Faced with the shortage of electric car battery, who is the winner?
In the era of new energy industry, new energy electric cars are not rare automotive products, but widely appear in daily life. At present, the global new energy car industry has entered a period of rapid development.
The demand for electric car battery has increased sharply, as the power battery is an essential key core component of new energy car. And recently it is said that there has been a shortage of electric car battery.
Well-known car manufacturers have also stressed this point, electric car battery companies are also signing contracts to build factories, it seems to declare that the shortage of electric car battery does exist.
So how bad is the shortage of electric car battery exactly? How are car companies and battery companies coping?We’ll talk about these points separately.
Faced with the shortage of electric car battery, some car companies have been prepared
The reports of battery shortages have been mixed. What’s really going on? We first analyze the situation from some main vehicle enterprises.
Xiaopeng Motors was the first to spread the news of shortage of electric car battery. In September,Xiaopeng Motors sold 10,412 new cars, up 44% from the previous month, up 199.4% year on year, and the cumulative sales from January to September have exceeded the whole year of last year twice.
Therefore, according to the data, Xiaopeng’s demand for batteries is indeed increasing, but whether its sales orders are affected by the supply of batteries has not been officially explained.
Nio revealed concerns about electric car battery earlier this year, saying in March that a shortage of electric car battery and chip would limit Nio’s monthly deliveries.
However, looking at September sales figures, Nio delivered 10,628 electric vehicles in September, up 125.7 percent year on year. This is the first time that Nio has achieved sales of more than 10,000 vehicles in a single month since its establishment.
A staff from a cross-border building cars company said that the current reports show that there is a really shortage problem of electric car battery , and their company has prepared the inventory in 2020, including actions like reserve capacity form battery company and purchase products to stock up, so the next two years will not be affected by shortages of battery.
Electric car battery companies lack of capacity, announced a new expansion plan
CATL also said in May that electric car battery production capacity was limited. However, further understanding found that not all the batteries in CATL are in shortage, mainly high-end battery capacity is in short supply at present.
CATL is a major supplier of high nickel ternary lithium batteries in China, as well as a major supplier of NCM811 batteries. It is worth noting that most of the electric car batteries used by Nio are NCM811.
SVOLT, the Chinese electric car battery company, also revealed that this year’s production capacity has been booked, there is a shortage of electric car battery capacity.
Guoxuan High-tech also has a similar capacity situation with SVOLT. A staff form Guoxuan high-tech revealed that in order to ensure the supply of batteries to key downstream customers, the production base is working overtime.
EVE also disclosed in a May announcement that its existing plants and production lines were running at full capacity and that demand for the product was expected to exceed supply for nearly a year.
Therefore since this year, many first-tier and second-tier electric car battery companies including the CATL, BYD, CALB, Guoxuan High-tech, EVE, SVOLT, Farasis Energy, announced a new expansion plan. Capacity planning this year is more than 1000 GWH, and is about 10 times for electric car battery loading of the total in this year.
It is worth noting that this year’s major new capacity is mainly from the first -tier and second-tier enterprises, and the scale of investment has expanded, some investment even reach tens of billions.
Capital also favors electric car battery enterprises, and the investment center of the new energy vehicle industry chain has shifted from vehicle to the middle and upper stream. Several A-share listed companies, including CATL, BYD, Guoxuan High-tech, EVE and Farasis Energy, have seen their share prices soar.
But electric car battery companies have recently become less attractive to capital markets as a better investment than battery factories has emerged amid the growth frenzy of lithium-ion batteries: upstream raw materials and processing equipment companies.
Upstream companies profit the most form the shortage of electric car battery
The upstream companies of electric car battery, that is the key raw materials of lithium ion battery, according to the whole lithium ion battery industry，mainly include: lithium carbonate and lithium hydroxide that related to anode;graphite that related to cathode; Diaphragm material; Copper foil; lithium hexafluorophosphate, VC solvent, PVDF additive that related to electrolyte.
In the past year, the price rise of lithium ion battery raw materials has caused a high level of concern in the market. The price of some raw materials for lithium-ion batteries has risen more than 200% since the start of the year, according to September data. But in fact 200% increase in all kinds of raw materials in lithium battery is not the most impressive one.
