Power battery companies cut prices by more than 20%? What frustration is too fast!

According to industry insiders, it is now time for everyone to publicize electric cars. It is more time when car companies can provide electric cars that are satisfactory to everyone. This is the key to whether electric cars can be brought to market in large quantities. The ability to make electric vehicles that satisfy everyone is a natural problem that cannot be bypassed.

Combining with the market conditions, although the New Deal has been delayed, the relevant departments have remained silent, but in 2018, the subsidy for new energy vehicles is an inevitable trend, and the resulting pain is gradually emerging. Judging from the performance forecast announced by several listed companies in recent days, subsidy retreat has had a direct impact on new energy auto companies, and corporate profits have declined. Even BYD, a leader in the new energy automotive industry, expects net profit for 2017 to fall by 15.09%-20.03% year-on-year. In this context, car companies are shifting pressure to downstream suppliers. Among them, power batteries as an important part of new energy vehicles, power battery companies are facing severe industrial pressure.

For example, Chengfei Integrated announced that according to the company's market research information and the intention of placing orders with large customers, well-known domestic car companies have put forward further price reduction requirements for battery companies, and the drop will reach 20% or more.

However, how much room is there for the decline in battery costs brought about by technological advances, efficiency improvements, and economies of scale? The battery China Network survey found that from the perspective of the industry as a whole, although battery costs have been declining year by year, due to the impact of raw material prices, there is limited room for decline in the coming year.

In terms of cathode materials, the price of cathode materials, which accounts for about 30% of the total cost, has the greatest impact on battery costs. Due to the price fluctuations of cobalt, nickel and lithium, the price of ternary cathodes has been high in the past two years. In the future, with high energy density requirements, the proportion of ternary batteries will not decrease, which means that the price of cathode materials will also be maintained. In contrast, the price of lithium iron phosphate cathode material that has fallen out of favor has declined.

In terms of negative electrode materials, graphite is mainly used. Prices of needle coke in China rose sharply in 2017 and environmental protection factors have caused prices to rise. In the long run, the average purchase price is declining year by year. In addition, even if the anode material increases in price, it has little effect on the total cost of the cell.

With respect to diaphragms, with the increase in domestic production of diaphragms and the increase in their production capacity in recent years, the prices of diaphragms have gradually declined. At present, the prices of wet diaphragms have fallen below 4 yuan/square meter, and dry diaphragms have been around 3 yuan/square meter.

For the electrolyte, the main material, lithium hexafluorophosphate, experienced a sharp drop in 2017, and the price dropped from the highest level of 400,000 yuan/ton in 2015 to about 150,000 yuan/ton. The average price of electrolytes has dropped to the current 50,000 yuan/ton, which has reached the cost margin.

In precision components, as an important part of the lithium battery and battery module, the battery shell top cover, steel/aluminum housing, positive and negative electrode soft connection, battery soft connection and other precision structural parts, safety and sealing of the lithium battery Sex and energy use efficiency have a direct impact. Under the guarantee of large-scale expansion of power battery capacity, the market will usher in a new round of market explosion in the next two years. However, with the release of Kedaili, Redfield and other companies, it is expected that the average purchase price will not fluctuate in the future.

In summary, the overall price of power battery raw materials did not show a declining trend in 2018, which made the price drop of power battery very limited. From the Ningde era, the procurement of major raw materials in recent years can also be a glimpse of either:

The picture shows the procurement of major raw materials in the Ningde era (Unit: 10,000 yuan)

Source: Ningde Times Prospectus (Mandate)

From another point of view, however, this also means that companies that are able to increase the overall cost-effectiveness of batteries by optimizing their production processes, increasing battery yields, and other effective ways can gain comparative advantage. In recent years, the price trend of power batteries in the Ningde era has attracted particular attention. As shown in the chart below, even at the price of 1.52 yuan/Wh, the price of the Ningde Power Battery System in 2017 decreased by 26% year-on-year, a large drop. It is undeniable that this is a level that some small and medium-sized battery companies can't match.

The picture shows the product price trend in Ningde times

Source: Ningde Times Prospectus (Mandate)

In general, as the price of key raw materials continues to rise, the space for power battery price cuts will be limited in 2018, and the cost pressures for small and medium-sized battery companies will be even greater. Therefore, relevant research institutions expect that the price of the battery system will continue to decline to around RMB 1.3/Wh in 2018, which is about 10-15% more reasonable.

Batteries China Network believes that the competent authority's goal for power batteries is that in 2020, the new lithium-ion power battery system will strive to achieve 260 watt-hours/kg of energy and the cost will drop to 1 yuan/Wh. However, vehicle companies require battery companies to further reduce their prices by 20 percent or more in 2018. This is more or less the same as saying "this is the same root, what to worry about is too fast." It is worth noting that if the battery industry has to cut prices to seize the market, or the phenomenon of products cut corners, it is worthy of greater disaster for industrial development.

The retreat of new energy subsidies is inevitable, in this case, in fact, whether it is car manufacturers or downstream suppliers, in the coming year must speed up industrial upgrading and enhance their own strength. For example, power battery companies can achieve high-quality development through supply chain construction, optimization of production models, process route selection, rational production lines, and production capacity layout. But blindly squeezing down the downstream battery companies, even if the prospects of the new energy automotive industry is no better, still face great risks.