Subsidy slope cost rises New energy power battery industry is facing changes

Power battery industry chain will encounter big changes. As the middle part of the new energy automobile industry, the power battery field is under pressure at both ends. The increase in raw material prices in the upper reaches brings about an increase in costs. At the same time, the automakers will upwardly shift the pressure on subsidy withdrawals. In the past two years, the power battery industry experienced a substantial expansion of production capacity to the current structural excess.

Numerous battery manufacturers that entered the market early on in the heat and helium subsidy have entered a vicious cycle: weak technological change, difficulty in meeting product standards, lack of orders, and idle production lines. The profit margin is compressed, the cash flow pressure is high, and it is even more difficult to update the production line equipment. In this context, the scale, capital, and technical advantages of leading companies are highlighted, and the industry reshuffle will accelerate.

Expand production capacity

Li Qing (a pseudonym) entered the field of new energy vehicles in 2015 and witnessed the process of the industry's capacity leap forward to the current structural overcapacity in the past two years.

According to Li Qing, 2015 is the first year of development of the new energy industry. In this year, the output of new energy vehicles reached 340,500 vehicles, which was more than four times that of 2014 and entered a truly significant volume phase. Since then, in 2016 and 2017, the output of new energy vehicles was 517,000 vehicles and 794,000 vehicles, respectively, with an average annual growth rate of more than 50%.

"I did not anticipate that the production and sales volume in 2015 will grow so fast that the production capacity will not be matched at all. The battery plant will not be able to handle as much cargo," Li recalls. "When the battery was hit, it was basically able to sell it as long as it was produced." Quality is not the main indicator for everyone's consideration, but the lower the price, the cheaper it is, and it is easier to sell it out, especially in the first half of 2016. Some car companies directly went to the battery factory to rob the goods.At the battery factory gate waiting, the battery was pulled out. ."

Li Qing told the China Securities Journal that in 2016, the industry entered the peak of production. During 2016-2017, capacity-intensive construction, battery plant, separators, positive and negative materials, and other aspects will be greatly expanded production capacity. Among them, the power battery has the highest value in the industry chain, and the investment return period is relatively short. As a result, capital inflows concentrated and the number of battery manufacturers reached more than 150 at the peak.

At the end of 2016, the Ministry of Industry and Information Technology released the "Automotive Power Battery Industry Regulatory Conditions (2017)" (Draft for Comment), which will significantly increase the threshold for power battery companies. Among them, the annual production capacity of lithium-ion battery cell companies has been adjusted to “not less than 8 billion watt-hours” from the “No less than 200 million watt-hours” stipulated in the “Regulations for Automotive Power Battery Industry”. The adjustment triggered controversy.

“This rule was not implemented in the end. But at the time, it really made the industry very nervous. Once it was implemented, car companies would not receive subsidies if they purchased batteries from a battery plant with an annual capacity of less than 8 billion watt-hours. No orders will be received. However, this has become an important driver for the expansion of production capacity in the past two years." The chief analyst of Real Lithium Research, Mo Ke, told the China Securities Journal.

Benefit from the huge equipment demand brought about by the substantial expansion, the lithium battery equipment industry has ushered in rapid development. Zhongtai Securities statistics show that in 2017, revenue growth rate of lithium-ion equipment ranked first in the sub-sectors of new energy vehicles, up to 128%. Leading intelligence for lithium battery equipment leading intelligence in 2016 and 2017 were revenues of 1.079 billion yuan and 2.177 billion yuan, respectively, and the growth rate exceeded 100% for two consecutive years; net profit was 291 million yuan and 538 million yuan respectively, and the growth rate was 99.68%. 84.93%.

The pursuit of capital for the new energy automotive industry continues to heat up.

Songsong Capital began to pay attention to the new energy industry many years ago and established a new energy and new materials fund. "In recent years, many new energy car battery companies have been invested. Some smaller investment institutions with low brand awareness have failed to make any investment," Zhang Shaolin, a partner at Songsong Capital, told reporters.

Yanshi Investment is also an early investment group focusing on the new energy automotive industry. “When we invested in early 2016, many people were not optimistic about this industry. By the middle of 2016, a large number of hot money was pouring in. Business plans were floating everywhere. Some companies raised hundreds of millions of dollars to say that they wanted to do a battery factory. In fact, they basically did. Not down." Chen Haodong, a partner of Panshi Investment, pointed out.