Lithium battery industry supply chain is facing challenges
The supply chain has become the biggest challenge in accelerating electrification
On the one hand, with the acceleration of electrification transformation in the global auto industry, the market demand for power batteries is increasing rapidly, related companies TOP 10 lithium iron phosphate power battery manufacturers are expanding production, and car companies are accelerating their own battery factories. The competition in the industry will become more intense, making the supply and demand balance of power battery materials for vehicles continue to be tight.
Power battery companies including CATL, EVE, CALB, SVOLT have expanded their production, and the investment scale is above tens of billions. At the same time, global auto companies have also successively increased their investment in power battery research and development and production.
On the other hand, concerns about insufficient supply have led to excessive orders placed by relevant companies in the industry chain. According to the market’s forecast of electrification prospects, there will be supply and demand problems for power batteries, which has also led car companies to increase battery orders.
The fact is that once the downstream car companies increase the size and form a large order, the production capacity of the midstream cell companies will be difficult to cope with, and they will place orders 1-3 times higher than the original to the upstream material companies.
The “material shortage” is imminent, and the price increase begins to spread to the ore, material preparation, equipment, research and development, production, sales and other links as if the first “domino” was hit.
The epidemic has exacerbated the shortage of materials
The epidemic can be said to be the accelerator of the material shortage.
Since 2020, the black Swan epidemic has caused a huge impact on the automobile market, leading to pessimistic expectations for future automobile sales. Early in the outbreak, it was predicted that the knock-on effect of COVID-19 on consumer demand could lead to a 16% drop in global vehicle production.
As a result, auto companies take the initiative to reduce or withdraw orders, supply chain stock declined significantly, production plans shrink. However, unexpected is that 2020 Q4 new energy vehicle market is good, power battery material capacity began to appear insufficient. After Q2 2021, power battery material capacity will be released.
The misjudgment of market supply and demand superimposed on upstream and downstream enterprises of the industrial chain is not smooth, and the game transmission between value and price has intensified the supply shortage of materials, leading to the shock of the global lithium supply chain.
Since 2021, the prices of the four major materials, nickel/cobalt/lithium/copper/aluminum, lithium hydroxide, lithium carbonate, lithium hexafluorophosphate, PVDF, VC and so on have collectively risen, and some auxiliary materials have risen several times compared with 2020.
At the beginning of the year, upstream material prices continued to rise, with midstream prices generally rising 10%-20%. In an effort to meet the demand for electrification, many battery suppliers have imposed more aggressive commercial terms to keep suppliers supplied with scarce materials.
It should be noted that “material shortage” is the result of multiple factors, and the production capacity tension caused by the material production cycle caused by accidental factors can be alleviated once the current situation of material shortage is solved.
The impact of material shortage on the industrial chain
What is the impact of material shortage on the industrial chain
Entering Q2, from the feedback of many battery companies, only part of the core customers can be guaranteed, followed by only the power battery supply of SUV models. Some 4S shops in the regional market of electric vehicle companies have no existing cars, or even a long car purchase cycle.
Take Mercedes-benz as an example, due to lack of battery and chip, mercedes-benz EQ series is basically out of stock in some 4S shops, and it takes 2-3 months to pick up the car. In a Xiaopeng store in Shanghai, the cycle of picking up cars was extended from 1-2 weeks to 1-2 months due to lack of batteries and chips.
Many electric cell enterprises, in order to ensure that production and management of the normal, all the time to send high-level leadership squat guard material factory, so that the opponent will be new production of the material.
In addition to grabbing material orders, grabbing resources has also become part of the cell enterprises or car enterprises to stabilize the supply chain. Volkswagen is a typical example.
As early as March 21, huayou cobalt industry, Volkswagen and castle peak power battery cathode material holding industrial chain upstream and downstream cooperation to achieve strategic cooperation intention respectively, quasi common Indonesia nickel and cobalt resources development layout, cobalt and nickel sulfate refining, precursor processing and integration of power battery cathode material such as the anode material production operations, to solve the material shortage problem.
As a matter of fact, it is not the usual practice for auto companies to reserve production capacity by paying suppliers in advance. Volkswagen’s move should be based on the electrification industry chain to ensure its control, so it wants to continue to explore materials, even ores. And each oEMS are looking for solutions about material protection.
In order to ensure the supply to the downstream market, battery manufacturers are also increasing the spare risk inventory of battery materials and offering a long contract to obtain stable material supply, so that the supply chain has more inventory than before, and reduce the impact of temporary parts shortage caused by natural disasters and other situations.
However, the current fluctuation of materials makes the long cycle from annual to quarterly or even monthly, and finally to the spot stage of cash delivery.
Looking back, automobile manufacturers would not directly bypass component manufacturers to vertically arrange materials (Tier1). Instead, they would go to Tier1 component manufacturers to place orders for materials and components needed for their plans, instead of directly purchasing materials themselves.
And “material shortage” changed the usual practice of this industry, many automobile manufacturers began to take the initiative to contact material manufacturers to “grab goods”. In the past, upstream enterprises took the initiative to talk about supply with Tier1, but this year, OEM manufacturers are looking for material suppliers and component suppliers, and even 40% self-sufficiency and 60% joint venture outsourcing. If you want to know the battery main material manufacturers, you can check Top 5 lithium ion battery anode material companies and Top 5 battery separator companies, and cathode and electrolyte manufacturers can check on the homepage.
In general, all links in the entire automotive industry chain should be more closely linked to form an ecology and cooperate with each other around the established goals, so as to adapt to the development trend of electric vehicles.