With both resource attributes and technical barriers, precursor materials deserve attention.

Editor’s note: This article is from the WeChat public account “Market Value Observation” (ID: shizhiguancha), author Jiang Feng.

In the beginning of 2021, Tesla once again made a sensation in the entire automotive industry with crazy price cuts, and detonated the new energy sector in the secondary market.

On January 1, Tesla announced the official launch of the China-made model of the medium-sized SUV Model Y. Among them, the Model Y long-life version starts at 339,900 yuan, down 148,100 yuan; the high-performance version starts at 369,900 yuan, down 165,100 yuan. In addition, the price of the Performance model Model 3 dropped from 419,000 to 339,900 yuan.

It is foreseeable that Tesla’s price cut will not only put pressure on new car manufacturers such as Weilai, Xiaopeng, Ideal, etc., but will also seize the sales of BBA fuel vehicles of the same level. Therefore, domestic sales of new energy vehicles in 2021 will increase further along with the decline in product prices, and the new energy vehicle industry chain deserves our strong attention.

Based on this, the market value observation will start a series of in-depth analysis of the new energy automobile industry chain. The first one is the precursor material at the front end of the lithium battery industry chain. The research targets include companies such as GEM, Zhongwei Co., Ltd. and Huayou Cobalt. .

Original traceability

Pioneer materials with both resource attributes and technical barriers

The new energy automobile industry chain can be further subdivided into upstream mineral resources and raw materials (lithium ore, cobalt ore, rare earth, graphite), midstream manufacturing links (batteries, motors, and electronically controlled three-electric systems), downstream vehicle manufacturing and wholesale Retail and other links. Among them, the power battery in the midstream manufacturing process can be divided into four major materials (positive electrode, negative electrode, separator, electrolyte), and from upstream non-ferrous metals to positive electrode materials, there are two links of lithium deep processing and precursor manufacturing.

The ternary precursor is abbreviated as NCM or NCA, which plays a role in linking the colored properties of cobalt-nickel salt and lithium battery cathode material, and plays a decisive role in the energy density and cycle life of the ternary cathode material. It belongs to the production of cathodes. The highest technological link in the process.

From the perspective of the value of the industry chain, power batteries belong toThe core part of the new energy vehicle “three powers” accounts for 50% of the cost, and the ternary cathode material is the highest proportion (35%) of the four major materials for power batteries. The ternary precursor is the key material for the preparation of ternary cathodes, accounting for up to 20% of the value of lithium batteries.

From the perspective of cost composition, the cost of precursor raw materials (cobalt sulfate, nickel sulfate and manganese sulfate) accounted for 85% of the cost, which has strong resource attributes. According to the different proportions of nickel, cobalt, and manganese, ternary materials can be divided into 111, 523, 622 and 811 types, in addition to NCA (lithium nickel cobalt aluminate). Due to the high price of metal cobalt, high nickel (low cobalt) technology has become the focus of future development of ternary lithium batteries.

For ternary materials, the higher the nickel content, the higher the energy density of the corresponding battery module. Therefore, the high-nickel ternary technology has both advantages in cost and energy density. According to high-tech lithium battery data, in the first half of 2020, the proportion of my country’s 8-series ternary materials (including NCA) has increased to 17.3%, an increase of 4.5% year-on-year.

However, with the increase of nickel content, the technical requirements for thermal stability of ternary materials have also increased, and the corresponding process difficulty will be greater. Generally speaking, the particle size, uniformity, sphericity and other indicators in the precursor will further affect the electrochemical performance of the cathode in the final lithium battery product, and the preparation process requirements are very strict. Therefore, in addition to resource attributes, precursors also have strong technical barriers.

From the perspective of technical routes, ternary lithium batteries and lithium iron phosphate batteries currently occupy the mainstream market position. Due to the advantages in energy density, the installed capacity of ternary lithium batteries has been higher than that of lithium iron phosphate batteries since 2018, accounting for more than 60% of the total. As the cruising range anxiety is still the most important issue that plagues the development of new energy vehicles, the ternary battery will be the main technical route for power batteries for a long time. As the installed capacity of ternary lithium batteries continues to increase, the demand for ternary precursor materials will also continue to increase.

NIO released ES7 on January 9th, which covers a technological innovation for batteries. It is equipped with a semi-solid battery with a maximum battery life of 1,000 kilometers. Previously, the lithium batteries used in new energy vehicles were all liquid batteries, while solid-state batteries were an upgrade of existing lithium batteries, and the energy density was greatly increased.

In the future, the foreseeable technological path for the new energy battery industry is to gradually transition from liquid and semi-solid to all-solid-state batteries. As for precursor materials, solid-state batteries will still use current liquid lithium battery cathode materials, and because of the ternary cathode materialsDue to its high capacity and low cost advantages, ternary precursors will inevitably be used in large quantities.

The demand continues to grow and the competitive landscape is good.The profit margin of the structural optimization industry is steadily increasing

From the perspective of industrial chain extension, there are three types of players in the ternary precursor industry: The first type is upstream companies that have the ability to smelt cobalt, nickel, manganese resources and cobalt, nickel, manganese and other salts, such as Huayou Cobalt, GEM, etc. ; The second type is a cathode material company in the downstream, and its upstream precursor business is mainly for self-use; the third type of company is a company that focuses on ternary precursors, mainly Zhongwei shares, Cologne Xinneng and other enterprises are the mainstay.

The cost of raw materials in the precursor industry is the most critical factor. Among the above three types of companies, the first type of company has advantages in resources or smelting and processing costs, and has a more prominent integrated competitive advantage. It currently holds a leading position in the industry and has a market share of more than 50. %; The second type of companies specializing in the production of precursors mainly include Zhongwei and Bangpu, with a market share of 25%. Compared with the resource advantages of the first-type enterprises, companies such as Zhongwei shares mainly rely on technical strength to gain a foothold in the industry. In addition, the production capacity of cathode companies is mainly used for self-use, with a market share of approximately 22%.

In addition to occupying an important position in the industry chain, the precursors also currently have a relatively good competitive landscape. In 2019, global shipments of ternary precursors were 334,000 tons, and top5 shipments accounted for 57.5%. In the first three quarters of 2020, this proportion has further increased to 68%.

Actually, although the new energy automobile industry has huge future space, it is not easy to find definite investment opportunities from A shares. On the one hand, as a challenger to traditional cars, the price of new energy vehicles is still not dominant, and the profitability is not optimistic; on the other hand, it is still Tesla’s dominance on a global scale. The forces have also chosen US stocks for listing, and there are not many pure new energy vehicles with A shares.

Before that, domestic new energy vehicle sales were too dependent on subsidies, and the cash flow of vehicle companies was generally poor, which further affected the cash flow of the upstream power battery industry chain. In addition, due to the rise of domestic lithium battery investment boom, the four major materials for power batteries are basically in overcapacity and the technical level is weaker than that of foreign countries. As a result, between low-end production capacity