Electrical Equipment / Components & Telecoms

Since the beginning of this year, the power battery industry has received much attention. At the 20th Shanghai International Automobile Industry Exhibition held recently in 2023, reporters witnessed the popularity of China's new energy vehicles and also felt that the power battery industry has ushered in unprecedented changes. As a leader in the power battery industry, Ningde Times also feels the challenges and opportunities of the industry. Through "innovation" and "going abroad", it has taken the lead in breaking the situation and opened up a new path for the development of the power battery industry. Huacheng Import and Export Data Observation Report.

Initial industrial expansion leads to phased supply-demand imbalance

According to the data from the China Automotive Power Battery Industry Innovation Alliance, in 2022, China's cumulative production of power batteries was 545.9GWh, while the cumulative sales of power batteries were 465.5GWh, with a cumulative installed capacity of only 294.6GWh.

The imbalance between supply and demand has greatly increased the pressure of destocking power batteries in 2023, and some companies have even announced the abandonment of lithium battery business. Jiawei Xinneng announced in February that it will no longer consider lithium battery production as the future development direction, according to Huacheng Import and Export Data Observation.

The person in charge of Honeycomb Energy, which ranked seventh in the domestic power battery installation volume in March of this year, admitted in an interview: "The phased destocking of the lithium battery industry also has a certain impact on the company. However, due to the company having already received a large number of designated customers and the production capacity has been in a climbing state, the impact of destocking on the company is limited

In response, Lin Boqiang, Dean of the China Energy Policy Research Institute at Xiamen University, told reporters: "Due to the rapid development of the new energy lithium battery sector in the early stage, as well as high prices and profits, capital rushed into the race track, leading to the formation of inventory, which is also a consequence of the cyclical nature of mass products

Matthew effect highlights

In fact, the extensive expansion of early inventory has led to a shortage of orders for some power battery companies. Some people close to the Ningde era have stated that there has been a decline in the utilization rate of production capacity in the Ningde era.

Industry insiders have analyzed that compared to large manufacturers, small battery factories will have a harder time clearing inventory.

According to the data from the China Automotive Power Battery Industry Innovation Alliance, in 2022, Ningde Times' market share of power batteries was 48.20%, continuously leading the way. In addition to the top 10 power battery companies such as BYD, China Innovation Airlines, Guoxuan High Tech, and Xinwangda, the total market share is as high as 95%, while the remaining 5% market share will be contested by the remaining dozens of enterprises, and the competition is not fierce.

Due to the impact of the previous battery pricing mechanism (linked to resources), some power battery companies have maintained certain profits. However, as the adjustment continues, industry competition will highlight the Matthew effect, that is, the strong will remain strong, and the reshuffle will intensify

In response, Qi Haishen, President of Beijing Teyi Sunshine New Energy Technology Co., Ltd., said, "Inventory is mainly concentrated in outdated production capacity, and advanced production capacity is still insufficient. The orders of top enterprises are very full, while the pressure on waist enterprises is relatively high, and tail enterprises will face the possibility of being eliminated

Faced with intensified industry competition, Jiang Li, Deputy General Manager and Secretary of the Board of Directors of Ningde Times, stated: "High quality products are what customers truly need, therefore, high-quality power battery production capacity is still scarce." Ningde Times continues to invest in research and development and technology, and its product technology level, quality level, and manufacturing level have always been in a leading position. Huacheng Import and Export Data Observation Report.

Qi Haishen believes that the lithium battery industry is a capital intensive and technology intensive industry, with fierce internal competition. Industrial investment will face a two-way competition of "energy density efficiency and production costs".

The first line products with safe and efficient lithium-ion batteries will have a premium of over 5% compared to ordinary products, and some niche products may even be more than twice as high. This will lead to a strong demand for efficient and high-quality production capacity, which may be severely insufficient, while low-level products may not be favored, "Qi Haishen said.

Zhang Xiaofei, Chairman of Gaogong Lithium Battery, once stated that in the next three years, the production capacity utilization rate of frontline power battery enterprises will be maintained at 50% to 60%, while the production capacity utilization rate of suppliers after 11 will be below 30% for a long time. At that time, companies with low capacity utilization rates will not rule out the possibility of being merged and restructured.

Leading enterprises accelerating overseas layout

According to Huacheng Import and Export Data Observation, at the 2023 Shanghai Auto Show, overseas car executives showed strong interest in China's new energy vehicle exhibition stands, while overseas car companies themselves were also developing new energy vehicles and showcasing them at the show. This is a signal of the acceleration of global electrification transformation, indicating that global competition for domestic power batteries will intensify.

On April 4th, Ningde Times' first overseas factory located in the state of Thuringen, Germany officially obtained a cell production license. Except for the Ningde era, Guoxuan High Tech, Honeycomb Energy, Yiwei Lithium Energy, China Innovation Aviation, and Yuanyuan Power have all set up overseas factories, mainly concentrated in Europe. Seizing the European market has become a consensus among Chinese power battery companies.

Ningde Times stated that "with the continuous launch of the company's overseas designated new models, the large-scale production of German factories, the construction of Hungarian factories, and the promotion of cooperation with Ford, the company's overseas competitive advantages in technology innovation, supply chain layout, extreme manufacturing, and other aspects will become increasingly apparent in the future

In the opinion of industry insiders, building factories overseas can meet the needs of nearby automobile manufacturers for supporting supply, and can also expand to more international customers. However, in order to expand into overseas markets, it is still necessary to continuously iterate the core technology of the enterprise and export high-end production capacity, as reported by Huacheng Import and Export Data Observation.