Next year, the price of power lithium batteries should fall within 10%

Raw material prices remain high, power lithium battery prices continue to fall, product gross profit margins have fallen, and market agglomeration has further increased. A large number of power lithium battery companies encountered a decline in revenue and net profit in 2018 and even turned from profit to loss. 'The price of power lithium batteries has dropped too fast, but the price of raw materials has not been able to keep up. The main engine factory has transmitted most of the pressure to the battery factory, which has caused a large number of battery companies to experience operational difficulties this year.' General Manager of Far East Foster Cai Dong told Gaogong Lithium that the current OEMs are negotiating with battery manufacturers for the purchase price of batteries for next year, but it is difficult to land. The important thing is that the battery price drop required by the OEMs has placed great pressure on the battery manufacturers. Gaogong Lithium learned in the '2018 (4th) Gaogong Electric Vehicle National New Energy Vehicle Enterprise Tour' event that due to the continued decline of new energy vehicle subsidies and the pressure of intensified market competition, OEMs are adopting various Actively reduce the cost of the entire vehicle. Among them, the main engine factory generally puts forward the request to the battery factory to reduce the battery price by 20% next year, and the highest requirement even reaches 40%. 'It is required that the battery price be reduced by 40% next year. In fact, the main engine factory wants to put all the cost reduction pressure on the battery factory. This is obviously unreasonable.' Cai Dong believes that although the upstream raw materials have been lowered, the battery's The room for price reduction is still limited. Therefore, next year's battery price should be more reasonable if it falls by 5-10% under the same conditions. In fact, in recent years, the explosion of the new energy vehicle market has driven the production and sales of power lithium batteries to rise sharply, but the price of batteries has continued to fall. Data shows that the market price of ternary power lithium batteries in 2017 is around 1.7-2.0 yuan/Wh, and the current market price is around 1.3-1.5 yuan/Wh, with a price drop of more than 20%. In accordance with the 20% price reduction requirement next year, the price of ternary battery from 1.05-1.15 yuan/Wh will become the price generally hoped by OEMs next year. The industry believes that the price reduction of power lithium batteries is the development trend of the industry, but it is very difficult to require the battery price to quickly drop from the current price to 1 yuan/Wh, and battery companies are facing tremendous pressure to reduce costs. 'On this basis, the resistance to further price reductions mainly comes from materials.' Many senior executives of the ternary power lithium battery company said that the price reduction of materials has not been as large as the price reduction of batteries. Material prices have generally fallen this year, and they have still not kept up with the pace of battery price cuts. In this regard, Cai Dong believes that the battery company’s current approach to reduce costs by arranging upstream raw materials does not make much sense, only to improve the company’s product performance and reduce manufacturing costs by practicing internal power. Under this pressure, Far East Foster enhanced the company's market competitiveness by introducing new materials, developing new products, and expanding production. In terms of introducing new materials, Far East Foster currently focuses on 2.6Ah/2.9Ah18650 batteries with an energy density of 220Wh/kg, and the energy density of the pack is about 140-150Wh/kg. On this basis, the company is actively developing high-nickel 811 products. Currently, high-nickel 811 products are shipped. It is expected that the proportion of high-nickel products will further increase next year. In terms of developing new products, Far East Foster focused on the layout of 21700 batteries on the basis of consolidating 18650 products. The company has introduced two advanced fully automated battery production lines with a processing efficiency of 200 ppm and a daily output of more than 400,000 batteries. On October 26th, Far East Foster's 3GWh21700 power lithium-ion battery project, a wholly-owned subsidiary of Smart Energy (600869), was officially put into operation, marking that Far East Foster's power lithium battery business has entered a new stage. The mass-produced 4.0Ah/4.5Ah21700 batteries use a high nickel cathode + silicon carbon anode material system, with an energy density of 240Wh/kg or more, and the energy density of the pack is 160-180Wh/kg, which is important for new energy sources. Logistics vehicles, passenger vehicles, etc. At the commissioning ceremony, Far East Foster received an order from Jiangling New Energy for 5,000 sets of 21700 power lithium battery systems in the first quarter of 2019, which are important for new models of more than 300 kilometers and have been delivered to many OEMs for verification. 'Next year the company will increase investment in 21700 batteries, and the proportion of power lithium battery products will reach half.' Cai Dong said truthfully. In terms of production expansion, Far East Foster's existing 18650 processing line has an output of 3GWh, and an additional 3GWh of 21,700 output. At the same time, Smart Energy also raised 1.8 billion yuan to build a high-energy-density power storage (square) lithium-ion battery research and development and industrialization project, adding 5GWh of square battery production. 'The proportion of mid-to-high-end models above A0 level that use square and soft-pack batteries will increase, but mini-cars below 300 kilometers are more optimistic about cylindrical.' Cai Dong told Gaogong Lithium that the delivery of cylindrical products is fast and cost-effective. , After the subsidy is completely withdrawn, there will be more cost advantages, so there is still confidence in the future use of cylindrical batteries in passenger cars and logistics vehicles.