Brief introduction to the change history of global power battery share

In 2019, the Nobel Prize in Chemistry was awarded to the inventors of the lithium battery – Akira Yoshino, John B. Goodenough and Stanley Whittingham.

The first recipient was a researcher from Asahi Kasei, a giant in the Japanese diaphragm field, and the other two came from research institutes and universities in the United States and the United Kingdom. However, Europe and the United States, which are technically the initiators and leaders, did not win this new energy competition, but fell into a long-term stagnation.

Until recently, the new energy vehicle market in Europe has grown by leaps and bounds, surpassing Chinese market demand for the first time. At the same time, Norway’s Northvolt’s first lithium battery was rolled off the production line, which brought a breakthrough for the European local battery factory, and achieved local shipments for the first time.

Everyone’s attention finally focused on the European market, and began to pay attention to the prospect of Chinese lithium battery companies going overseas to Europe. Yet the United States, a technological powerhouse, is still holding back, despite policy urgings.

In today’s power battery world, China accounts for nearly half of the world with 48.60%, South Korea slips to 30.40%, and Japan only 12.20%. Even if the voice and demand are high, the total share of Europe and the United States does not exceed 8.8%.

What are the determinants of this result?

The change history of global power battery share

United States

Although Biden’s series of initiatives last year marked the United States’ once again foray into the power battery industry, the United States does not seem to be able to get out of the shadows after the defeat 10 years ago, and its local industrial chain is also difficult to support.

On August 5, 2021, Biden signed an executive order deciding to formulate stricter fuel efficiency and emission standards, which will force the demand for new energy vehicles in the United States. The goal is to account for 50% of the sales of new energy vehicles in the United States by 2030.

No matter what kind of game and discussion the United States has carried out on this, it is an undeniable fact that similar measures were proposed by Obama as early as 12 years ago.

At that time, just as the U.S. economy was just hit by the subprime mortgage crisis, power batteries, as an out-and-out emerging industry, were given a serious mission: if its manufacturing plant was in the United States, the unemployment rate in the United States would not be a problem. , the economy can be saved.

What’s more, Bell Labs is in the United States, and the future Nobel Prize in Lithium Battery Chemistry is also in the United States. For Obama, the development of power batteries at that time can be said to have everything ready and only owed the east wind. Although there is no wind, you can create the wind yourself. The Obama administration chose to blow the wind to A123, a domestic lithium battery company.

In the power battery industry at that time, Japanese and Korean companies occupied most of the market. The United States hoped to plant a flag for itself in this industry. This desire was not excessive, but the reality gave them a blow.

A123, a division founded by a science and engineering professor in early 2001, is his gateway to turning technology into products. As early as 2009, A123 developed a lithium battery that can charge 90% in 5 minutes, and its life is 10 times longer than that of ordinary batteries.

The US government is willing to believe that A123 will become an American company leading the global battery industry. Since 2009, Obama has spent 2.4 billion US dollars in government subsidies to invest in the new energy industry, of which 250 million have been given to A123, accounting for more than 10% .

However, it is failing to “save the unemployment rate and boost the American economy” that the Obama administration had hoped for.

The US government’s request for a subsidy of 250 million US dollars is that A123 will move all production lines back to the United States.

However, before the production line was relocated, the raw materials for the cathode materials were provided by Changzhou, China, the cathodes for lithium batteries were produced in South Korea, and the assembly process was arranged in Shanghai, China.

To move back means a lot of money. From 2008 to 2012, A123 has invested more than 300 million US dollars in total; and it has to recruit local employees at a higher cost. The hourly wage of American workers is 22.3 US dollars, while the Chinese workers’ wages at that time The hourly salary is only 2 US dollars, and the staff cost has increased by 10 times.

In the process of the initial “de-globalization” industry in the United States, A123 has unfortunately become a victim. The cost of lithium iron phosphate batteries it produces is as high as 1000 to 1500 US dollars per kWh. At that time, the ternary lithium battery produced by Panasonic only cost 320-420 US dollars per kWh.

In this context, although the revenue growth rate of 30%-40% is maintained, the blood loss of A123 cannot be stopped.

In 2011, A123 had a net loss of 97 million US dollars. In the first half of 2012, the loss amounted to 83 million US dollars, and it lost half a year of money from the previous year.

