The lithium-ion industry is facing shocks: surging costs and slow technology improvement
The lithium battery industry is facing two negative impacts:
On the one hand, under the existing mature technology path, the production capacity and planning are still increasing, and the homogenization competition is becoming more and more fierce. On the other hand, the realistic technological innovation that is most conducive to reducing costs is progressing slowly.
These two factors work together to continuously intensify the competition and involution in the lithium battery industry. The cost problem of the industry chain is particularly obvious, and the competition seems to be less and less technical.
The current competition is forced to a non technical level
At present, supply chain management has become an important competitiveness of the lithium battery industry.
An important reason for the good performance of CATL in terms of gross profit margin is that it has carried out a series of layouts with a certain breadth and depth in the supply chain.
In addition, leading companies such as BYD, SVOLT Energy, and Yiwei Lithium Energy have also frequently deployed upstream industries such as positive electrodes, negative electrodes, diaphragms, copper foils, and lithium resources in recent years, and laggards have also begun to gear up.
The layout of the industrial chain has become a standard action for leading companies to build their core competitiveness, and it is becoming more and more intense.
Just recently, Yiwei Lithium Energy, Enjie Co., Ltd., Yuntianhua, Huayou Holdings, etc. signed the “New Energy Battery Whole Industry Chain Project Cooperation Agreement”, planning to build new energy batteries, lithium battery separators, iron phosphate and phosphoric acid in Yuxi. Battery supporting projects such as iron-lithium and copper foil projects.
Today, it seems that it is not enough to just lay out the manufacturing end of the industrial chain. The giants are still moving up the industrial chain. CATL, BYD, and Tesla are even snapping up lithium resources. The competition is beyond words.
In addition to the upstream layout of the industrial chain, business innovation has also been put on the competition agenda.
Recently, CATL launched the “battery swap mode”, which aims to make up for the shortage of lithium battery products through the battery swap mode, activate the needs of some limited application scenarios, and then expand the sales scale of lithium batteries. The core is business model innovation, not technological innovation.
Previously, CATL also launched sodium-ion batteries, as a technical route complementary to existing lithium battery technology, which can help promote lithium batteries through the “A+B” model.
Whether supply chain management or business model innovation has nothing to do with technology.
When lithium battery giants are carrying out supply chain management and business innovation, the technological progress of lithium battery itself seems to be forgotten, and the priority is reversed.
Some of the lithium battery innovation technologies that have been hotly discussed in recent years have been slow to progress. The high-nickel ternary is controversial, the solid-state battery has a lot of thunder and little rain, and the 4680 battery is still trying to improve the efficiency of mass production.
Under the boundless imagination of the huge prospects of the lithium battery industry, we cannot extricate ourselves from the homogenized competition on the existing mature technology route, and we are getting deeper and deeper.
Lithium iron phosphate counterattack
In the past year or so, lithium iron phosphate batteries have achieved a counterattack. In 2021, more than half of China’s lithium iron phosphate installed capacity will account for 51.7%, compared with 38.3% in the same period in 2020.
Compared with ternary batteries, why the proportion of lithium iron phosphate has increased significantly, because it is more secure? Obviously not only that, the key is to be cheaper.
The smooth journey of lithium iron phosphate batteries is the embodiment of “cost is king” in lithium battery competition.
The cobalt-free batteries touted by Musk ended up using low-cost lithium iron phosphate batteries on a large scale. But to be honest, lithium iron phosphate is indeed “cobalt-free”. In the end, it succumbed to cost.
At present, the prices of some lithium battery materials are still rising, and the cost pressure remains unabated. The recent average price of battery-grade lithium carbonate has exceeded 400,000 yuan/ton, about 300,000 yuan/ton at the beginning of this year, and less than 60,000 yuan/ton at the beginning of last year.
As a representative of “cheap” lithium iron phosphate battery, the cost is still under pressure, and the cost increase exceeds that of ternary battery. In the rough competition without technical content, perhaps the two eventually need to reach a balance, only the cost is high and low, and there is no such thing as superior performance.
Cruel competition under the existing technology route
At present, in the field of power and energy storage batteries, the more mature technical routes are square, cylindrical (18650/21700), soft pack, as well as lithium iron phosphate, ternary (non-high nickel) and so on.
Under these technical routes, the cost of materials has risen to varying degrees, and the price of resources has remained high. At the same time, the supply of materials with long production cycles such as diaphragms and copper foils is still tight, and the competition is becoming more and more cruel.
Under the pressure of material supply and cost, the production capacity of lithium batteries is “big and fast”, the homogenization is serious, and the industry’s production capacity is under great pressure to digest. Except for the CATL, the gross profit margin of other companies is difficult to be optimistic.
Under the background of high gross profit margin and performance pressure, “survival” exceeds “development”, which will restrict the progress of technology. Under the pressure of industry competition and capital, lithium battery companies are struggling to cope with cost pressures.
Just imagine, the 4680 battery that was popular last year, because the short-term mass production efficiency is not high and the production cost is relatively high, how can such innovative technology survive and promote under the existing cost pressure?
Lithium battery technology innovation seems to be in trouble.
How to get rid of existing internal competition
To reduce the cost of lithium batteries, the 1.0 stage relies on scale, and production capacity is king. The 2.0 stage relies on technological innovation to improve the dimension of competition.
In the 2.0 stage when the industry’s production capacity reaches a certain scale, the marginal effect of production capacity on cost reduction is reduced or even turned into a negative effect.
In the context of the current material cost pressure and tight cost supply, the capacity utilization rate will be impacted, and the depreciation of fixed assets will further increase the cost pressure.
At present, the production capacity is gradually released, and the cost of lithium batteries has entered the 2.0 stage. The role of technological innovation in reducing costs is significantly higher than that of simple capacity expansion.
In this context, we see Tesla touting the 4680 battery, and domestic giants such as Yiwei Lithium Energy are also actively following up.
The 4680 battery is mainly a structural innovation, which is far more difficult than the innovation of the blade battery, and puts forward higher requirements for the production process and equipment, and this is a new topic for the entire lithium battery industry, and it is a brand new species.
The 4680 battery has the technical characteristics of a square battery, which can achieve higher battery capacity and energy density. At the same time, the large cylindrical structure can achieve better heat dissipation, higher system integration, and higher safety requirements. Ternary materials I like it quite a lot, so it is favored by Tesla.
In fact, as a customer to lead lithium battery innovation, the automobile factory has certain advantages, which can reduce the initial promotion cost, have a certain trial and error cost, and improve the probability of success. The bold innovation of BYD and SVOLT Energy may stem from such genes.
BYD’s innovation in blade lithium iron phosphate batteries “pulls lithium iron phosphate back from the marginalization by itself”. The innovation of blade batteries has consolidated the foundation for BYD’s current position in the lithium battery industry, and also helped BYD’s auto sales all the way up.
SVOLT Energy, with the background of Great Wall Motors, has adhered to the lamination technology route from the beginning, and now focuses on the creation of short-blade batteries, which is also quite distinctive in terms of lithium battery innovation.
At present, the old technical route has matured, the competition in the dimension of production capacity has developed to the most intense state, and the new technical route is still brewing. When the old and the new alternate, the competition pattern is naturally stalemate, and the industry urgently needs to break the game.
