The problems behind the development of lithium battery companies

Under the "Tesla" thermal stimulus, whether it is a national policy or a local government, whether it is an overseas market or a domestic market, the "new energy automobile" is a popular keyword that cannot be bypassed, and "lithium power" has become a human being. Want to fight for the feast.

However, the truth behind the feast seems cruel, due to the lack of core technology, a serious excess capacity, the domestic lithium battery companies have fallen into a price war to stop. In the face of the disorderly competition in the “bleeding” industry, the leading lithium battery companies intend to seek self-regulatory cooperation through the G20 approach.

Industry prospects hot companies "bleeding" price cuts

On March 26, the lithium power industry summit held in Dongguan, Guangdong province, was unusually lively around new energy vehicles. According to incomplete statistics, there are more than 300 companies and their responsible persons visiting. At the same time, on the other side of the ocean, the upsurge of Tesla’s detonation is in the ascendant.

According to statistics, in January 2014, domestic production of new energy vehicles (including EV, PHEV, and HEV) was 3,190 units, which represented a year-on-year increase of 16%; in February, the output was 1,837 units, which was the same as that of the previous year. It is estimated that in March, the output will reach 3,000 vehicles, up 12% year-on-year; it is expected to increase by 30% throughout the year. The Institute of Advanced Industrial and Commercial Research predicts that the global electric vehicle market will start heavy volume in the second half of 2014. The power battery market will drive the growth of lithium battery materials. With the growth of batteries, material companies will set off a new round of investment. The size of the four key materials market will be about four times that of 2013 by 2020.

However, for domestic lithium-ion companies, this seemingly lively feast is still only temporary. “Although domestic lithium battery cathode materials account for more than 40% of the global market, most of them are mainly in the low-end market and have low technical thresholds. The large amount of investment comes from other areas where there is little or no technology accumulation.” Wu Mengtao, general manager of Tianjin Bar Film Technology Co., Ltd., a leading company, said.

The data shows that as of 2013, there are as many as 171 cathode material manufacturers in China. On the one hand, new emerging demand markets such as 3C consumption, mobile power, smart phones, and tablet PCs are generating new opportunities for digital batteries. On the other hand, the favorable policies in the new energy automotive sector also make the future prospects of the power lithium battery industry promising.

Despite promising market demand, a large number of domestic lithium-ion companies are still in the “blood era”. The negative electrode material technology is relatively mature in lithium-ion materials. With the expansion of Chinese and foreign manufacturers, anode material can not avoid the fate of a sharp drop in prices. According to statistics from the Institute of Lithium Industry, the average price of negative materials has dropped from 79,500 yuan/ton in 2010 to 65,000 yuan/ton in 2013, with an average annual decline of 6.5%. The price war made most of the company's gross profit margins squeezed to 25%-30%, and net profit was basically 5%-10%, leaving little room for profit.

"Faced with the competition of powerful foreign companies, some domestic companies are helpless. Customers have a long period of arrears and operating pressure, the triangle debt is very common." Dean Xiangshan, deputy general manager and chief engineer of Dongguan Shanshan introduced.

In order to seize market share, some companies use low-price distribution and extended payment cycle marketing strategies, and some companies account for as much as 60% of accounts receivable. Among the lithium-listed companies that have announced the 2013 annual report, there has been a substantial increase in accounts receivables among a number of companies, of which Desai battery accounts receivable accounted for more than 80% increase from the end of 2012. A lithium industry analyst said that accounted for a high proportion of accounts receivable, not only increase the occupation of working capital, is not conducive to the improvement of operating efficiency, but also allows companies to lay the worries of capital chain fracture.

Dr. Zhang Xiaofei, president of the Institute of High Industrial and Industrial Research, pointed out that the downstream core cell factory is affected by the price drop, in order to increase the profit rate, and to force the material price. In particular, major cell manufacturers have a large demand for materials and have stronger bargaining power. The payment cycle of the cell manufacturers has also been extended by an average of one month from last year. Account period 60-90 days is a common phenomenon. At the same time, the competition from international material manufacturers is also squeezing the survival space of domestic manufacturers.

Some industry insiders expect that homogenous competition will only bring about vicious competition and lower profits of the industry. In the future, the overall price competition for lithium battery will be more intense, but the market will be polarized, that is, only regular products and low-end products. Enterprises, price competition will be more intense, and some companies do high-end performance products, may be used in large quantities with the downstream application industry, in the price and profit margins are relatively better. This depends on the company's own technology accumulation and R&D strength.

No key technology is the crux of the matter

The industry policy is good and the market prospects are broad. Why does the related lithium battery company fail to make money? The lack of core technology is still the key.