Most companies are more concerned about lithium carbonate, mainly because in the past month, lithium carbonate soared 50%, it saw the biggest increase in all lithium battery raw materials in the short-term.
And lithium hexafluorophosphate used to account for less than 3% of the cost of raw materials for lithium-ion batteries, but this year it has risen to more than 10%.
Take Do-Fluoride(SZ.002407) for example, the company that the sales of lithium hexafluorophosphate as the main business, the results of the first half of 2021 show that under the premise of 67.68% year-on-year growth in revenue, the year-on-year increase in profit was as high as 1859.97%.
So why are capital market bullish on upstream companies? The reasons are not complicated. Electric car battery itself is not standard product. Different electric vehicles require different batteries.
Mainstream car companies will require battery companies to produce electric car battery adapted to their own models, so the production line is needed for customized production.
At present, the new energy car industry is not yet mature. Although the overall growth rate continues, the success of a single auto product is uncertain. If the sales volume of the car is insufficient, even if the production line is transformed to produce other types of batteries, it will also cause huge losses to the battery company.
There is no such uncertainty for upstream companies, whose products are highly standardized industrial products and whose capacity can be fulfilled as long as the overall market increases.
Year-to-date, 17 listed companies in the raw materials and manufacturing equipment sector have seen their share prices rise by more than 100 per cent, with earnings growth in the first half of 2021 outpacing revenue growth by a wide margin.
Compare that with the performance of electric car battery companies. Although revenue and profit also had good performance growth, but it did not match the growth of battery installed capacity. In other words, battery companies are selling more batteries without generating a corresponding increase in earnings.
In addition to the gross margin of CATL which is the leading enterprise barely maintained no decline, the gross profit of the other electric car battery enterprises have declined.
The profit space of battery enterprises is greatly eroded by the price rise of raw materials. For this point, a number of battery enterprises are very helpless, raw material prices have been testing the endurance limit of electric car battery enterprises.
However, in the long run, the supply of raw materials for electric car battery can be alleviated. According to the reserves, mining difficulty, manufacturing difficulty and price of different raw materials, the battery industry is adjusting in real time.
For example, lithium iron phosphate batteries, which are more abundant and cheaper, have rebounded sharply in the past two years.
Countermeasures of automobile enterprises
Due to the capacity expansion of electric car battery enterprises can not quickly fall to the ground, in the face of huge battery demand, the “battery shortage” of new energy vehicles may continue. Car companies are responding in different ways.
The first is to expand its range of battery suppliers in line with the traditional auto parts supply system. This will bring opportunities to high-quality second-tier electric car battery companies and Japanese and Korean battery companies who is coveting China’s market of electric car battery for a long time.
For example, electric car battery supplier SK recently signed a battery supply contract with Xiaopeng Motors, which had previously been supplied mostly by CATL. In addition to being an important partner with CATL, BMW also purchases batteries from three other companies: EVE Samsung SDI of South Korea and Northvolt AB of Sweden.
The second way is in-depth cooperation with electric car battery enterprises, including joint venture factory building, strategic investment and other ways.
For example, Dongfeng, SAIC, GAC, FAW and other enterprises have respectively established joint ventures with CATL. The strategic investment mainly includes the cooperation between some large car enterprises and second-tier electric car battery enterprises. For example, Guoxuan has become a shareholder of Guoxuan High-tech and Daimler has become a shareholder of Farasis.
Third, it is car companies to build their own factories. Volkswagen, Daimler, GENERAL Motors and other auto companies have similar layouts in Europe and the United States.
In September, Toyota also announced that it plans to invest $13.7 billion in battery research and development, production and capacity expansion, with the goal of producing 200 GW of batteries a year by 2030 and halving battery production costs.
Of course, for auto companies, there are a series of problems such as technology accumulation and research and development, as well as certain risks to build their own factories.
While maintaining battery supply relations with first-tier electric car battery companies, Volkswagen is cooperating with second-tier battery companies to quickly make up for technical shortcomings in battery chemistry and other related fields and improve its own battery production capacity as soon as possible.