In the end, a sudden flameout failure of major customer Fisker became the last straw that crushed it – it turned out that the lithium battery of the A123 had a technical defect and needed to be recalled, and promised to pay 55 million US dollars in compensation.

So far, A123 not only lost an important customer, but also ushered in huge debts, which was a fatal blow for it, which was surviving in the power battery market where demand momentum was still insufficient at that time.

In the end, A123 declared bankruptcy, which was also considered by the local media as a sign of “death to the US lithium battery industry”.

This broken power battery manufacturer was finally acquired by Wanxiang Holdings from China and was reborn. It signed a listing counseling agreement with China International Capital Corporation in October last year and officially entered the listing counseling period.

However, the dilemma of the power battery industry in the United States is still: the local power battery capacity is insufficient, and the upstream and downstream of the industrial chain have not been opened up. The US has to face not only Japan and South Korea, but also China, the biggest giant, and the European market is also rising.

After the market has evolved from a battle for subsidies to a battle between production capacity and the market, it is more difficult to grab other people’s bread. The United States still has little hope of victory in this new energy battle that started almost at the same time as China.

However, from a demand perspective, the US market is experiencing rapid growth. In 2021, the annual sales of new energy vehicles in the United States will reach 656,000, a year-on-year increase of nearly 100%, and the annual penetration rate of new energy vehicles will be 4.2%, an increase of 2 percentage points from 2020.

Europe

Although Europe is the birthplace of the automobile industry, whether it is production or sales of finished products, the local area has absolute strength, but in this new energy battle, Europe is also relatively lagging behind.

Industry insiders are optimistic about the European auto industry chain and regard Europe as a rising star. However, it was not until May of this year that the first domestic self-produced battery appeared in Europe, which is far from the level of parity with Asia.

For Europe, it is inevitable to be lost in the face of rising China and Asia.However, Europeans once called China a rising country. If this perspective is changed to the field of new energy, perhaps Europe is also a rising country in the power battery world in the eyes of China.

From an industry perspective, Europe has learned from China’s successes, as well as from the US’s failures.

The successful experience is: China’s new energy industry started with policy support.

Europe learned this set of policies, which began in 2017, when King Ning began to rise. Just the year before, the Ningde era only ranked third with a global market share of 9.04%, behind Panasonic and BYD. .

In fact, as early as 2009, the European Union passed a bill requiring that the average carbon dioxide emissions of newly registered passenger cars in the EU should not exceed 95g/km by 2021.

According to this calculation, the carbon dioxide emission of 95g/km means that only 3.24 liters of gasoline can be burned per 100 kilometers, which is much more radical than China’s plan of 5 liters of gasoline per 100 kilometers in 2020.

In October 2017, the EU finally started planning subsidies.

Policymakers from several countries and 17 battery industry partners have jointly established the European Battery Alliance, which aims to create a competitive “ecosystem” for the European power battery industry.

The plan of the alliance is that as long as the research and development of vehicle power batteries by EU companies involves multiple EU member states, the relevant government departments of the member states will allow 100% subsidies for research and development funds.

In terms of subsidy intensity, 26 of the 27 EU member states have formulated relevant stimulus policies to encourage the development of electric vehicles. After entering 2020, the subsidy intensity has been further increased.

Taking Germany as an example, in April 2016, the German government issued the purchase subsidy policy (also known as “environmental bonus”) for the first time. Among them, the single-vehicle subsidy for pure electric vehicles (BEV) and fuel cell vehicles (FCEV) is 4,000 euros, and the single-vehicle subsidy for plug-in hybrid electric vehicles (PHEV) is 3,000 euros.

In February 2020, it launched a new electric vehicle subsidy program for 2020-2025. Compared with the subsidy program in 2016, the total subsidy amount in Germany was increased to 2.09 billion euros, and the subsidy amount for bicycles was increased again.

A 50% increase in the single-vehicle subsidy for pure electric vehicles and plug-in hybrid vehicles priced below 40,000 euros, the single-vehicle subsidy for pure electric vehicles and plug-in hybrid vehicles priced between 40,000 and 65,000 euros will be increased by 25%.

