No one wants to get stuck in the expansion of production and sales of new energy vehicles.
Editor’s note: This article is from the WeChat public account “Laikazk” (ID: laikazk), author: Xinxin.
The after-temperature of “car building” has not yet passed, and the power battery has become a new hot spot.
As the global automotive industry accelerates its electrification transformation, the demand for power batteries has skyrocketed, and companies have expanded production and speeded up self-built battery plants, and industry competition will become more intense. Recently, SAIC Group launched a “battery bank” that separates cars from electricity, and GAC Group released a power battery technology strategy “Neutron Star Strategy”. BMW and Ford will also expand investment in solid-state batteries, and Weilai will launch lithium iron phosphate battery packs. While car companies have successively set foot in power batteries, head power battery companies such as CATL and AVIC Lithium are also expanding production, and even invested tens of billions of dollars.
“Rising costs of raw materials, worrying about the shortage of battery supply, and not wanting to rely too much on current battery suppliers…” These have become one of the reasons why auto companies build battery factories. Not only that, but car companies also reduce the risk of battery supply through various methods such as joint ventures, equity mergers and acquisitions, and finding second-tier battery manufacturers.
China Automotive Power Battery Industry Innovation Alliance predicts that my country’s new energy vehicle output will reach 2.246 million in 2021, an increase of 75.3% year-on-year, and the annual demand for power battery loading will reach 115GWh, an increase of about 80.8% year-on-year. During the “14th Five-Year Plan” period, my country’s power battery demand will more than quadruple compared with the current one. In the past five years, 60% of the world’s power battery technology innovations have been in China, including materials, batteries, systems, and equipment. In the next period of time, over 60% of the world’s power battery production capacity will be built in China, and my country will become the world’s largest power battery producer.
At the moment when the industry concentration has become increasingly high, auto companies have launched power batteries one after another. Can they break the current competitive landscape? What is the focus of power battery technology competition in the future? How to improve the development of the power battery industry chain?
01 Multi-party attack, car companies don’t want to “jump their necks”
This year, the trend of vehicle manufacturers entering the power battery industry has become more and more obvious, which has also led to new changes in the new energy vehicle industry. Ford Motor, as mentioned above, recently announced the establishment of a new global battery innovation center Ford Ion Park to accelerate the research and development of power battery packs and battery cell technology, as well as future power battery manufacturing. The SAIC Group also said that it will soon launch a “battery bank” that separates cars and electricity, and will launch a unified specification battery pack at the end of this year or early next year, covering 11 models, which can support lithium iron phosphate, ternary lithium batteries, high Nickel batteries, even solid-state battery cells.
Volkswagen Group recently stated that it will sell 1 million electric vehicles this year, and plans to become the global electric vehicle market leader by 2025 at the latest. And the corporate cloth established by Volkswagen Group in ChinaThe bureau’s advanced power battery production capacity is also an inevitable step to ensure its power battery supply.
In the development process of the “new four modernizations” of the auto industry, the importance of electrification is undoubtedly important. Whether to build a battery factory or purchase batteries is related to whether auto companies can control the voice of batteries in the future. At present, many automakers in the industry have their own battery R&D centers. They purchase batteries from battery suppliers, but PACK battery packs are produced by themselves.
As the scale of production and sales of new energy vehicles expands, auto companies are also getting closer to “making batteries” in person. On the one hand, the current sales of new energy vehicles are less than 5% of fuel vehicles, and traditional fuel vehicle companies have just begun to make efforts. The new energy vehicle market has huge room for growth in the future, and it is far from the stage of full competition. There will not only be these few power battery companies now, but new power battery companies will emerge. On the other hand, it is to change the battery supply and demand relationship between traditional car companies and power battery companies. In the past two or three years, foreign brands such as Audi e-tron, Jaguar i-PACE, Mercedes-Benz EQC and other foreign brands have been delayed due to battery supply problems. In China, there are also Geely Geometry, Weilai, Xiaopeng Automobiles who are in the dilemma of battery shortage. This situation of being “stuck” by the battery forces the automakers to embark on the road of self-built battery factories.