The new Chou CTO stone bridge introduced at the G20 summit, the application of anode film forming additive has been quite mature, the application of positive electrode protection additives is getting less and less, anti-overcharge additives have a small amount of application, the most important is the high cost. The patents for the core additives are mainly in the hands of Japanese companies, and Chinese companies have relatively few patents.

Zhang Xiaofei pointed out that China's lithium battery industry faces problems such as lack of core technologies, low level of overall automation, and homogenous competition. Currently, it also raises new issues such as tight funding, rising debt ratios, increased inventory, and lower gross margins. Coupled with the prevalence of local protectionism, policy implementation is not in place and the healthy growth of excellent companies is constrained. At present, the supply and demand of the lithium battery market is seriously out of balance, especially the utilization rate of the power battery is below 30%.

"From the point of view of the key components of lithium batteries, companies in the fields of cathode materials, anode materials, electrolytes, and separators face different levels of homogenization competition, overcapacity, and price wars." Zhang Xiaofei , Lithium materials, generally overcapacity, resulting in imbalance between supply and demand, downstream bargaining power, price disorder competition has become the norm, which lithium iron phosphate excess is the most serious, the total capacity utilization rate below 10%.

Taking the lithium cobalt oxide used in cathode materials as an example, Wu Mengtao of Tianjin Balcome introduced that “At present, the domestic market price is 4 to 5 thousand US dollars lower than that of Korean domestic companies. The domestic cathode material industry is competing in the technical level. Completely losing the competitiveness that was not originally strong, and it completely became the cheap material wholesale market of Korea Battery Company."

The electrolytic solution known as the "blood" of lithium batteries also has excess capacity. Ding Xianghuan of Dongguan Shanshan said that currently there are about 45 domestic electrolyte manufacturers, the total annual production capacity of more than 150,000 tons, a serious excess demand, the situation can not be reversed within a short time, or will last at least 2-3 years.

The diaphragm industry, which has high technical requirements, has not been spared. According to Yang Jiafu, deputy general manager of Shenzhen Xingyuan Materials, in terms of the current status, the global market demand for the diaphragm in 2013 is probably 750 million pings. The high-end market is monopolized by the United States, Japan and South Korea, and 80% of the mid-range market is also foreign. Occupy, the low-end market is only vicious competition by many domestic companies, China has entered the entire field of membrane manufacturers 46, the design capacity of more than 1.8 billion Ping, a serious excess capacity.

“At present, the domestic diaphragm companies have planned production capacity that is far greater than the actual global production capacity, but actual shipments are very small.” Gu Chuanming, deputy general manager of Luzhou Pearl Pearl, a supplier of lithium battery separator materials, introduced in more than 40 companies involved in lithium battery separators in China. There are fewer than 20 companies that really have products, and less than 10 that have been approved by users. Domestic diaphragm production and yields are very low. Domestic diaphragms have reduced prices by more than 30% in the past year, and most of them are in the dry process. In the low-end and middle-end markets, there are relatively few dry-sheet and wet-film companies that are in line with international standards. Most of the diaphragm companies have price war issues, and only a few companies have entered the quality system competition.

Without a key technology, China's lithium-ion companies, in order to survive, desperation can only choose the price war this "kill ten thousand, self-defeat eight thousand" tricks. Zhang Xiaofei lamented that price competition has led to a decrease in the gross profit rate of materials and a decline in profitability. In order to reduce production costs, Dachang has continuously expanded its production capacity, further exacerbating industry competition.

G20 released industrial chain complementary cooperation and self-help

The chaotic situation of the industry is forcing domestic companies to seek the path of self-discipline cooperation. At the first G20-Lithium Summit of the Lithium Ignition Organization of March 26, the debuted lithium G20 members included 20 companies including BYD, Dongguan Shanshan, Tianci Materials, Xinzhou State, and Zhuozhou Pearl. large enterprise.

“In the lithium battery industry, there are currently two choices before us: one option is to continue to go it alone on a level with no standards and continue to smash prices with its peers; another option is to move the entire industry. The technical strengths of all links in the chain combine to highlight the advantages of integration in various segments.” Zhang Xiaofei said that for many companies in the domestic lithium industry, whether they want to import international supply chains, they still hope to integrate the entire industry chain. It is always the driving force behind the industry. Only by making breakthroughs in technology can there be a rise in the end-use market.

China Securities Journal reporter learned that the G20 summit reached a total of four proposals, namely: the draft G20-Lithium industry chain core material and core product market specifications; draft G20-lithium industry chain core material technology industrialization roadmap; The G20-Lithium Summit Product Specification Application Development Team was established; the G20-Lithium Summit Technology Sharing Center was established.