At the same time, compared with China, the EU’s subsidy method has also undergone a layer of evolution: more emphasis is placed on market-based purchases, that is, direct distribution to consumers rather than car companies, to a certain extent, to avoid the “subsidy fraud” behavior of car companies.

In addition to learning from successful experiences, the EU has learned from the United States that it is not to do what should be done in several steps at once.

In order to avoid the trap of de-globalization and the great leap forward in production capacity in the United States, the power battery industry chain in Europe is extremely fragmented and in no hurry:

Minerals are supplied by Portugal, Spain and the Czech Republic (lithium), Finland (rare earth), Finland (cobalt), Australia and Chile (lithium).

In terms of anode materials, countries such as Belgium, Finland, Germany and Poland are provided, while other materials required for batteries are provided by countries such as Belgium, France and Italy.

In addition, the battery cells are produced by Sweden, Germany, France and Italy; the battery assembly is completed by Germany and Poland; the battery recycling is completed by Belgium, Germany and Poland.

According to public data, the European Battery Alliance has invested 100 billion euros in battery manufacturing in Europe and plans to build 25 super factories in the EU.

From a demand perspective, about 2.3 million electric vehicles will be sold in 18 European countries in 2021. Among them, the number of pure electric vehicles increased by 64% compared with 2020 to 1.19 million. The European electric vehicle market, which accounts for more than 10% of the new car market, has grown around 13-fold in the five years since 2016.

From a supply chain perspective, since the first lithium battery rolled off the assembly line at the end of last year, Swedish battery manufacturer Northvolt has also officially started shipping, becoming the first European company to provide power batteries to automakers.

Reducing costs, improving production efficiency, not overly relying on accessories suppliers from other countries, and forming a complete battery production chain of its own is one of the powerful means to efficiently promote the European new energy vehicle market.

But the situation it faces today is that 90% of the world’s share is in the hands of Asia. It is a great test for cost control to build an industrial chain from scratch and grab a share in today’s market.

Nowadays, the pressure of competition in battery production costs is huge. In the absence of technological generation gaps, leading manufacturers rely on scale to spread low costs. The EU, which started from scratch, is still facing a reality that is not optimistic.

Japan and South Korea

No one seems to deny that Japan and South Korea are leaders in the development of lithium batteries.

But in 2017, when the CATL surpassed Panasonic to become the world’s No. 1, Japan and South Korea were already slowly falling. In 2021, South Korea’s share of shipments will show a downward trend, while Japan is only supported by Panasonic.

According to related reports from Japan, one-third of the world’s battery technology patent applications in 2018 came from Japan, followed by South Korea and China. In the first decade of lithium-ion battery development, lithium-ion battery technology opened up market space mainly in electronic products.

In 1991, lithium-ion batteries developed by Sony Corporation began to be used in portable electronic products. In 1998, Panasonic launched a cylindrical lithium ion battery for notebook batteries, which opened up the notebook battery market space.

The expansion of the downstream application market has brought about the effect of industrial scale. In 1998, the output of lithium-ion batteries in Japan reached 400 million. However, Japanese companies have made it difficult for other competitors to catch up in terms of technological leadership and the perfection of the industrial chain structure.

But in the end, it was two factors that made it lose the battle with China:

The first point is just the opposite of the United States. The United States has made a great leap forward in production capacity, while Japan has been trapped in the economic crisis in the late 1990s. opportunity.Another point is too forward-looking and chooses a more distant market, ignoring industrialization.

In 2010, Japan released the “Next Generation Vehicle R&D Strategy”, shifting from focusing on pure electric vehicles in the past to developing hydrogen fuel cell vehicles at the same time.And the reason why it chose hydrogen fuel cells is somewhat similar to the idea of the United States: it can use local resources.

The fuel cell catalyst platinum supplied by Japan’s Tanaka Precious Metals accounts for 60% of the world’s share, and Japan is rich in water and heat, which can basically provide the raw materials needed to produce hydrogen fuel cells.

This bet made the two major auto leaders, Toyota and Honda, choose to stand in the “fuel cell” line, and went astray again under the circumstance of being cautious about investment in lithium batteries.

South Korea’s battery industry has established a monopoly of large groups from the very beginning.South Korea’s lithium-ion industry is dominated by Samsung SDI and LG Chem, and the parent companies of these companies are all important pillar groups in South Korea.