Wang Binggang, director of the Technical Committee of the National Electric Passenger Vehicle Technology Innovation Alliance and the leader of the National New Energy Vehicle Innovation Engineering Expert Group, said in an interview: “Whether the OEM should build a battery factory depends on its demand. When the demand for batteries is large enough, we will consider building a battery factory independently, and we must be able to maintain continuous technological progress. Just like now we see that many passenger car companies make their own engines.” He also mentioned, but For passenger cars and commercial vehicles, fewer engines are made by themselves. Because the output of the whole vehicle is not enough, it is not appropriate to make the engine.
In addition to the consideration of stable supply, reducing production costs is also an important goal. Data shows that battery costs account for about 30%-40% of the total cost of electric vehicles, and automakers purchase battery cells to produce battery packs on their own, which is more cost-effective than purchasing battery packs directly. Although the Ningde era has refuted the news that the price of lithium iron phosphate batteries will increase by 10% recently, as the price of raw materials rises, the significant increase in battery costs is also a high probability event.
In fact, in order to solve the problem of power battery shortage and cost, powerful car companies have not only determined to build their own battery factories, but have also begun to manufacture power batteries in factories through self-investment, mergers and acquisitions, such as Tesla , BMW, Volkswagen and other companies have even participated in the battle of upstream lithium resources. At present, many auto companies such as SAIC, GAC, Changan, Geely and Ningde Times have reached a joint venture and cooperative relationship, while Changan and Toyota have reached a joint venture and cooperative relationship with BYD. Multinational car companies also show no signs of weakness and seek deep bindingFor example, Volkswagen China became the largest shareholder of Guoxuan Hi-Tech, while Mercedes-Benz also announced that it would take a stake in Funeng Technology and obtain a 3% stake. Honda invested 3.7 billion yuan to participate in the fixed increase of Ningde Times and obtained a 1% subscription.
While cooperating with CATL, some car companies are also exploring the possibility of cooperation with second-tier battery manufacturers. For example, the battery cell supplier of GAC Aian’s main models has gradually changed from Ningde era to AVIC lithium battery. Yiwei Lithium’s square ternary battery has also won the designated project of BMW Brilliance, and Tesla’s domestic Model Y Designate LG as the exclusive battery supplier. “Competition generally lowers prices and reduces the risk of the supply chain, but it depends on a certain upstream company. Finding multiple suppliers is a common method for auto parts procurement.” A person in the auto industry said.
In the rise of the Ningde era, the role of auto companies is crucial. But judging from various recent phenomena, the auto companies that once relied closely on the Ningde era are trying to avoid this industry giant. If these car companies want to get rid of the situation of being constrained by others, they naturally have the right to speak and fight for pricing power, and they also have concerns about production capacity. But looking at it conversely, these large-scale self-built battery factories, if their electric vehicle sales do not meet expectations in the future, then the large amount of battery production investment may become a huge burden.
02 The industry faces new challenges, and the technical route accelerates iteration
The entry and layout of multiple players also stirred up this “pool” and accelerated the iteration of the technological development route.
At present, two main development paths for power batteries have been formed: one is the high-performance ternary battery route, and the other is the lithium iron phosphate battery route with the advantages of low cost and high safety. In the early stage, affected by the adjustment of national new energy policy subsidies, the demand for ternary materials expanded rapidly, and surpassed lithium iron phosphate in 2018. At present, ternary materials account for the highest proportion of production, sales, and installed capacity. However, in the past two years, the occurrence of multiple “ternary lithium batteries” as the “spontaneous combustion protagonist” of new energy vehicles has caused some car manufacturers to rethink the safety of ternary materials batteries, and lithium iron phosphate has achieved a major breakthrough in technology. Also reap the favor of the market.