Zhang Xiaofei introduced the drafting of lithium battery product market regulations. The summit companies will lead by example in the market and will play a demonstration effect on the market; draft the roadmap for the industrialization of lithium-ion electricity industry chain technology, such as the 3-5-year technical indicator roadmap, market-oriented. Develop products to promote the lithium industrialization process; set up the G20 Lithium Summit product specification application development group to allow companies in the industry chain to select each other from the upstream to the downstream, form a cooperative body with each other, and jointly develop application products; Summit members Signed technical confidentiality agreement to build a technology sharing center and share technology within a certain range.

“The G20 summit was initiated entirely by the people and showed an urgent need for industry norms.” According to industry insiders, the establishment of such associations should have been dominated by the government, but the relevant government departments have lagging information and faced an inflection point in the industry. Many companies cannot wait. Launched by Lithium Power, a third-party platform of the lithium power industry, it will help ease the current chaos in the industry, promote the integration of resources in the industry, and realize the expansion of the industry.

Zhengye CTO Fan Bin said that with the introduction of a series of new energy support policies in the country, it is bound to drive the rapid growth of the lithium battery industry, and to the development of satellites, aerospace and aviation, the domestic demand for lithium batteries will grow rapidly, domestic Lithium battery companies will certainly have a huge market growth space, but China's lithium battery companies account for a small share in the country, lithium battery technology development and application and the international level there is a certain gap, through the formation of this industry chain "Alliance" can Deepen exchanges and interaction in the industry, promote the improvement of industrial industry supply chain, and enhance the competitiveness of industry enterprises in the international market.

Some participating companies introduced that although most of the key lithium battery manufacturers, including electrolytes, separators, and positive and negative grades, have all established lithium-ion battery small-scale test lines, there is a lack of upstream and downstream collaborative R&D platforms in the industry. The technology sharing center is expected to establish a new model for technology research and development, and a more market-oriented R&D portfolio will promote accelerated technology development.

“The overall advantages of the automotive industry supply chain are very important. If the G20 model is successful, in the future, a domestic supply chain structure will be formed with large-scale electric vehicle manufacturers as the core and 2-3 mainstream suppliers for each key material and equipment manufacturer.” Said.

There are also G20 summit companies told the China Securities Journal reporter that, compared with the horizontal cooperation of the industry chain, the vertical cooperation of the G20 industry chain is not difficult in practical operation. But in any case, the lithium battery industry has begun to realize the problem. Through mutual assistance, cooperation, and technology research and development, it is of great benefit to the industry's standardized development.

Institutions are optimistic about new energy automotive sector

Driven by multiple forces such as policies, energy security and environmental pressure, the development of new energy vehicles is expected to accelerate. According to institutional sources, new energy vehicles will gradually be recognized by the general public as new technologies such as cruising range, safety and reliability, and manufacturing costs continue to decline. New energy auto industry related companies are expected to usher in a period of rapid development.

Since last year, as Tesla continued to be hot, the A-share new energy vehicle segment also performed well. Wind data shows that since the first trading day of 2014, the new energy automobile index closed as of March 27, with a cumulative increase of 9.88%, while the Shanghai and Shenzhen 300 Index fell 6.82% over the same period.

The new energy auto sector is especially loved by fund companies. The Southern Fund, Agricultural Banking Fund, Debon Fund and SWS Fund have paid special attention to this topic. The Southern Fund believes that this sector is and will continue to be strongly supported by national policies in the future. There is great room for industry development and the prospects for future earnings growth are good. The Debon Fund proposes to pay attention to the lithium-ion battery and energy storage in the sub-sector under the new energy vehicle sector because they belong to emerging industries that start with time in the West and bring together many advantages such as new technologies and environmental protection. The country is expected to issue policies. Strong support.

Li Bengang, fund manager of domestic growth for Dacheng Fund, believes that the core of new energy vehicles is how to define the attributes of their consumer products. New energy vehicles differ greatly from other optional consumer products. First, one-time expenditures are large, and real entry thresholds need to be reduced to switch costs. Higher, so limited by the policy and manufacturer brand; Second, the energy supply limit is the strongest, there is no uniform standard. Based on a comprehensive analysis, the impact of energy and policies on the penetration rate of new energy vehicles is much higher than the experience. The path of beneficiaries of the new energy automotive industry chain is expected to follow the “transmission and distribution companies—import agents—new energy buses and some taxi manufacturers—new energy vehicle manufacturers—upstream industry chain manufacturers”. Evolution.

“In the context of policy support and technological advancement, 2014 will be the first year of the explosive growth of China's new energy vehicles, and related sectors may benefit, such as the new energy passenger car segment.” CCB Fund exemplifies each new energy vehicle According to the calculation of the minimum cumulative promotion volume for the 5,000 cities, the number of promotion in the two batches of promotion cities needs to reach more than 250,000 vehicles, among which the sales of new energy vehicles in the public sector is 130,000, and 50% of the neutral assumptions are sales of new energy buses. With sales of new energy buses at about 65,000 vehicles, the average annual sales volume in 2014-2015 will be around 30,000 units, which is a significant increase from sales of less than 10,000 units in 2013. The increase in subsidies for new energy vehicles will also benefit the pure electric passenger car segment.