No matter in financial strength, talent accumulation or policy support tendency, it has unique advantages. Therefore, in the early stage of industry development, human resources, financial resources and industrial policies are firmly monopolized by major groups.

This of course has a downside: it suppresses healthy competition.

But on the other hand, it also avoids some of the possible harm for the development of the industry in its infancy – market disorder or chaotic competition.

Based on the technologies accumulated in the consumer electronics industry before, the two major companies have chosen to transfer their advantages to power batteries. At the same time, Korean manufacturers are not afraid of expanding production or price wars. Once used means to beat China’s fledgling manufacturers out of breath.

After the policy was released, the operating rate of Samsung SDI and LG Chem’s factories in China fell to less than 10% for a while, and South Korea’s SKI simply closed its factories in Beijing.

However, now the once “advanced” has started a new round of expedition.

Recently, Japan launched the “Innovative Battery Development for Electric Vehicles” project, focusing on supporting the research and development project of all-solid-state batteries for electric vehicles led by Toyota, and choosing a new technical direction.

At the same time, car companies also plan to launch all pure electric models after 2030.

The South Korean government announced ambitiously in July 2021 that it will invest 35 billion US dollars in the development of the country’s power battery industry by 2030. LG New Energy has also landed in South Korea’s capital market and has become a dazzling star.

It is still unclear how the Asian battlefield will go forward.

China

Among the many industrial technologies, new energy may be one of the few industries that has put China far ahead of all other countries in the world. Now the leading companies in China are TOP 10 lithium iron phosphate power battery manufacturers.

However, even if it has become the world’s leading benchmark for power batteries, far exceeding the level of other countries, China’s new energy industry development has also suffered criticism and hardships.

Regarding the development history of power batteries in China, we have combed through many articles before. Interested readers can read the historical articles, but the battle of lithium batteries for more than 10 years is not always smooth in China, at least not as smooth as the industry data and corporate earnings we’ve seen.

In 2015, an article was widely circulated on the Internet, and the core point was that “China’s development of lithium battery industry is unreliable”.

Combing the original views in the refutation article, we can see that the article’s criticism of the development of China’s power batteries at that time mainly focused on the following points:

1. Hundreds of intellectual property international patents for lithium batteries are from Japan and the United States;

2. The safety of the power battery is in doubt;

The company is in total loss, and the raw materials mainly rely on imports, so the long-term development prospects are not optimistic.

Until now, many people should find these remarks ridiculous, because its biggest problem is thinking that the process of technological development is static.

If there is no patent today, there will be no technological progress in the future; if it is a loss today, there will be no profit in the future.

At the same time, this article is underestimating the necessity and importance of policy subsidies in the incubation of a new industry and new technology – and the sleepy auto industry base Europe has learned this before it finally emerges.

But the birth of this article has a background. According to a group of typical cases announced in 2015, 72 of the 93 new energy vehicle companies illegally obtained subsidies, and fraudulently obtained more than 760,000 subsidized vehicles, involving a total amount of 9.27 billion RMB. , “Defrauding subsidies” has indeed been a pain in the development of power batteries.

But this is indeed a short-term pain. In the face of the excessive low-end production capacity at that time, the subsidies and whitelists started after 2016 have changed from the previous sunshine to precise technical support.

Companies with low energy density are no longer able to obtain subsidies, and “subsidy fraudulently” and low-end production capacity are gradually eliminated.

In response to the problem of “excessive dependence on imports of raw materials” raised in the article at that time, Chinese companies have also started the pace of global purchase of mines and deployed upstream, and everything is moving in a better direction.

Conclusion

In this key battle over the energy battle, policy subsidies, technological leadership, globalization, and lack of rush for success are all essential.

And balancing all the elements and ultimately winning is not as easy as it seems.

The word “success” condenses wisdom, but it also condenses the perseverance of countless industry people.

Even if it was not understood at the time, the development of the final industry will reward all participants and re-verify that time-honored survival strategy:

As long as there is sufficient sustenance and economic strength to support it, it can finally become king.

Today, the former halo of “advanced” Japan and South Korea is no longer, “underachievers” Europe is trying to get rid of the burden of the past, and the king who is proud of the world is carefully staring at all potential competitors.

The power battery competition that has lasted for more than ten years is still rolling forward with the passage of time.