According to data from the China Automotive Power Battery Industry Innovation Alliance, in the first April of this year, my country’s total power battery installed capacity was 31.6GWh, a cumulative increase of 241.1% year-on-year. Among them, the cumulative installed capacity of ternary batteries was 19.0GWh, accounting for 60.0% of the total installed vehicles, an increase of 173.4% year-on-year; the cumulative installed capacity of lithium iron phosphate batteries was 12.6GWh, accounting for 39.8% of the total installed vehicles, an increase of 455.9% year-on-year. This also means that compared to ternary lithium batteries, lithium iron phosphate is growing more rapidly.
In the market structure, my country’s power lithium batteryThe concentration of the pool market is already very high, and the echelon is clearly stratified. In 2020, the installed capacity of the top three companies in my country’s power lithium battery accounted for 71.38% of the total, and the installed capacity of the top five companies accounted for 84.08% of the total. The installed capacity even reached 91.84% of the overall. In the first three months of this year, the installed capacity of the top ten companies reached 92.10% of the total, which means that the power lithium battery companies that rank after the top ten have actually been marginalized, and the industry has been shuffled sharply.
Looking at the company specifically, Ningde Times accounted for 52.45% from January to March 2021, with an installed capacity of 12.22Wh; BYD ranked second, accounting for 12.88%, with an installed capacity of 3GWh; the third was LG Chem, accounting for 8.20%, has an installed capacity of 1.91GWh. As my country’s policy puts forward higher requirements for power lithium battery products, market share will be further concentrated to leading enterprises.
But from the perspective of car companies, self-built battery factories and increased cooperation with second-tier battery companies may also be breaking this Matthew effect to form checks and balances on top companies. For the development of second-tier battery companies, having the endorsements of these big car companies will help the company’s value judgment in the capital market or in market competition. Once the collective effort is made in the amount of vehicles installed, Then it will also challenge the absolute advantage of the top enterprises. On the other hand, with the cancellation of the “whitelist” policy, battery companies in Japan and South Korea have been offensively. In particular, Tesla’s sales advantages in China have aroused the counterattack of foreign companies such as LG Chemical heart. According to incomplete statistics from the media, companies such as Panasonic, LG Chemical, SKI, and Samsung SDI have invested more than 50 billion yuan in China last year. At present, LG Chem, SKI, and Samsung SDI are increasing their investment in China. While deeply binding local material companies, they are also constantly following up on cutting-edge technology routes, such as the technology research and development of large cylindrical batteries and high nickel batteries.
In the competition of battery technology research and development routes, solid-state batteries are becoming an important battlefield for car companies. Solid-state batteries use solid electrolytes to replace the electrolyte and separator in liquid lithium-ion batteries, which will improve their safety performance and are expected to increase the battery’s single energy density and prolong battery life. On the one hand, solid-state batteries alleviate consumers’ anxiety about alleviating cruising range, and on the other hand, they greatly reduce the risk of spontaneous combustion of power batteries.
Recently, BMW and Ford announced that they will expand their investment in Solid Power, a startup in the United States. Solid Power mainly develops all-solid-state batteries and will supply BMW and Ford test cars in 2022. Volkswagen is betting on Quantum Scape, a start-up solid-state battery company, and has invested a total of US$300 million. Toyota, Honda, Nissan, Volkswagen, Hyundai and other car companies have already deployed in the field of solid-state batteries, and domestic car companies such as Great Wall, BYD, and Weilai have also acceleratedThe pace of development of solid-state batteries. In addition, domestic battery manufacturers such as CATL have also made breakthroughs in the fields of solid-state battery cathode materials and electrolytes.
In an interview with the media, Cui Dongshu, secretary-general of the Travel Federation, said that solid-state batteries are the commanding heights of the next generation of lithium battery technology, and OEMs should plan ahead to avoid “walking in the air.” Mileage anxiety and safety are topics that power batteries cannot avoid. In the future, whoever masters the key technologies of solid-state batteries will take the initiative.
It is worth noting that car companies are still keen on battery “new technology”, including BYD’s blade battery, which claims that it will not explode and catch fire in the acupuncture experiment. Musk also said that Tesla will achieve battery-free in the future. Cobalt “chemical”, there are also “solid-state batteries” released by Weilai without liquid electrolyte and GAC’s “graphene batteries”. However, in terms of landing, most of the new battery technologies are still in the pre-launch stage. Even the blade batteries that have been installed in BYD related models have limited marketization.
