reduce prices. Such as the cooperation between Guoxuan High-tech, Funeng and BAIC Group, CATL, Fluoride and Geely Group, and CATL and BMW. By establishing long-term cooperation with car companies, we can ensure a stable sales channel for products, thereby reducing the impact of falling battery prices on the compression of profitability. Enhancing the research and development of high-energy-density batteries and entering high-end production capacity. Driven by policies and restricted by technical conditions, currently pure electric models can only choose ternary lithium batteries with higher energy density. Even in the early transformation of the Ningde era, there are still nearly half The production capacity of lithium iron phosphate batteries, more ternary lithium battery production capacity is still in the planning. Therefore, there has also been a situation where the supply of power lithium battery companies is less than demand, and structural overcapacity and structural undercapacity exist at the same time. In addition to being made into power lithium batteries, lithium battery products can also be made into energy storage batteries. Between the two, the price of power lithium batteries is higher. Unlike power lithium batteries, energy storage batteries do not require high energy density, but The requirements for battery safety and life are extremely high. For example, lithium iron phosphate batteries, due to their low energy density, are gradually replaced by ternary lithium batteries in the field of power lithium batteries. The safety of lithium iron phosphate batteries is very good. Energy storage power stations choose lithium iron phosphate batteries as energy storage batteries. In fact, it is precisely because of the safety of lithium iron phosphate batteries that BYD has long used them as batteries for new energy vehicles. Because of this, it is gradually emphasizing long battery life. Today with mileage, BYD’s lithium battery output has been surpassed by the Ningde era, which focused on high-energy density lithium batteries. Looking at the entire power lithium battery industry, there are still a series of problems in domestic high-energy-density battery technology. Subsidy policy requirements for battery performance, standards for investment in new battery projects, whitelisting of Japanese and Korean powers, and in-depth layout of high-quality battery companies in the upstream and downstream... This series of actions will promote the technological level of the battery industry and the rapid survival of the fittest in competition , How to ensure a superior position in the competition? Eliminating excess production capacity, deploying new production capacity, investing in new technology research and development, and deep binding with car companies... This will all become the direction of battery companies' strategic planning.