From the perspective of the sub-industry chain, agencies believe that new energy vehicles, especially electric vehicles, will promote the development of automotive electrification, and the promotion of new energy vehicles will inevitably bring about growth in the motor drive system market, with automotive drive motors and control systems. High-quality companies with core technologies will benefit significantly. In addition, electric component manufacturers will benefit from the rapid development of the new energy automotive industry, while strict industry certification will build deeper moats for outstanding companies in the industry, which will be higher than those in general industrial applications. Profit rate.

CCB Fund believes that in the long run, the extensive promotion of new energy vehicles will benefit the upstream lithium resources. As the relationship between supply and demand improves, the price trend of lithium carbonate and the valuation of the overall sector will also change accordingly. This will provide better investment opportunities. At the same time, the benefit of more new energy vehicles is still to choose NdFeB permanent magnet motor as the drive motor, NdFeB plate will also benefit.

Industrial Alliance Helps Lithium Power Industry Develop Healthily

With the gradual release of sales of new energy vehicles, the lithium battery industry is entering a new period. Industrial development is ushering in a turning point. "In 2014, China's electric vehicle market will have an increase of about 120%." Dr. Zhang Xiaofei, director of the Institute of Advanced Industrial Science and Technology, said in an exclusive interview with the China Securities Journal that one side is the rapid development of the industry and the other is a fierce price war. , All companies go it alone, in this market situation, the development of industry standards and self-discipline in the industry has become particularly important, the establishment of lithium battery G20, is to hope to help the lithium battery industry healthy development.

China Securities Journal: What is the background of the establishment of the Lithium-powered G20?

Zhang Xiaofei: On the one hand, the lithium battery industry in China will usher in an inflection point. The world's major manufacturers are making efforts in electric vehicles. In 2013, there were more than 10,000 vehicles including the Lingfeng Motors, Chevrolet Volvos, Tesla Motors, and Toyota Prius. We estimate that the global electric vehicle market will grow by 80% in 2014, and China will have a 120% increase, thus breaking the very slow development of electric vehicles in previous years. At the same time, starting from the end of last year, the country has introduced various subsidy policies in succession, which has produced significant benefits for the entire industry. On the other hand, the industry is currently facing the dilemma of overcapacity, fierce price competition, and lack of industry standards. Therefore, from the lithium-electricity industry to the downstream electric vehicle industry should develop a corresponding plan, if Tesla enters the Chinese market in 2017, and China does not have a corresponding strategy, it will be a major blow to the entire domestic battery industry.

China Securities Journal: What are the specific aspects of the lithium battery G20?

Zhang Xiaofei: This is the first summit of the lithium battery G20. At present, only some preliminary agreement of intent has been reached. The future will be gradually deepened and the industry standards will be formulated. The agreement of intent mainly includes four aspects: first, the drafting of the G20 Lithium-Ion industrial chain core material and the core product market specification; secondly, the drafting of the G20 Lithium-Ion industrial chain core material technology industrialization roadmap; third, the establishment of the G20 Lithium Summit product Standardize the application development team; Fourth, establish the G20 Lithium Summit Technology Sharing Center. The members of the first G20-Lithium Summit basically covered the representatives of outstanding leaders in all aspects of the entire lithium-industry chain, including leading companies in lithium battery manufacturing - CNAC Lithium Battery, Universal Solar, Foster, Tianjin Group and Zhongtian Energy Storage. , cathode materials leading enterprises - Jiangxi Zhengtuo, the emerging supplier of comprehensive lithium battery materials - Xingneng new materials, leading companies diaphragm - China Science and Technology, Pearl Zhuozhou, star source material, electrolyte and upstream material leader - Xinzhou State, Dongguan Shanshan, Guangzhou Tianci, a leading company in lithium battery equipment - new Jia Tuo, Zhengye Technology, Jiyang Automation, Hongbao, electric vehicle manufacturing leader - BYD, Wuzhou Long.

China Securities Journal: What are the implications for the future development of lithium-ion G20?

Zhang Xiaofei: The companies in the industry are strong and united to jointly promote market regulations, combine the technical strengths of all links in the industry, and highlight the level of integration in this segment, which can increase the professionalism and concentration of the company. While expanding the scale. In layman's terms, if the industry is able to unite and unite, it is more likely that companies will praise each other, rather than “vicious competition,” and resist the attacks of foreign companies in the domestic market. The G20's goal is to promote such a profound event in the lithium industry in China.