03 Perfect the industrial chain, battery recycling is the key
In the power battery industry chain, the upstream is related to mineral resources such as cobalt, lithium, and rare earth, while the downstream is the recovery and cascade utilization of power batteries. While the production and sales of new energy vehicles are developing greatly, the recycling of power batteries is also a problem that the entire industry needs to solve together. According to industry forecast data, the decommissioning volume of power batteries will be 24.6GWh in 2020, 33.95GWh in 2021, 55.38GWh in 2022, and 134.49GWh in 2025. 2021-2022 will be the beginning of the outbreak of decommissioned batteries, and the annual industrial scale of decommissioned batteries will exceed tens of billions.
In order to ensure battery recycling, in 2018, the “Interim Measures for the Administration of Recycling and Utilization of Power Batteries for New Energy Vehicles” jointly issued by the Ministry of Industry and Information Technology, the Ministry of Science and Technology, and the Ministry of Environmental Protection stipulated that automobile manufacturers should undertake the recovery of power batteries. The main responsibility is to establish power battery recycling channels, and be responsible for the recovery of waste power batteries generated after the use and scrapping of new energy vehicles. According to the data at the end of 2020, there are currently 27 companies in my country that have professional qualifications for power battery recycling.
Although many OEMs have established battery recycling businesses, a large number of power batteries have not flowed into formal channels. First of all, because retired batteries can be sold for money, many batteries have been purchased by some unqualified car scrapping factories and “small workshops” at high prices. The workshop can give a purchase price of 12,000-15,000, and most of them do not have professional battery decomposition equipment; secondly, consumers do not know the information on the recycling channels of retired batteries, and the power to voluntarily hand in retired batteries is insufficient, resulting in a large number of batteries not entering Recycling channels brings hidden dangers to safety and the environment.
Professor Li Yan from the School of Environment of Renmin University of China said thatThe power battery is different from all other energy storage batteries. It is a battery pack (group) and requires a professional company to disassemble the module. Regardless of the disassembly site, equipment, personnel, and safety, there are special requirements. The disassembled waste battery cells include waste liquid and solid waste, which must be collected, stored, transported and kept in accordance with hazardous waste. Waste liquid or solid waste must not be discarded, landfilled or incinerated.
There are two main ways to recycle power batteries: one is cascade utilization. After the power battery is fully charged each time, the electrode structure will change and the internal resistance of the battery will increase. According to industry standards , The power battery capacity is reduced to about 80%, that is, the retirement time limit. Although it is not suitable for automobiles, it can also be applied to the energy storage market, light electric vehicles, backup batteries, etc.; the other is the recycling of raw materials, that is, the battery After dismantling, the electrode material is subjected to alkaline leaching, acid leaching, and extraction after removing impurities to realize the recovery of precious metals such as nickel and cobalt. At present, the recycling rate of metal dismantling has reached 99%, making it the most important processing method in the industry.
Although the country has promulgated power battery recycling standards and has effectively regulated the technology to ensure the safety, environmental protection and efficiency of power battery dismantling, my country does not have a complete recycling industry chain, and battery standards are not uniform and technology is not consistent. The maturity and the high cost of reverse battery recycling have directly affected the economic benefits of power battery recycling and the development of the recycling industry. Especially with the explosive growth of new energy vehicles in recent years, the recovery pressure of power batteries will be even greater in the future.
At present, Volkswagen officially launched its battery recycling program at the beginning of this year. The first automotive power battery recycling pilot plant is located in Salzgitter, Germany. The initial plan is to recycle 3,600 battery systems each year. According to the latest news from Reuters, Tesla plans to increase recycling facilities at the local Shanghai factory. These facilities will be able to repair key components such as batteries and electric motors. The recycled lithium-ion battery packs will be processed and recycled by designated factories.
In general, to solve this battery recycling problem, we cannot rely solely on the company itself. This is a system construction problem. Policies, car companies, battery companies, recycling companies, and consumers are all indispensable.